British Airways PLC on Friday reported a net loss of 208 million pounds ($346 million) in the six months ending in September as the global economic downturn continued to take its toll on revenues.

The first-half net loss compared with a loss of 42 million pounds a year earlier.

On the pretax level, BA reported a loss of 292 million pounds compared with a profit of 52 million pounds a year ago.

Though worse than the consensus of analysts' expectations for a 252 million pound loss, shares in BA rallied a further 3 percent in early London trading to 192 pence as the company laid out its plans to cut costs further and reduce capacity.

"On balance, BA's determination to cut its cloth has been well received by the market, with the shares having posted a 26 percent gain over the last year," said Richard Hunter, analyst at Hargreaves Lansdown Stockbrokers.

"BA bulls remain steadfast and in sufficient numbers to counteract the bears," Hunter added.

BA's chief executive Willie Walsh said the company "can't stand still" with revenues likely to be 1 billion pounds lower this year and that further cost reductions were "essential."

He said BA intended to cut the equivalent of 3,000 jobs by March and reduce winter capacity by 6 percent.

Despite the stock market reaction, the company's cost-cutting endeavors threaten to embroil it in labor strife. The Unite union went to court on Thursday in an attempt to stop BA from imposing new contracts on cabin crews.

The union is currently conducting a strike authorization vote, with results due on Dec. 14. Continued...