Under-fire BA begins management cull

As it slims down for another fight with Virgin, BA is offering voluntary redundancy to 1,400 managers...

Last Updated: 31 Aug 2010

BA boss Willie Walsh (who’ll be adorning the cover of next month’s MT) wants to cut the wage bill by £170m as he tries to steer the airline through a period of extreme turbulence. Soaring fuel costs and declining demand have already put paid to about 20 airlines – Walsh hopes that his cost-cutting drive, plus its recent tie-ups with Iberia and American Airlines, will stop BA going the same way.

Given that this amounts to about 3% of its entire workforce, BA is clearly aiming for a serious cull of its senior and middle management here, as it looks to trim its second biggest cost line (after – you guessed it – rocket fuel). So there’ll be some high-level casualties before the year is out: some of those being offered redundancy are earning up to £250,000. Walsh, who apparently delivered the bad news personally to his top brass yesterday, argues that BA had no choice: ‘We are in the worst trading environment the industry has ever faced, and we must take action to offset the combined effects of the continuing global economic downturn, weakened consumer confidence and high fuel prices,’ the airline said in a statement today.

But not everyone’s happy about Walsh’s rescue plan for BA – notably his old enemy Sir Richard Branson. The Virgin Atlantic boss, who spent most of the 1990s complaining about the dirty tricks BA was employing to keep Virgin under heel, is back on the warpath over its planned tie-up with AA. Branson reckons that since the combined entity will control about two-thirds of the transatlantic market, it’s bad for competition and bad for the consumer – precisely the reasons why the alliance was banned in 1997 and 2001. He’s even gone to the lengths of painting ‘No Way BA/AA’ on the side of all his planes.

In a live head-to-head on Radio 4 this morning, Walsh accused Branson of living in the past – he claims that the market has changed hugely since the 90s, that the new deal will be good for passengers, and that Branson shouldn’t be trying to open up old wounds. But then he would say that, wouldn’t he…

It’s a shame really: the recently-revealed price-fixing conspiracy between BA and Virgin might have heralded a new age of co-operation - until Virgin had to go and blew the whistle on the scam, in a desperate bid to save its own neck. Now we’re back to square one...

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