British Airways will survive war in Iraq, chief executive Rod Eddington has told senior staff but he also warned of "further action" to keep the business on track.

The airline would survive the Iraq conflict but would would face "tough times ahead", Mr Eddington told managers in an email.

He said: "More than ever, cash is king and further action will be necessary to ensure the business remains on track.

"The conflict will have a significant financial impact on the industry and our business, as we learnt from our Gulf War experience in 1991 and, of course, September 11th.

"We must not expect to return to where they were two years ago when the war has finished."

The airline, which has already said it will cut 3,000 jobs by March 2004 on top of 10,000 in the last year, is monitoring the effects of the conflict on passenger numbers.

It is understood that routes to the Middle East and the airlines seven daily flights to New Yorks JFK airport are under review.

A BA spokeswoman said New York was "just one of the routes we would be looking at".

She said the company would examine "a range of options", from using smaller aircraft to reducing flights.

The move follows a 20 per cent reduction in its overall capacity over the last few years to head off the effects of a slump in demand for air travel following the September 11 terrorist attacks, as well as intense competition from budget airlines.

In May last year, BA reported its worst set of results since privatisation 15 years ago, with full-year losses of £200 million.