THE new two-year business plan for British Airways was unveiled yesterday and includes provision for reducing costs by £450 million and restoring 10 per cent operating profits.
The first plan announced since ex-Aer Lingus boss Willie Walsh became chief executive to prepare the move to Terminal 5 ‘could mean more job losses’ BA admitted.
The airline has already slashed 12,000 jobs since 2002.
Last year, it announced that 600 management jobs would be axed and it is believed 6,000 more jobs are to be axed under the new plan to transfer to Terminal 5.
The Transport and General Workers Union (TGWU) commented that the talk of further job cuts caused ‘some concern’.
TGWU national secretary for civil aviation Brendan Gold said: ‘The T&G and the unions generally at BA have already made a significant contribution to taking cost out.
‘Thousands of jobs have already gone and we saw the effects of that a couple of summers ago when the airline found itself short of people at Heathrow.’
Gold added that the unions would be studying the details of the two-year business plan and predicted some ‘tough talking’.
He continued: ‘Everyone wants BA to continue its success. But that must include recognition that the workforce and the unions have and will continue to play a key role.’
BA said in its statement: ‘The plan covers the period from the end of March 2006 to the end of March 2008, when British Airways will move into its new operational home in Terminal 5 at Heathrow airport.
The plan includes:
• Savings across the airline worth £225 million in 2006-07 and a further £225 million the following year;
• Investment of nearly £200 million to include a new Club World seat, on-demand films in all cabins and ba.com;
• Establishment of new procedures aimed at major improvements in punctuality and baggage performance in preparation for Terminal 5, plus greater use of self-service check in;
• Proposals to enable the achievement of a 10 per cent operating margin and prepare the airline for future profitable growth.’
BA boss Walsh claimed: ‘This plan will make us fit for the future.
‘By resolving our pensions deficit, reducing cost and delivering world-class customer service, we can make a 10 per cent operating margin a sustainable reality.
‘Better management of our costs and having an absolute focus on customer needs will give us a lasting platform for success.
‘Meeting the business plan’s objectives will put us in a position to take on our competitors in preparing for growth.’
For the 2006/7 period, the airline has forecast revenue growth of four to five per cent, driven by increased capacity and seat factors.
BA’s fuel bill is forecast to be up by some £400 million for 2006/7.
Total costs for 2006/7, excluding fuel, are forecast to be flat with increases offset by cost efficiencies.
In 2005/6, nearly a third of British Airways customers worldwide bought their seats directly from the airline. The vast majority of these booked on ba.com. The business plan aims to raise this proportion to half by March 2008.
The business plan confirms that the planned size and shape of the airline’s Heathrow schedule in 2008 will mean the location of a small number of services in Terminal 3.
To maximise the ‘cohesion of joint services’ with oneworld alliance partners Qantas and Iberia, flights to Australia and Spain will depart from Terminal 3 from March 2008.
