BRITISH Airways faces "headwinds" which could cost it up to £400m in the next few months.

The carrier also hinted that pressures on short-haul operations could lead to possible route cuts.

BA also said talks had begun with unions about the airline's proposed £300m reduction in staff costs by March 2006.

John Rishton, BA chief finance officer, said the "cost headwinds" which would hit the airline were pensions, increased pay, fuel rises and increased landing charges.

Fuel, for example, was likely to cost £50m more in 2004to 2005 than in 2003to 2004, he said.

Rod Eddington, BA chief executive, said BA was constantly looking at the poorest performing short-haul routes.

The number of passengers travelling in first class and business class on short-haul routes was down to about half of what it was three years ago, and would probably never recover, he said.

The low-cost airlines had some effect and big companies were also expecting executives to travel in economy class on short-haul routes, he said.