Staff may strike as BA cuts 5,000 jobs

Unions representing British Airways staff last night threatened to hold strike ballots after the company revealed plans to cut 5,000 jobs in an attempt to slash costs by pounds 1bn in three years.

BA refused to rule out compulsory redundancies to achieve the job losses, but pledged to recruit an extra 5,000 staff in other areas and to maintain the total workforce at around its current level of 49,000.

In a briefing to 350 senior managers, Bob Ayling, chief executive, attempted to dampen speculation of an imminent move towards a "virtual corporation" where most functions would be contracted out to different firms with varying pay rates and working conditions. But he warned that failure to achieve the cuts would lead to the outsourcing of several key activities.

"The competition is getting better and more efficient. Our customers expect more, but our cost of providing a seat has risen faster than the price customers pay in a highly competitive marketplace," Mr Ayling said.

The plan involves finding 5,000 staff willing to take voluntary redundancy from BA over the next 18 months, beginning in November. Most of those affected would be at Heathrow and Gatwick, where the company admitted it might have to resort to compulsory job cuts. A similar number of staff with customer service and language skills would be taken on.

Mr Ayling said he did not expect "wholesale job losses". He told managers: "Measures will be put in place to ensure that we treat our employees in the best possible way. Jobs will also be created and jobs secured."

Candidates for drastic efficiency savings included check-in functions and baggage handing, which would be carried out at what BA describes as "external market prices". If the desired cuts were not achieved, and if the measures proposed by management teams failed to cut BA's cost base, these functions would be sub-contracted.

In addition BA's engineering division, which employs 10,000 staff engaged in aircraft overhaul and servicing work, could be partly sold off. A company source suggested BA would not necessarily need to maintain a majority stake in the operation. Earlier this year the airline said it had no plans to hive off or float the engineering division.

BA also said it planned to double the size of its business from routes franchised to other airlines. The carrier earns pounds 50m from franchised routes, often to former BA destinations.

As unions met with management last night, officials wereraising the possibility of industrial action. It is understood that George Ryde, senior negotiator for the aviation industry at the Transport and General Workers' Union, has received pledges of support from other European unions. Union representatives at other airlines on the continent have told Mr Ryde that they will refuse to handle BA flights if its employees walk out.

Workers' leaders at BA believe, however, that management may "throw money at the problem" and that voluntary redundancy terms will be sufficient to secure the necessary job losses. It is also likely that some other unions will be less willing to take industrial action.

BA's workforce has grown from 39,500 world-wide at the time of privatisation in 1987 to 55,000 today, of which 49,000 are employed in the UK.