-Caveat Lector-
From
http://www.observer.co.uk/uk_news/story/0,6903,615847,00.html
}}}>Begin
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 los
ses 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 generat
ion' to revolutionise the airline without the risk of major industrial action, ending
a culture of
being 'all things to al
l people', even when it makes no financial sense. BA plans to shrink over a two-year
period and wit
hdraw 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 worke
rs 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 Cont
inent.
Under the plans, passengers flying to destinations such as Brussels or Paris from
Manchester, Glasg
ow 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 fl
ying 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 o
f 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 faile
d 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 s
hrink BA without trigge
ring 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' fr
om Heathrow to Manchester, Glasgow and Edinburgh. But it will stop flying European and
domestic ser
vices from its costly r
egional bases in Birmingham, Manchester and Scotland to places such as Aberdeen,
Brussels, Paris, D
usseldorf 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 lo
oking at the total netw
ork.'
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 Europe
an 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.
Guardian Unlimited © Guardian Newspapers Limited 2001
End<{{{
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