Cost-cutting BA 'to axe 4,000 jobs'

British Airways unveiled plans today to cut costs by £300m (€435m) in a move expected to lead to up to 4,000 job losses.

The airline said it wanted to reduce employee costs in its head office and support functions by 30% and by 15% in operational areas.

The job cuts will be achieved by voluntary severance, early retirement, natural turnover and restricted recruitment as well as unpaid leave and part-time working.

The cuts will be in addition to 13,000 job losses achieved by this March under a previous cost-saving programme.

Unions were also told that BA was urging pay restraint this year to help achieve the target savings.

Chief executive Rod Eddington said: “To maintain our position as a world-leading airline, we must further reduce our costs so we can invest in our products and people.”

BA did not say how many jobs will be lost as a result of the announcement, but it is expected to lead to cuts of between 3,000 and 4,000 posts, including managers and administration staff.

Flight and cabin crew and ticketing and check-in areas are not expected to be largely affected by the fresh round of job losses.

BA said its current number of flights would be maintained, but gave no details of its performance in recent months ahead of new financial figures being published next month.

Mr Eddington said: “We must make the necessary changes in partnership with our staff and trade unions, and without impacting on the service our customers have rightly come to expect.

“We have shown we are able to meet our targets through voluntary means and that will remain our aim.

“The last two years have been about survival – now we want to be in a position to prosper.”

Mr Eddington said BA had made "considerable progress" on reducing costs over the past two years, but revenue fell sharply during the same period.

He said: “Our outlook on revenue is slightly better. However, it is clear our cost base still remains too high.”

The changes would help deliver an operating margin of 10%, said Mr Eddington, allowing BA to “share further benefits” with its staff.

Proposals for a new bonus scheme, linked to an operating profit margin, for BA’s 47,000-strong workforce will be taken to the BA board.

BA directors met union officials today to explain the new plan and there were a series of briefings for staff.

Mr Eddington has also written to every employee with details of how they might be affected.

BA faces an extra payment of £133m (€193m) a year on its pension payments, and talks were expected to be held on whether staff would be asked to contribute more.