BA moots £450-million-pound cost cutting plan, more job losses forecast |
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Fri, 10 Mar 2006 17:10
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LONDON: British Airways has announced a 450-million-pound cost reduction plan to combat the pressure of fuel costs and the mounting competition from budget airlines. The two-year plan could lead to further loss of jobs, the company warned.
The airline said its fuel bill for 2006-2007 is expected to rise by 400 million pounds to around 2 billion pounds and vaguely indicated a revision in the fuel surcharge. However, chief executive Willie Walsh told analysts later that he has no immediate plans to hike the surcharge, even selectively.
The company revealed its 2006-2008 business plan, which targets a 10 per cent operating margin, and said it expected a 4 per cent to 5 per cent growth in revenue in 2006-2007, while its total costs for the year would remain unchanged in view of the cost cutting measures. It will also be investing around 200 million pounds on new on-board services, which include a new Club World seat and on-demand films, as well as improvement of its booking website.
BA had announced in November last that it would trim its staff by 35 per cent, or 600 jobs, by 2008 as part of an earlier 300-million-pound cost-cutting plan. It had cut its workforce by 13,000 since 2001 and the staff strength now stands at 48,000. The airline will not say how many people will be affected. It is also saddled with a 1.3-billion-pound deficit in its final salary pension fund. It is planning to bring forth proposals to cover this deficit soon.
Walsh said the company can now start talking about growth and it is in a position to add aircraft to its fleet with an option to buy 10 wide-bodied aircraft from Boeing.
Walsh said the opening of Heathrow's fifth terminal in March 2008 will bring in further efficiencies with more self-service check-in kiosks and automated baggage handling.
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Ryanair beat BA to No1 position in Europe 