Cost cutting BA 'to axe 4,000 jobs'

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The Independent Online

British Airways unveiled plans today to cut costs by £300 million 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 under the Future Shape and Size initiative embarked on after 11 September.

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 said last November that it had already succeeded in saving £701m under Future Shape and Size against an initial target of £650m by March 2004. A further £450m efficiency programme was launched last March.

But the airline also disclosed that despite the huge efficiency gains made in the past two and a half years, its labour costs were continuing to increase. In the second quarter from June to September they rose 1 per cent to £516m, sparking concern among analysts about BA's excessive wage bill.

Chris Tarry, an independent aviation analyst, said: "Future Shape and Size was an achievement in the circumstances but a lot of what was achieved was temporary and a large part was voluntary. As BA comes to the next stage of efficiency improvements it becomes more of a challenge. The reality is that there has been a structural downward shift in fares so each pound of labour cost is generating less revenue and BA has to address this."