BA to slash 10,000jobs
Taken from Sundays Observer
BA crisis as 10,000 face axe
Europe routes go in massive shake-up
Joanna Walters, transport editor
Sunday December 9, 2001
The Observer
British Airways has drawn up secret plans to axe up to 10,000 jobs and slash domestic flights in a desperate bid to avert financial disaster.
In the biggest revolution since privatisation in 1987, the airline is planning a massive cost-cutting exercise and a dramatic downsizing of its image as a global carrier.
The 'world's favourite airline' has been plunged into financial chaos in the wake of the 11 September terror attacks and is losing more than £2 million a day. It faces losses this year of £750m.
Under plans codenamed 'The Future Size and Shape Project', BA executives are considering seeking at least 8,000 redundancies early next year and shrinking UK and European operations. It has already announced 7,000 job losses but it has become clear that deeper cuts are needed.
According to senior BA sources, the war on terrorism is being seen as the 'opportunity of a generation' to revolutionise the airline without the risk of major industrial action, ending a culture of being 'all things to all people', even when it makes no financial sense. BA plans to shrink over a two-year period and withdraw from many domestic and European routes. An announcement is expected in early spring, possibly February. The Observer has learnt the airline is discussing a series of dramatic measures including:
·Cutting the workforce from 57,000 to 47,000 by losing pilots, cabin crew, managers, overseas workers and engineers.
·Closing heavy loss-making regional operations in Birmingham, Manchester, Glasgow and Edinburgh and transferring some routes to subsidiary British Regional Airlines.
·Slashing up to half its remaining European services and several unprofitable long-haul routes from Gatwick.
·Surrendering to low-cost airlines by ending dozens of routes from Gatwick and Heathrow to the Continent.
Under the plans, passengers flying to destinations such as Brussels or Paris from Manchester, Glasgow or Birmingham, will have to fly on one of BA's tiny partner airlines or travel via London.
A senior BA source told The Observer the airline had asked itself tough questions: 'Should we be flying to all those places where we do not make money - is it because BA wants to paint the world red, white and blue or is it behaving like a business? These issues have to be addressed and we are looking at the totality of the business.'
BA's Australian chief executive Rod Eddington aims to achieve most of the planned redundancies on a voluntary basis. But since he joined the airline from the now defunct Australian carrier Ansett in July 2000 he has failed to rule out compulsory job losses. He believes the current slump in the global aviation industry - more than 150,000 jobs have been axed worldwide - could be the best chance he will ever have to shrink BA without triggering strikes.
The last time BA tried to make deep cuts was in spring 1997 when staff launched a devastating three-day strike that virtually shut down the airline and ultimately destroyed the career of then-chief executive Bob Ayling.
BA will continue to fly to all the major European capitals from London and on the 'trunk routes' from Heathrow to Manchester, Glasgow and Edinburgh. But it will stop flying European and domestic services from its costly regional bases in Birmingham, Manchester and Scotland to places such as Aberdeen, Brussels, Paris, Dusseldorf and Frankfurt.
Martin George, marketing director at BA, last night confirmed that a major review is under way. He said: 'The project is only a few weeks old. We have been given a clean sheet of paper and we are looking at the total network.'
BA flies to 97 countries with 287 aircraft. Last year it made pre-tax profits of £150m, but profits of £470m on its American operations contrasted sharply with losses of £172m on domestic and European routes. And since 11 September, BA's transatlantic traffic is down 30 per cent, with the global economic downturn also deterring high-paying business travellers. The source said: 'We cannot hide behind profits from the Atlantic any more.'
He said the fast-expanding low-cost airlines were drawing thousands of passengers from routes such as Nice, Barcelona, Munich, Lyon and Venice. 'The low-cost airlines are not going away and it comes to the point where we cannot go to these places just for public relations or historical reasons.'
Britain and the US are likely to sign a deal for 'open skies' before Christmas that will allow more US rival airlines to fly into Heathrow. This will allow BA to strengthen its global partnership with American Airlines, the world's largest carrier, but the arrival of giant US carriers such as Delta, Continental and Northwest at Heathrow next year makes it imperative for BA to cut costs and become more efficient.
Just a few personal thoughts on the matter:
1)Losing 10000 jobs from
pilots, cabin crew, managers, overseas workers and engineers would eliminate almost all pilots, most cabin crew and engineers and all overseas staff before managers are touched. So who's going to operate the aircraft?
2) BA don't have any 'loss making operations' in Edinburgh and Glasgow, and the Birmingham base makes a profit (which is more than most of our long haul routes do if our accountants are to be believed)
3) Important quotes:
the war on terrorism is being seen as the 'opportunity of a generation' to revolutionise the airline without the risk of major industrial action
He believes the current slump in the global aviation industry - more than 150,000 jobs have been axed worldwide - could be the best chance he will ever have to shrink BA without triggering strikes.
Once again the board of directors seek to cash in on the atrocities of Sept 11th and make the average employee pay for the lack of direction of management.
I have no wish to see my employer go the way of Sabena, but its about time our board of directors toook a reality check here! Our 'profitable' long haul routes are nothing without a solid European network to provide transfer pax. Our 'costly' European operations are mostly costly because they are subsidising the management folly which is Waterside and all the other massive overheads which the accountants care to attribute to shorthaul.We are unable to compete with 'low cost' operators because we employ 10000 too many managers and, despite the aftermath of Sept 11th, we have yet to lay off a single member of staff. Finally, as a result of our crippling cost base, it is apparent that current company strategy is to withdraw from any short haul route on which we do not enjoy a complete monopoly.
Your comments please.
British Airways, RIP