BA bosses spell out 'biggest ever crisis'

British Airways bosses today spelt out the “biggest ever crisis” facing the aviation industry as they faced protests from workers and shareholders over plans to slash costs, cut thousands of jobs and freeze pay.

Chairman Martin Broughton warned that the market for first class and business travel may never recover and admitted BA needed to raise its cash reserves to survive the crisis.

Workers staged protests outside the company’s annual meeting in London, calling on shareholders to back their stance against the company’s plans, and parading cages full of lemmings to show their anger at how the company was being led.

Chief executive Willie Walsh said he was confident the deadlock with unions over the cost-cutting plans would be broken, adding there was “no reason” why workers should take industrial action.

The executives faced strong attacks from shareholders over their plans to cut costs, with one employee accusing them of being in the “fat cat club”.

A succession of shareholders raised complaints with the board about the company’s performance and the measures being proposed to cut costs, including 3,700 job losses and a two-year pay freeze.

One shareholder, who also works for BA, accused the management of “corporate greed” for refusing to accept an offer from trade unions to cut costs.

He asked if it was morally acceptable for the “fat cat club” to continue “licking cream” while workers offered to cut their pay and conditions and shareholders saw the value of their investments fall.

Mr Broughton replied that the cost-cutting proposals affected the entire company, including the board of directors.

He said the firm was focusing on maintaining services to customers but he spelt out his belief that the downturn in air travel and the need to cut costs were not temporary problems.

“The recession will be temporary but it has left a permanent impact on our business.”

Another shareholder and current employee accused Mr Walsh of “talking down” the airline with his warnings that it faced a fight for survival, saying he was bringing the company into “disrepute”.

Mr Broughton replied that Mr Walsh had merely been spelling out the problems BA faced and was not misleading anyone, saying he had given a “realistic assessment” of the problems BA was facing.

Mr Walshtold a news conference later he remained committed to achieving agreement with the unions on cost savings, but had pledged not to comment publicly about the negotiations, which will reconvene on Thursday.

“I am confident we will be able to do a deal,” he said.

Mr Walsh revealed that BA was planning to reconfigure some of its aircraft to reduce the number of premium seats from 70 to 52 in view of the fall in first class and business travel and said it was “possible” BA would have a single class operation from its airport at Gatwick.

Mr Broughton also warned that the deficit in BA’s pension funds is likely to have worsened by more than £1bn (€1.66bn) in the last year.