By Daniel Morrissey LONDON, Feb 4 (Reuters) - British Airways Plc reported a third-quarter loss of 187 million pounds ($264.7 million) and predicted more job cuts on Monday as it hurtled towards its worst full-year loss since privatisation 15 years ago. Struggling to cope with a slump in demand for air travel after the September 11 attacks on New York and Washington, Europe's largest airline also reported a 20 percent fall in revenues to 1.84 billion pounds for three months to December 31. BA said it would need to shed more jobs to rein in costs but was comfortable with its cash position, ruling out issuing new shares, raising more debt or selling its 22 percent stake in Australia's Qantas Airways Ltd (QAN). Hit hard by the fall in transatlantic traffic since September 11, BA posted a third-quarter operating loss of 187 million pounds, compared with a profit of 80 million pounds for the same period a year earlier. Costs fell by 8.5 percent. The loss was at the better end of market expectations, but that was cold comfort for an airline relying heavily on North American routes for profits and confronting fierce competition from no-frills carriers on European short-haul routes. It suffered a further blow last month when U.S. regulators effectively blocked for the second time its proposed transatlantic joint venture with American Airlines (AMR). "There are still big question marks over its future strategy and the balance sheet is still pretty stretched," said Deutsche Bank analyst Jonathan Wober. Shares in BA closed down three percent at 205-1/2 pence, off an intraday low of 203 pence, in a weaker overall London market. The benchmark FTSE 100 Index (FTSE) ended 0.45 percent lower. In the debt markets bonds issued by BA fell on fears that ratings agencies might cut the airline's credit ratings. Its 7.25 percent sterling bond due August 2016 was slashed to junk-grade status late last year. MORE JOBS TO GO Like most airlines BA has high operational gearing. With thin margins and huge fixed costs, most carriers suffer hefty losses even if revenues fall just a little. BA is due to respond later this month to the crisis with the results of its "future size and shape" strategic review which is expected to lead to more cutbacks among the carrier's staff and routes. BA has already announced 7,200 job cuts. "We are going to have to take some more jobs out of our business," Chief Executive Rod Eddington told BBC radio after the results. But he declined to comment on newspaper and market speculation that another 10,000 jobs could face the axe. Amanda Forsyth, a fund manager at Standard Life Investments, which owns 2.4 percent of BA, said the investors' conference on February 13 was an ideal day to deliver its new business plan. "At the end of the day the results are not as important as the size and shape review coming up," said Tim Rees, director of equities at fund manager Clerical Medical. BA has declined to name a publishing day. ABN AMRO analyst Damien Horth said in a research note that forecasts past this fiscal year would hinge upon the business plan and the funding of restructuring costs and debt reduction. "We would be surprised to see the company move away from its focus on premium and UK originating traffic," said Horth, adding that job losses "in the thousands appear inevitable". Eddington said BA, groaning under 6.5 billion pounds in net debt, had burnt two million pounds in cash a day in the quarter but that included 129 million pounds in debt repayments. "There are no plans for a rights issue," he told reporters, quashing speculation on a one billion pounds rights issue. "There are no plans for a bond issue. We're happy with what we've got." But Forsyth said later comments to analysts by Eddington that there were no plans "at the moment" for a convertible security to raise funds could be interpreted as being equivocal. Chief Financial Officer John Rishton told analysts BA had 1.2 billion pounds in cash, 600 million pounds in committed bank facilities and no restrictive debt covenants and its capital expenditure would halve to about 400 million pounds in 2002/03. BA said its average passenger fare yields were up 0.3 percent in the three months on a year ago. "The best thing that we can hope for in this current environment is that yields don't decline," Eddington told the analysts' conference call.