RSS Feed (xml)
British Airways says it plans to cut a further 1 , 200 jobs after
reporting a first-half loss for the first time. The job loss
announcement means the airline will have shed a total of 4 ,900
positions by March 2010. The company suffered a loss before tax of
£292 m ($485 m) for the six months to the end of September, compared
with profits of £52 m a year earlier. The first half of BA's
financial year is usually stronger because it covers the summer
holiday season. BA said revenue over the six-month period was down
13.7 % to £4.1 bn, compared with £4.75 bn in 2008. "Aviation remains
in recession with revenue likely to be £1 bn lower this year," said
BA chief executive Willie Walsh. He told the BBC that this had been
the "most difficult year in the history of the aviation industry".
"All airlines are facing the same pressure. Operational changes at
British Airways are absolutely necessary to improve the performance
of the business," he said. BA has already achieved 1 ,900 global job
reductions by natural wastage, voluntary redundancies and reduced
overtime. Strike ballot BA is currently in a battle with unions over
changes to jobs and pay. It wants to cut the number of cabin crew
staff on its long-haul flights from 15 to 14 , with the change
coming into effect on 16 November. The company is also proposing a
two-year pay freeze. It says the changes are essential to its
survival. On Thursday, the Unite union said it would continue with a
strike ballot of British Airways cabin staff over the changes,
despite its legal challenge to the new working patterns being
delayed. Unite had sought a High Court injunction to have the changes
blocked, but the full trial will now not go ahead until 1 February.
Unite said staff would "unwillingly" work the new schedules from this
month but it would still ballot for a strike. The result of the
strike vote will be known on 14 December. Analysts said the latest
figures could be used as ammunition by the union. "These weak results
will underscore their fragility to unions opposed to wholesale
restructuring that is required if BA aims to survive this downturn,"
said Saj Ahmad from Gerson Lehrman Group. Shares in BA rose 6.2 % to
197.8 p as the market welcomed news of the extra job cuts and
measures to reduce costs. BA said its half-year operating costs were
down 8.7 %, despite the weakening of the pound, and fuel costs were
also lower by 17.8 % compared with the same period last year. Pension
scheme BA's half-year results revealed a growing problem with its two
final-salary pension schemes. Both are now closed to new joiners, but
although the older scheme (APS) now consists mainly of BA
pensioners, just under half of the 70 ,000 members in the newer
scheme (NAPS) are still working for the airline. In the past six
months, the surplus in the older APS scheme fell from £860 m to £27 m
while the deficit in the NAPS scheme ballooned from £1. 167 bn to
£2.66 bn. The value of the assets in both schemes rose, largely due
to this year's huge rebound in share prices. But this has been
outstripped by the rising cost of paying for the pensions once they
come into payment. The BA pension scheme trustees, in their interim
valuation, have assumed that the scheme's assets will earn a smaller
income in the future. The implication is that BA will have to increase
the already large deficit payments it makes to its final-salary
schemes, which it is obliged to do to ensure that they eventually
return to balance. A spokeswoman for the airline said it was
currently paying in £335 m per year into APS and NAPS, and that over
the past three years, the company has paid in £1.8 bn to cover its
current payments and the deficit.
