U.K airline British Airways PLC (BAY.LN) Monday said September traffic failed to pick up despite more favorable annual comparisons, and its important premium traffic continued to weaken.

Traffic, measured in revenue passenger kilometers, or RPKs, fell by 0.8% from a year earlier to 9.83 billion RPKs, with total passenger numbers down 1.7% to 2.9 million. Premium RPK traffic dropped 7.9% on the year, the second time BA has posted a decline for September since 2004, with non-premium traffic up by 0.7%, BA said.

September is usually a strong month for premium traffic as business passengers return from summer vacations, but declines in premium traffic should ease going forward as comparisons become more favorable.

The "less dramatic declines in more important premium traffic is a positive sign and a step in the right direction," said John Strickland, Director at JLS Consulting Ltd.

He said BA needs to focus on reducing those declines further, with autumn to early winter typically being important periods for those traveling premium class.

A 3.7% cut in capacity, measured in available seat kilometres, helped boost passenger load factor by 2.4 percentage points to 81.3%. Load factor measures the proportion of available seats an airline fills with paying passengers.

BA's group treasurer and head of investor relations, George Stinnes said the airline is still discussing governance structures relating to a potential merger with Iberia Lineas Aereas de Espana SA (IBLA.MC) but added it must deliver synergies for a merger to be viable.

He said the airline hasn't placed a deadline for concluding talks with the Spanish carrier.

Earlier Monday a BA spokesman said the airline will respond to concerns raised by the European Commission over its transatlantic tie-up plans by the end of October.

The European Commission Friday confirmed it had sent its Statement of Objections to BA, AMR Corp's (AMR) American Airlines and Iberia over their plans for deeper cooperation on transatlantic routes. The commission is concerned the airlines' bid to increase cooperation could restrict competition and raise fares for consumers but BA and Iberia Friday said are keen to address and overcome any issues raised by the commission.

Anti-trust immunity would allow the carriers to work more closely on schedules and prices, while also sharing revenue.

Stinnes said he could see no reason for why BA should need to grant any concession so it could work more closely with other airlines within the oneworld alliance. "Sometimes logic, intellect or otherwise" doesn't mirror reality.

The oneworld alliance is a group of 10 airlines working together on global routes.

Meanwhile, budget carrier Ryanair Holdings (RYAAY) posted a 17% increase in the number of passengers it carried in September to 6.1 million from 5.2 million a year earlier, while load factor rose one percentage point to 85%.

 
   KEY EUROPEAN AIRLINE SEP TRAFFIC: 
 
   AIRLINE          RPKs     Chg On Yr   PASSENGER NOS Chg 
   British Airways  9.83 Bln   -0.8%      2.9M        -1.7% 
   Ryanair          n/av       n/av       6.1M          17% 
   EasyJet          Due Oct 
   Air Berlin       Due Oct 
   SAS              Due Oct 
   Lufthansa        Due Oct 
   Iberia           Due Oct 
   Aer Lingus       Due Oct 
   Air France-KLM   Due Oct

-By Kaveri Niththyananthan, Dow Jones Newswires; 4420 7842 9299; kaveri.niththyananthan@dowjones.com