Cost cutting is vital for survival, says BA chief

Author: Press Association

Chief executive Willie Walsh told the company’s annual meeting in London that
he wanted to achieve 3,700 job losses by next March on top of 2,500 which
have gone since last summer.

“There is no point trying to skirt around the fact that we need a fundamental
and structural change to our employee cost base.

“These changes are essential to our short-term survival and, more importantly,
to our long-term viability.”

Mr Walsh said talks, which are continuing with trade unions to achieve the job
losses and agree a pay freeze, were delivering some “very positive” results
but he warned unions that he was not exaggerating the difficulties BA faces.

“We have pulled no punches. It is essential for our short-term survival and
long-term viability that we secure permanent change in our employee costs.”

BA chairman Martin Broughton said the aviation industry was facing the biggest
crisis it had ever known and he warned that the market for premium air
travel may never fully recover.

He told shareholders that BA made an operating loss of more £300 million in
the final quarter of the last financial year, the worst quarterly result in
its history.

“This is no ordinary aviation downturn. This is no cyclical swing that will
automatically turn up again.”

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

The company has paid £1.8 billion into its two pension schemes in the past
three years – more than its profits.

“The deficits remain huge and, in the current climate, the company will not be
able to afford to increase its own contribution.”

Despite BA’s financial problems, Mr Broughton said the company remained
opposed to state aid for airlines and took a swipe at Virgin boss Richard
Branson, who had raised the issue recently.

“We should not be too critical of Richard Branson. After all, he is rather
worried about his own airline and he knows quite a lot about subsidies
because he’s been welcoming them into his train operations for years.”

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