British Airways plc has announced it is to cut back on loss-making routes and switch to some smaller aircraft in a major capacity-squeezing plan aimed at boosting profits amid market turbulence.

The move - which came as the airline posted an 84 per cent drop in pre-tax, pre-exceptional first quarter profit - further distances BA's strategy from that of main rivals which have been chasing market share.

However, BA, which said its programme would lead to up to a 12 per cent reduction in capacity over the next three years, warned yesterday that other airlines would eventually have to follow suit. "The overall message is BA is putting its foot on capacity expansion and doing what we can as one company in the industry to take this irrational [excess] capacity out," the chief executive, Mr Bob Ayling, said.

BA's decision marks one of the first times an airline has cut capacity in an expanding and highly competitive market.

The announcement did not come as a big surprise to analysts who have been gradually digesting BA's plans to cut capacity for more than a year. Many say that while Mr Ayling's strategy will be painful in the short term, it could be the right long-term approach for the airline industry.

BA said first-quarter pre-tax profits rose to £200 million sterling from £145 million sterling last year, but that included disposal profits of £177 million, which translates into a pre-tax, pre-exceptional figure of about £23 million.

More than £6 billion will be spent over the next three years to improve all of BA's services. That includes a spruce-up for Concorde and a new lounge at Heathrow.

Mr Ayling added that BA was in serious discussions with Boeing Cos and Airbus Industrie to replace 20 of its 53 short-haul Boeing 757s - which carry between 150-190 passengers - with smaller 100-seat aircraft.