BA to axe 16000 - mainly management/non front line?
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BA to axe 16000 - mainly management/non front line?
Apologies if people have got this already - have those in Waterworld finally got the message?
SUNDAY TIMES. .SUNDAY FEBRUARY 03 2002 . . . .Board adopts radical rescue plan for BA . . . .RORY GODSON, BUSINESS EDITOR . . . .THE board of British Airways has approved a radical management plan to cut 16,000 jobs and change the airline’s routes and working practices. . .The Future Size and Shape document agreed on Friday will reprieve some short-haul routes and create a new blueprint for Gatwick, the airline’s loss-making second base.
Rod Eddington, BA’s chief executive, considered withdrawing entirely from the airport but decided to treat it as a regional base for lower-fare flights.
The decisions, taken after a day and a half of meetings, may draw City flak for being less adventurous than expected.
It had been predicted that the airline would retrench and become like the British Overseas Airways Corporation (BOAC) that merged to form BA in 1973. Eddington will defend the plan, saying that the surgery envisaged by some analysts was “complete amputation”.
A source at the airline said this weekend: “To go back to being BOAC would be a wholesale retreat. We need to compete with Lufthansa and Air France, not fly away.”
The plan is likely to be announced a week tomorrow and be explained in depth to shareholders two days later at BA’s annual investor day.
However, the plan is certain to be discussed tomorrow when BA posts a £200m operating loss for the quarter to December 31. Analysts now expect the company to make a pre-tax loss for the year to March 31 of about £600m.
The board approved plans to cut any short-haul routes that “do not contribute to profitability”. Eddington will also ask unions to radically change their inefficient work practices. He believes that he can fly almost as many passengers with a much smaller workforce.
Directors believe that the weeding-out of sickly services and a reduction in capacity will allow the airline to make a 10% profit margin on its operations.
The axe will fall most heavily on management and other non-frontline staff. BA’s payroll is expected to shrink from 58,000 at the start of the financial year last March to 42,000 over five years.
The board was told last week that faster progress than had been expected was being made with the 7,200 job cuts announced in the wake of the September 11 terrorist attacks on New York and Washington.
Eddington has also told senior colleagues that he “hopes and expects” that Lord Marshall, the company’s long-serving chairman, will stay in position until November 2003, when he will be 70.
One banker involved in several recent American and European airline deals said BA was proposing “less of the same”.
“They are just doing the same old thing, only less of it. There is no real attempt to address BA’s main problem, which is its high costs. They don’t want to do that because the company does not have sufficient balance-sheet strength for a protracted fight with cabin and flight-crew unions,” he said.
Most analysts still expect that later this year the company will have to launch a rights issue to repair the balance sheet — its debt, at £6 billion, is three times its market value. o United Airlines, America’s second-biggest carrier, underlined the continuing trauma in the industry on Friday when it reported a loss for 2001 of $2.1 billion, thought to be the largest corporate deficit in airline history. However, Ryanair, the Irish low-cost carrier, is expected to post upbeat results this week, saying that passenger numbers have grown 30%.
. .Copyright 2002 Times Newspapers Ltd.
SUNDAY TIMES. .SUNDAY FEBRUARY 03 2002 . . . .Board adopts radical rescue plan for BA . . . .RORY GODSON, BUSINESS EDITOR . . . .THE board of British Airways has approved a radical management plan to cut 16,000 jobs and change the airline’s routes and working practices. . .The Future Size and Shape document agreed on Friday will reprieve some short-haul routes and create a new blueprint for Gatwick, the airline’s loss-making second base.
Rod Eddington, BA’s chief executive, considered withdrawing entirely from the airport but decided to treat it as a regional base for lower-fare flights.
The decisions, taken after a day and a half of meetings, may draw City flak for being less adventurous than expected.
It had been predicted that the airline would retrench and become like the British Overseas Airways Corporation (BOAC) that merged to form BA in 1973. Eddington will defend the plan, saying that the surgery envisaged by some analysts was “complete amputation”.
A source at the airline said this weekend: “To go back to being BOAC would be a wholesale retreat. We need to compete with Lufthansa and Air France, not fly away.”
The plan is likely to be announced a week tomorrow and be explained in depth to shareholders two days later at BA’s annual investor day.
However, the plan is certain to be discussed tomorrow when BA posts a £200m operating loss for the quarter to December 31. Analysts now expect the company to make a pre-tax loss for the year to March 31 of about £600m.
The board approved plans to cut any short-haul routes that “do not contribute to profitability”. Eddington will also ask unions to radically change their inefficient work practices. He believes that he can fly almost as many passengers with a much smaller workforce.
Directors believe that the weeding-out of sickly services and a reduction in capacity will allow the airline to make a 10% profit margin on its operations.
The axe will fall most heavily on management and other non-frontline staff. BA’s payroll is expected to shrink from 58,000 at the start of the financial year last March to 42,000 over five years.
The board was told last week that faster progress than had been expected was being made with the 7,200 job cuts announced in the wake of the September 11 terrorist attacks on New York and Washington.
Eddington has also told senior colleagues that he “hopes and expects” that Lord Marshall, the company’s long-serving chairman, will stay in position until November 2003, when he will be 70.
One banker involved in several recent American and European airline deals said BA was proposing “less of the same”.
“They are just doing the same old thing, only less of it. There is no real attempt to address BA’s main problem, which is its high costs. They don’t want to do that because the company does not have sufficient balance-sheet strength for a protracted fight with cabin and flight-crew unions,” he said.
Most analysts still expect that later this year the company will have to launch a rights issue to repair the balance sheet — its debt, at £6 billion, is three times its market value. o United Airlines, America’s second-biggest carrier, underlined the continuing trauma in the industry on Friday when it reported a loss for 2001 of $2.1 billion, thought to be the largest corporate deficit in airline history. However, Ryanair, the Irish low-cost carrier, is expected to post upbeat results this week, saying that passenger numbers have grown 30%.
. .Copyright 2002 Times Newspapers Ltd.
