British Airways is offering voluntary redundancy to 1,400 managers, the airline confirmed today, in a bid to cut its wages bill by £170 million.
The move is being targeted at senior and middle managers, including some of the airline's technical management staff.
Staff have been given the option of applying for voluntary redundancy but unions fear that compulsory redundancies will follow if not enough people take up the offer.
The airline, which last month announced plans to combine routes, pricing, sales and marketing with American Airlines to create a powerful new transatlantic carrier, wants to wipe up to £170 million off its wage bill by getting rid of swathes of senior staff - amounting to about 3 per cent of the total 42,000 strong workforce.
Letters offering severance deals to managers on salaries from £40,000 to £250,000 will be sent out on September 25, with managers expected to leave by New Year's Eve.
Willie Walsh, chief executive of BA, gathered 150 of his most senior managers yesterday to give them the bad news and blamed the high price of oil and the economy.
In a statement, the airline said: "We are in the worst trading environment the industry has ever faced and we must take action to offset the combined effects of the continuing global economic downturn, weakened consumer confidence and high fuel prices."
A spokesman added that employee costs were now second only to fuel costs, which are expected to rise by £1 billion this year to more than £2 billion.
Although the price of oil has been falling from a peak in mid-July, any benefit to BA has been wiped out by the sharp drop in the value of sterling, particularly against the dollar.
BA is also battling a general weakening in demand, with August traffic figures released by the airline showing a 2.7 per cent fall in its load factor - a measure of how full its planes are - compared to 12 months earlier.
BA also gave warning that the outlook for premium travel remained “uncertain” until after the summer break. The total number of passengers carried by the airline fell 3.2 per cent to 2,988,000 compared to August last year.
"We are determined to maintain a competitive cost base and we will continue to review all areas of the business," the spokesman said.
Separately, Sir Richard Branson who runs BA's rival Virgin Atlantic, has accused British Airways of manipulating the statistics it has given to competition regulators who will have to decide whether or not to allow the alliance between BA and AA to proceed.
Mr Walsh responded, in a live radio spat between the two airline chiefs, by saying that Sir Richard Branson was trying to recreate the feud that existed between the airlines during the 1990s, when British Airways was accused by Virgin Atlantic of using "dirty tricks" to stymie Virgin's business.
Mr Walsh and Sir Richard were discussing the proposed alliance of BA and AA, to which Virgin objects fiercely. From today the slogan ’No Way BA/AA’ will be painted on the side of his company’s planes.
Speaking on BBC Radio 4’s Today programme, Sir Richard said he expected regulators to reject the merger. “The competition authorities listened to us twice before and rejected the idea of BA and AA working effectively as one airline because they believed it to be anti-competitive,” Sir Richard said.
“We believe nothing has changed, and we are going to wage a major battle to try to stop the two biggest carriers in the world from effectively working as one carrier, being able to sit down behind closed doors and fix prices and, we believe, damage the smaller competitors on the routes.”
He added: “The market competitor, massively, is BA. If you then put American Airlines on top you are talking about 65 per cent of the market. And the danger is that BA and American together will be able to go into travel agents and say, ’Look, we have 65 per cent of the market, and 65 per cent of your business is coming our way. Next year we want you to make it 68 per cent, the year after that we want you to make it 71 per cent.”
But Mr Walsh said the new deal, which also involves Spanish carrier Iberia, would be good for passengers and good for the aviation industry.
He told the programme that the background had changed completely since Virgin's feud with BA in the 1990s. He said the industry had moved on since the introduction of the ’open skies’ agreement, freeing up transatlantic routes.
Mr Walsh said: “These arguments are old, they are out of date, it’s time to move on. We have got a new operating regulatory environment, a new competitive environment - move with the times.”
He added: “This is an issue that will be assessed by the competition regulators, the experts in this field. And it’s only if they believe that this is more convenient for the consumer, that this is pro-consumer will it be approved.”
Similar proposals between BA and AA were rejected in 1997 and 2001.
The enmity between BA and Virgin Atlantic resumed again two years ago, when Virgin Atlantic blew the whistle on a price-fixing conspiracy between the two airlines.
It has emerged that Virgin has made a £32.5 million provision in its latest accounts to cover costs arising from its role in the criminal conspiracy with BA to fix the fuel surcharges levied on fares for long-haul flights to and from the UK.
The airline escaped prosecution by the US and UK competition authorities for blowing the whistle but it has been unable to escape a civil action brought in the US, which is forcing the two airlines to reimburse passengers who paid the illegally fixed surcharges.
Under the settlement, which was provisionally agreed in February, a total of $59 million (£33.3 million) can be repaid to US ticket purchasers and up to £73.5 million to UK purchasers.
Courtesy: Times Online
The move is being targeted at senior and middle managers, including some of the airline's technical management staff.
Staff have been given the option of applying for voluntary redundancy but unions fear that compulsory redundancies will follow if not enough people take up the offer.
The airline, which last month announced plans to combine routes, pricing, sales and marketing with American Airlines to create a powerful new transatlantic carrier, wants to wipe up to £170 million off its wage bill by getting rid of swathes of senior staff - amounting to about 3 per cent of the total 42,000 strong workforce.
Letters offering severance deals to managers on salaries from £40,000 to £250,000 will be sent out on September 25, with managers expected to leave by New Year's Eve.
Willie Walsh, chief executive of BA, gathered 150 of his most senior managers yesterday to give them the bad news and blamed the high price of oil and the economy.
In a statement, the airline said: "We are in the worst trading environment the industry has ever faced and we must take action to offset the combined effects of the continuing global economic downturn, weakened consumer confidence and high fuel prices."
A spokesman added that employee costs were now second only to fuel costs, which are expected to rise by £1 billion this year to more than £2 billion.
Although the price of oil has been falling from a peak in mid-July, any benefit to BA has been wiped out by the sharp drop in the value of sterling, particularly against the dollar.
BA is also battling a general weakening in demand, with August traffic figures released by the airline showing a 2.7 per cent fall in its load factor - a measure of how full its planes are - compared to 12 months earlier.
BA also gave warning that the outlook for premium travel remained “uncertain” until after the summer break. The total number of passengers carried by the airline fell 3.2 per cent to 2,988,000 compared to August last year.
"We are determined to maintain a competitive cost base and we will continue to review all areas of the business," the spokesman said.
Separately, Sir Richard Branson who runs BA's rival Virgin Atlantic, has accused British Airways of manipulating the statistics it has given to competition regulators who will have to decide whether or not to allow the alliance between BA and AA to proceed.
Mr Walsh responded, in a live radio spat between the two airline chiefs, by saying that Sir Richard Branson was trying to recreate the feud that existed between the airlines during the 1990s, when British Airways was accused by Virgin Atlantic of using "dirty tricks" to stymie Virgin's business.
Mr Walsh and Sir Richard were discussing the proposed alliance of BA and AA, to which Virgin objects fiercely. From today the slogan ’No Way BA/AA’ will be painted on the side of his company’s planes.
Speaking on BBC Radio 4’s Today programme, Sir Richard said he expected regulators to reject the merger. “The competition authorities listened to us twice before and rejected the idea of BA and AA working effectively as one airline because they believed it to be anti-competitive,” Sir Richard said.
“We believe nothing has changed, and we are going to wage a major battle to try to stop the two biggest carriers in the world from effectively working as one carrier, being able to sit down behind closed doors and fix prices and, we believe, damage the smaller competitors on the routes.”
He added: “The market competitor, massively, is BA. If you then put American Airlines on top you are talking about 65 per cent of the market. And the danger is that BA and American together will be able to go into travel agents and say, ’Look, we have 65 per cent of the market, and 65 per cent of your business is coming our way. Next year we want you to make it 68 per cent, the year after that we want you to make it 71 per cent.”
But Mr Walsh said the new deal, which also involves Spanish carrier Iberia, would be good for passengers and good for the aviation industry.
He told the programme that the background had changed completely since Virgin's feud with BA in the 1990s. He said the industry had moved on since the introduction of the ’open skies’ agreement, freeing up transatlantic routes.
Mr Walsh said: “These arguments are old, they are out of date, it’s time to move on. We have got a new operating regulatory environment, a new competitive environment - move with the times.”
He added: “This is an issue that will be assessed by the competition regulators, the experts in this field. And it’s only if they believe that this is more convenient for the consumer, that this is pro-consumer will it be approved.”
Similar proposals between BA and AA were rejected in 1997 and 2001.
The enmity between BA and Virgin Atlantic resumed again two years ago, when Virgin Atlantic blew the whistle on a price-fixing conspiracy between the two airlines.
It has emerged that Virgin has made a £32.5 million provision in its latest accounts to cover costs arising from its role in the criminal conspiracy with BA to fix the fuel surcharges levied on fares for long-haul flights to and from the UK.
The airline escaped prosecution by the US and UK competition authorities for blowing the whistle but it has been unable to escape a civil action brought in the US, which is forcing the two airlines to reimburse passengers who paid the illegally fixed surcharges.
Under the settlement, which was provisionally agreed in February, a total of $59 million (£33.3 million) can be repaid to US ticket purchasers and up to £73.5 million to UK purchasers.
Courtesy: Times Online
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