BA to slash 10,000jobs

[Hand Solo]

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

[The Vicar]

"The Future Size and Shape Project"
Does it come accompanied by an expansive cadastral chart laying out the plan?
Had to ask because that is the kind of thing which preceded Ansett's Business Recovery Plan. Unfortunately Ansett never recovered from it.

Good Luck. Methinks you will need it!

[Cardinal]

No airline has ever shrunk towards profitability. In 90 years of airline business hundreds, perhaps thousands have tried. Yet it has never worked. They just keep shrinking. And shrinking. And shrinking. And then there is nothing left to sell, nothing left to leverage, and the proverbial plug is pulled. BA's bean counters must be pretty darn good if they can pull it off. I wish them my best.

[Nightstop]

A clean start is what's needed here. Impossible at any existing airline, especially BA. A certain low-fare airline took a long look at one of it's local rivals recently with a view to a merger.....the result? No way! Working practices and agreements with suppliers and unions would have dragged down the whole operation. As for operating "low-fare" out of LHR and LGW, I don't think so. The low cost carriers need higher than average utilisation of their resources, sitting at a remote holding stand for 20 minutes awaiting a take off slot is not the way to achieve it, or is operating sectors in excess of 2 hours imho.

[The Guvnor]

The main problem that the airlines in Europe have - and Nightstop put his fingers on it - is the high cost of operating through major airports such as LGW and LHR.

I find it insane that FR can operate out of PIK, for example, for around a fiver per passenger fully inclusive of all services: ATC, landing fees, handling (ramp and terminal) yet a few miles up the road you're looking at total costs nearly three times that.

Yes, a lot of that is due to the greed - and intransigence - of the BAA; but equally the handling companies also charge astronomical prices.

Short haul operations are always going to be more expensive on a cost per seat basis than long haul - you have your aircraft cycle maintenance charges; handling, airport fees, higher fuel burn, etc.

I'm very concerned though that the likes of LHR (certainly) and LGW (possibly, unless they wake up and smell the coffee - probably after the North Terminal is deserted) will become purely long haul airports, pricing themselves out of the short-haul market. This will make life rather difficult for passengers wanting to connect to/from those long haul routes, so you'd then see a couple of niche short haul operators start up offering considerably more expensive fares (but convenience for connecting pax) to various points in the UK and Europe. Slots - especially at LHR - would remain a problem which would result in demand exceeding supply and pax having to travel to 'low cost' airports such as LGW (if they get their act together...), LTN and STN (if they don't continue with their present policy of trying to price their customers out of the place).

BA will simply concentrate on its profitable long haul routes, and I suspect will become very much a high quality, high yield niche carrier targetted at the business traveller (which was Bob Ayling's masterplan) - rather than an all-things-to-all-people carrier.

I suspect that it may well even become a 'virtual' airline - franchising out those services; meaning that BA itself becomes a few people in an office somewhere: everything else is outsourced. BA would then handle the 'brand management' and overall direction (as they do with their existing franchisees) whilst incurring no risk or expense.

The aircraft, crews, etc would all be the responsibility of the individual franchisees and as long as they are allowed to operate independently would be highly successful (viz GB Airways, BMed and BRAL/CityFlyer pre acquisition by BA).

[Notso Fantastic]

It's become SO tragic, it is almost funny. Eddington hides in his glorious, glass walled, ivory tower surrounded by administrators who are determined that job losses be confined to operational staff only, and they get their way! Of the 7000 'job cuts' so far, ask yourself who has actually gone? Flight Engineers of 5 Classic Jumbos are the only ones! The rest of that mythical figure are a few outside 'consultants' and all the rest are job sharing! (ie VIRTUAL job cuts only). So we are still overburdened with Revenue Analysts, Personnel, Administration, and the largest group of 'senior managers' this side of the West Coast of America- thousands of them, all chopping positions for uniformed staff.
BA is now a joke, and they want to get rid of.......pilots, cabin crew, managers, overseas staff..... Well let's see them dump pilots- the ones they have work harder than anybody else in the industry as it is- and if they do get rid of them, I guarantee better jobs for them will open up everywhere. Despite self appointed pundits preaching doom, this recession is more for economists than anybody else- things are very healthy if you look around, A short correction was needed, as it regularly is, but next year things will be moving forward. BA, however, will be overburdened by thousands of useless Revenue Analysts (we got lots of them in BA), administrators, office staff like you wouldn't believe. Got a feeling though that one person will be leaving next year- Rod himself, who has proved himself a able successor to the Ayling style of management (administration is King, who cares about staff morale? And front line staff are dirty sweaty people like you don't get in the magnificent glass walled, stream running through it, cool offices!)

[ 09 December 2001: Message edited by: Notso Fantastic ]

[sirwa69]

despite the aftermath of Sept 11th, we have yet to lay off a single member of staff.

Funny thing that, There were a couple of leaving parties last week for sacked BA staff. Also they closed down their local Cargo operation with the sacking of 8 staff just last week. :mad:
And thats just in this little station :mad:

[52049er]

Its such a boring old tactic this one - leak a 'report' to the press, create the feeling of last-ditch-company-goes-to-the-wall-if-we-dont panic amongst staff, then announce 'only' 8000 job losses instead of the 10000 and take the plaudits. The only interesting bit is the additional reporting in the Business section of the Observer - warning that executives at BA will have to accept changes or the loss of their jobs - sounds like RE softening up his management team too.

It just doesnt add up. As Hand Solo said - we have no bases in EDI or GLA (unless they mean those 5 people who answer the radio and give you a loadsheet), Manchester is now not exactly a regional hub, and at BHX the last I heard was that HR had been told to keep the headcount due to increased pax following the sabena/swisscrossair stuff.

Nice being treated like a child isnt it.

[corsaman]

re. BA layoffs - BA has disguised the layoffs as 'voluntary severance' im many cases - take Belfast for example where staff on all levels of salary from new-in, crap-contract to old-rate, fat cat were forced to take voluntary severance in October, following the closure of the base at Belfast International. Although they had no choice in the matter, other than a handful of jobs at GLA/EDI/ABZ. One example was a payoff of £6000 and a pension of £8000 pa, after 32 years. It might appear BA has not laid anyone off - this is true if you count compulsory redundancies - but the toll of vols is pretty well on target for the 7000 they wanted back in October. Pity about BFS - they were a great crowd.

[cumulo-granite]

Well there was one chance recently to make the LGW short-haul European network profitable again for BA - but that's well and truly screwed now as CFE has all but ceased to exist and it'd be far too late to U turn with the cost base where it's now ascended to.


:( :( :mad:

[topman]

cumulo-granite, quite right. Rod had the oportunity and he blew it. The chance will never come again. It's going to be a rough ride and my prediction is the wholesale retreat from LGW.

The complete board deserves the sack for the lost opportunity.

[PAXboy]

Cardinal: No airline has ever shrunk towards profitability.
I agree but the likley outcome is the various carriers shrinking into mergers. The set up of the alliances was done to prepare the ground for this.

With regards to the carrier in point, we may indeed expect to see BA reduced to a handful of people co-ordinating the sub-contractors. They will fly on behalf of One World, in whom they will have part ownership.

In the end, we may see them go the whole way, in which case One World becomes a listed company in all the countries where they have partners and the individual carriers cease trading by reversing themselves into One World.

And you thought it was difficult enough to get a decision from the people at Waterworld? When WW does not exist and the operational decision is taken on the far side of the globe?

To forstall the question: As a pax, No I do not like the idea either.

[Molly1]

Excuse me Notso Fantastic
Well let's see them dump pilots- the ones they have work harder than anybody else in the industry as it is-
Your having a laugh,try doing a 7on 3off shift pattern as an engineer pal.

[Carnage Matey!]

Ah, but BA won't reduce to a handful of people. Having deemed routes to be uncompetitive and unprofitable due to excessive overheads, the company will dump the route, aircraft and associated operational staff to concentrate on the profitable routes. But as these routes now carry a greater share of the overheads, they become uncompetitive and unprofitable so are dumped to concentrate on the profitable routes. Ultimately we will be left with a very large office block with 36000 administrators overseeing a fleet of 7 Concordes which cost £100,000 to fly on. Meanwhile the accountants will scratch their heads because can't understand why they're not making a profit and the administrators will fume because the 4 daily flights are so full they can't use Duty travel tickets to go on a department team-building exercise in Barbados. It'll probably be at this stage that our franchisees, now being considerably bigger operators than BA, will decide to become OneWorld members in they're own right and stop paying Waterworld franchise fees. However as the final source of revenue evaporates our backroom staff will not be perturbed - they won't have heard the news because they'll be sitting in 'The Street' having a cappucino. But then hey, Waterworld is a cashless society, it cant be that hard to survive as a revenueless society. Can it?

PS As for Victor Meldrew, you sound as miserable and curmudgeonly as your namesake. NotSo made the valid point that BA pilots work very hard in relation to other pilots in the industry. No mention of engineers. If its that bad you could always learn to do our job because thats sooo easy.

[ 09 December 2001: Message edited by: Carnage Matey! ]

[ 09 December 2001: Message edited by: Carnage Matey! ]

[flt_lt_w_mitty]

If the newspaper report is accurate

- that would be a first! - the future for BA longhaul and for BA as a company is indeed bleak.

Assuming that, as they say, 'Turkeys do not vote for Christmas', the cuts will presumably leave the huge, non-revenue earning overheads of BA largely in place, while taking down the 'front-end' - nasty, noisy, expensive aeroplanes.

That leaves the surviving BA fleet to support the overheads. The route structure is already struggling to make a profit with a lot of long-haul aircraft flying fairly full - a situation to delight the normal airline. BA is unfortunately NOT a normal airline.

If you take high, fixed overheads supported by x aircraft; reduce x by y; the unit cost per aircraft in supporting the overheads will rise - yes? That makes the surviving fleets less profitable and more attractive to the surviving Turkeys (sorry, accountants and management consultants) for the chopping.

What will be left of BA? A glorious HQ running almost nothing. I can only see one way this once great company is going - the city will not take long to see through the demise of BA the airline and be looking for whatever BA is to be. If they do not see a potential for earning money - and for an airline it is aircraft mainly that earn the money - they will want out.

If the newspaper report is accurate................

Carnage - you beat me to the conclusion!

[mainfrog2]

It reminds me of the Titanic,supposedly unsinkable and the Captain steamed full speed into an iceberg while the band played rousing music.
I find it all really disappointing but maybe it's time I moved on to a new lilypad.

[thewwIIace]

the best chance they had was leave CFE as was on crap pay etc and put all Euro ops on their contracts and make money, not the other way around which seems like an ego trip to the max!
******ed airline now, days limited unfortunately, at least CFE had a fighting chance against the low cost guys. horrible to say, but if there was a major incident with a low cost operator public opinion will change very fast to paying £20 more and fly with a reputable airline. it would kill low cost instantly.

[Wig Wag]

>>horrible to say, but if there was a major incident with a low cost operator public opinion will change very fast to paying £20 more and fly with a reputable airline. it would kill low cost instantly<<

Valuejet failed to survive their fatal crash don't forget.

It is difficult to gauge the working practices of an airline as a passenger.

[twistedenginestarter]

It is quite staggering that BA doesn't understand what its own brand proposition is. It is flying a flag without knowing what that flag represents.

Business people like Easy going to Madrid but they fly BA. Why? Do they enjoy paying more money for a exactly the same thing? No -it's because they are not coming back. They are off to Frankfurt.

BA offers a one-stop solution. Once they move away from that they now have to start battling with any Tom Dick or Harry who sticks a low cost service from A-to-B. Or of course against LH and AF who may stay in the game.

I know Rodney has got a problem losing some money (ok a lot), but it's only temporary. Throw away all that investment in routes and people, and it's gone forever.

I am sorry but I think BA will have to have new management before the slide stops.

Great shame.

[The Guvnor]

Wig Wag - actually, ValuJet are alive and kicking and are now called AirTran.

Their principal problem was that they expanded too fast and their quality control process couldn't keep up: plus in the case of the Everglades crash that was entirely attributable to false labelling of dangerous goods.

[The Guvnor]

I can't believe BA ... are they serious about wanting to keep their premium pax, or is their marketing team really employed by VS or another competitor and they are simply trying to kill off the airline for an ulterior motive? :rolleyes: :eek: :rolleyes:

BA downgrades club-class bags

Keith Harper, transport editor
Monday December 10, 2001
The Guardian

British Airways has abolished priority status for business class baggage and is lumping it in with economy luggage in a new cost-cutting exercise.

Global service standards manager Tony Mahood said management had discovered a "substantial cost saving" by reducing the production of brand luggage labels. Only first class passengers will now receive a priority tag.

One of the big attractions of club class flights to busy businessmen - a market BA wants and needs to keep - is knowing their bags will be first off the carousel. Now premium passengers will face the same delays as those at the back of the plane.

The move was described by one senior manager as "a blow to the reputation of the company at a time when we are trying to attract passengers back." But a BA spokesman said: "These are hard times and hard times call for hard measures. We have to look at all areas to see where we can make savings."

BA denied reports that it had drawn up plans to make a further 10,000 people redundant next year. It has already announced 7,500 job cuts by next April. Five thousand BA workers have left so far.

Yesterday's reports are confusing. They suggest that BA wants to reduce its workforce from 57,000 to 47,000, but the airline said its numbers had already been cut to 51,500 and by next March would be down to at most 49,000.

But BA made it clear that it could not rule out further redundancies. The position will become clearer early next year when the company has completed a review called the future size and shape project.

BA said the review had only just started. "Five managers are conducting it. They have been given a clean sheet of paper and will look at the entire network."

Senior staff say the company is preparing staff for the worst, but that the cuts will not be as draconian as is being painted.

[thallam]

The Observer article contained little that was new, but I was most surprised to see yhe comment"'opportunity of a generation' to revolutionise the airline without the risk of major industrial action". The first part makes sense, The second suggests that the target is organised labour rather than excess bureacracy. When you go for liposuction, you don't start with the muscles.
Examples of the belly fat I have encountered recently: The Captain who turns up for a flight ops. meeting at Waterside to find the room occupied by the Feng Shui group. The manager I took to a central european location (first class both ways) whose only task over 3 days was to give a 30 min. assessment to a couple of locals ( he turned up late for these).
Being a low cost airline may not be an option, but we can no longer afford this nonsense :eek:

[White Knight]

Well I've flown for a few different companies and I have to say that BA is the worst run that I've encountered.....Never have I seen so many chiefs !!
May as well just paint LGW orange because if Stelios has got any sense he'll be bargaining now with BAA for all of the stands and slots that will eventually be free...

[Pandora]

Norfolk in Breaks,
the Feng Shui group is now the stuff of legends - maybe you were the person who told me about it. But can anyone top this - I carried a bread roll temperature auditor on one of my flights.

[cirrus01]

There is a Manager based at Waterworld (or should that be Centre of the Universe ? )who is in charge of PLANTS , yes that's right those green leafy things ........


BRING BACK THE YELLOW DOG NOW !!! :rolleyes:

[RVR800]

Have they done any 'pareto' analysis yet

This is when they investigate their product lines and find that 90% of the business comes from only 10% of the routes offered

This then results in axing the offending routes

[Dan Winterland]

I suggest that BA should split up the long haul and short haul businesses, with the short haul perhaps looking to follow the lead of the low cost operators in saving costs and trying to match them at their own game.

They could give the two airlines snazzy new names - such as British Overseas Airways Corporation and British European Airways. :D

[twistedenginestarter]

If they wanted to stay in business they would have leaked saving £100 million. Instead the leaked cutting people. Draw your own conclusions about their perspective.

If I was Rod, or if Stelios was Rod, we would be saying to all our suppliers and employees "We have to cut costs - brutally. Help us or the costs will be cut - completely. Which do you want?".

Rod is no better then Bobby at understanding management is about getting things out of people, not getting people out.

[dwlpl]

White Knight,

In yesterdays Sunday Express business supplement it stated that easyJet have asked for more slots at Gatwick.

It says that easyJet would make Gatwick its major base with between 20 and 30 737's being eventually based there. This would provide approx 1600 people with jobs.

[ 10 December 2001: Message edited by: dwlpl ]

[Egg Mayo]

Please ignore - too tired and too muddled!

[ 10 December 2001: Message edited by: Egg Mayo ]

[PAXboy]

It may indeed be time for BA to start it's final slide, I shall watch with interest.

At the weekend, a programme reviewing the performance of the top 100 companies in the USA pointed out that the average time for a company to be in the top quartile of the field was 12 years. It might return but only after sliding out of the list, being changed and then climbing again.

[Deadleg]

DW, it's already happening-CitiExpress etc!

[G-AZZA]

I'm amazed at BA, it is obvious that an Airline makes money by flying people in aircraft, operated by pilots, crewed by cabin staff and fixed by engineers. If you get rid of routes, aircraft and their crews, you don't make money, which is the whole reason for running an airline in the first place! Sure, some routes don't make money, but it is probably served by the wrong aircraft type. If all else fails then find a new route to make money on.