BA have in fact expanded very little over the past ten years. Until the recent delivery of a new 777-200ER there had been no new longhaul aircraft for ten years,- just a very few conversions of 767s from short haul to long haul. For most of the good years they were undersupplying their potential market,- a quite extraordinary situation which has allowed others to grow on business they chose not to provide for.
Amongst their current problems, two in particular relate to capacity and both have their roots in the Ayling era.
Firstly an overwhelmingly high percentage of their long haul production is on trans-Atlantic routes so they are heavily exposed to downturns on those. With the weakened pound on this side of the pond and the downturn in business ex the USA they therefore have a problem. Over the last decade or so they have sharply reduced their range of Asian and Australian destinations, deleting Osaka, Nagoya, Seoul, Taipei, Manila, Kuala Lumpur and Singapore and have pulled out of all of Australia except Sydney and reduced their capacity to Bangkok. This is despite much of Asia having been the fastest growing market.
Secondly, again about 10 years ago it was decided to dump as much as possible of the Economy Class low yield market in favour of much expanded business class cabins. The current market is trading down from the front of the aircraft to the back so they can't fill their premium seats and haven't got the capacity "down the back" to make up for it. Short term reconfiguration just isnt possible in these days of high tech premium seating which is virtually built into the aircraft and the lead time on large numbers of new Economy seats is also lengthy.
Both things stem from them having decided not to spread their long haul risk over both geography and classes of business and too many eggs have gone into single baskets . They took an enormous gamble by concentrating on the Atlantic and premium business, both of which are currently taking the biggest hits. Low yield business they have dumped has also fuelled the growth of their competitors who have used it to build both points served and frequencies which have in turn made these competitors more appealing to the high yield business traffic and some of this will have come from BA .For a long time there has been a serious weakness in their global strategic understanding and planning.