Slasher axes 600 jobs at BA
· 'Slasher' says three-year reductions will not be last
· Airline sets its sights on £50m of annual savings
Terry Macalister
Thursday December 1, 2005
The Guardian
Willie Walsh, the new chief executive of BA, reinforced the cost-cutting reputation which earned him the nickname "Slasher" at Aer Lingus by announcing 600 senior job losses yesterday.
Almost 50% of the airline's top executives and 30% of middle managers are to be made redundant in a move designed to save £50m a year as the airline battles against high fuel costs and competition from no-frills flyers such as Ryanair.
Mr Walsh, who took over at the beginning of October, said the reduction in his management team, to be achieved by 2008, would not be the end of job cuts. He refused to be drawn on future numbers.
Already 3,000 people a year are leaving the business through normal turnover but he said "some" were being replaced as BA tries to reach its target of saving £300m in labour costs by March 2007.
"I said when we reported our second-quarter financial results last month that our costs were up in most areas and that, as a result, we need to re-energise our efforts to deliver a competitive cost base," Mr Walsh said.
He denied there was any change of strategy and insisted it was no indictment of the way his predecessor, Rod Eddington, had run the business. "His track record was exceptional. BA was one of the few companies that really did face up to the challenges after 9/11."
Reporting second-quarter results two weeks ago, Mr Walsh played down the importance of job cuts as a way of reducing costs. Yesterday he insisted he had flagged up the need to tackle costs, and there was "absolutely no panic and to my mind no surprise" in the announcement of 597 senior staff cuts, which will cost the company £50m.
BA hopes most of the reductions can be achieved voluntarily but he accepted there were likely to be some compulsory redundancies. Top managers have salaries of about £86,000 while the middle ranks are on about £45,000. The company believed most managers would understand the need for changes and Mr Walsh foresaw no problem with unions, because the cuts would be done in a controlled and structured way.
The moves would not affect safety and should make the business more effective, BA said, using similar arguments to those voiced by the airport operator BAA when it cut middle management jobs recently.
The senior job cuts will come in three phases, with 94 top executives to leave the airline by March 31 2006 and further reductions over the next two years.
Reuters quoted a source familiar with the situation as saying that Mr Walsh was considering a 15% cut in the total workforce of more than 46,000 over several years as part of its move to a single new terminal at Heathrow. But the move could exacerbate relations with the unions after three summers of industrial strife at Heathrow and ahead of planned changes in work practices there.
Mr Walsh cut a third of the workforce at Aer Lingus, while Mr Eddington shed 14,000 jobs over the last five years at BA, Europe's third-largest airline.
Kevin Egan, a national officer for the Amicus trade union, said: "We are still waiting to see the detail from BA but our priority will be to ensure that alternative options to compulsory redundancies are offered."
Equity analysts said the move was in line with the strategy of making £300m of savings but one pointed out its unfortunate timing in the run-up to Christmas - "the kind of thing investment banks do".
Shares in BA rose 1% to 355p.