21 July 2005
British Airways has warned advertising company M&C Saatchi that it may end the agency's £60 million-a-year deal.
It is one of a number of major contracts under review and is part of a plan designed to shave £300 million from BA's overall £4 billion procurement budget. It has already reduced its supply base from 14,000 to 2,000 in three years.
A BA spokeswoman told SM: "We are not unhappy with M&C, it is about best practice and it's the right time to do this. It's not just about driving down costs, it's about managing advertising spend effectively."
She added that the advertising contract would not be decided by e-auction, which helped the company reduce its PR spend by 25 per cent in May.
A shortlist of three or four potential agencies is now being drafted and those companies will be invited to pitch alongside M&C Saatchi. A final decision is expected in the autumn.