ALEXANDER CAMPBELL / LONDON
British Airways chief executive Rod Eddington has sought to dampen speculation that the airline is planning to reduce staff levels by as many as 10,000, branding it as "unfounded", and asserting that no firm decisions on staff levels have yet been made.
Media reports link the cuts to an internal project studying a radical overhaul of the airline called the Future Size and Shape. A decision is anticipated in February and is likely to be revealed some time after the airline announces what are expected to be heavy losses in its third-quarter results.
The restructuring is expected to result in a number of unprofitable long-haul routes being cut, along with a big reduction in domestic and regional services. Some regional routes are expected to be handed over to franchise carriers or lower-cost parts of the BA empire such as CitiExpress.The final shape of the airline is likely to be contingent on the outcome of 'Open Skies' negotiations between the UK and USA and the related decision by US competition authorities in January on whether to grant antitrust approval for a proposed American Airlines/BA alliance.
Extreme options considered by the five-man team conducting the review are said to have included withdrawing from its second London hub at Gatwick and ditching short-haul services altogether. The strategy of concentrating on high-yield passengers to the detriment of economy travel is also being reviewed, say sources.
The airline has already moved recently to stem regional losses, ending services to the Northern Ireland capital Belfast amid a number of service reductions in the wake of the 11 September terrorist attacks. British Airways Regional has also been merged into CitiExpress.
Redundancy numbers this year already total 7,000, reducing the staff from 57,000 to 50,000. Observers believe a further 10,000 job losses are at the top end of any potential reduction with 5,000 -7,000 being the more likely figure.
Announcement of a new strategy is likely to be followed by a rights issue timed for the second quarter of 2002, as the airline seeks to bolster its flagging finances ahead of what is likely to be an expensive restructuring.
Meanwhile, BA's would-be partner American Airlines announced that it expects to make a "very, very big loss" for the fourth quarter of 2001 and the full year. The airline is forecast to record sales of $18.9 billion this year and $17.8 billion next year (compared with $19.7 billion in 2000), and losses of $8.81 per share for 2001 (compared with $4.65 profit per share in 2000). The airline will delay delivery of 36 of the 45 aircraft it ordered from Boeing.
Source: Flight International
