15 December 2005
We ask the experts how you can bring new life to your company in 2006
posted 11:27am 06/01/06
Willie Walsh, who took over as BA chief executive in October, said the airline needed to "re-energise efforts to deliver a competitive cost base".
A spokesman confirmed that purchasing would be among those hit: "It is fair to say that the procurement department will have to cut senior management by 50 per cent."
In a statement, Walsh said the reduction of 597 managerial jobs across the organisation marked the start of a "renewed effort" to achieve a 10 per cent operating margin, by removing duplication and further streamlining the business.
"We must lower our costs so that we can fund future investment in our business," he added. In October he announced the company's plans to invest in its Club World business, in-flight entertainment and the ba.com website over the next 12 months.
Walsh, who was previously chief executive of Aer Lingus, is reported to have slashed costs by 30 per cent and cut a third of its workforce while in charge of the Irish airline.
Staff consultation will take place over the next few weeks and a fifth of top executives from across BA will leave the business by April. Further reductions will be made until March 2008.
The airline estimates the move will save it £50 million and says it is part of a £300 million cost-reduction programme announced in January 2004.
A spokeswoman told SM
that BA's half-yearly results, reported in November, made it clear the firm needed to "re-energise cost-cutting".
The results estimate the Gate Gourmet dispute this summer - when BA staff staged unofficial strikes following the dismissal of hundreds of catering employees from the outsourced firm - cost between £35 million and £45 million.
BA made profits of £437 million with an operating margin of 10.2 per cent for the period April to September, which includes its most profitable months. The spokeswoman said the aim was to achieve 10 per cent throughout the year.
The procurement department, led by director Silla Maizey, has already experienced drastic cuts in the past few years. In 2002 the team lost more than third of its 300-strong workforce as part of 13,000 job cuts across BA in the wake of the 9/11 terrorist attacks.
No one from the BA procurement department was available for comment.