British Airways fighting for survival, CEO says

LONDON — British Airways’ proposed 3,700 job cuts are essential to the company’s survival as it faces the “eye of the storm” ravaging the airline industry, Chief Executive Willie Walsh said Tuesday.

Thousands of BA ground staff have railed against the planned job cuts and an accompanying two-year pay freeze, saying the airline should focus on cutting costs elsewhere. Negotiations over a potential deal have been left deadlocked.

Walsh told investors at the company’s annual general meeting that the drastic expenditure cuts were necessary to keep BA viable as the global economic downturn eats away at demand for air travel.

The airline has also announced plans to ground aircraft, slash seat numbers and postpone taking delivery of a dozen new Airbus A380 superjumbos.

“There is no point trying to skirt around the fact that we need a fundamental and structural change to our employee cost base,” Walsh said as scores of trade union officials staged a protest outside the meeting.

“These changes are essential to our short-term survival and, more importantly, to our long-term viability,” he added.

The proposed job cuts, to be made by next March, would come on top of the 2,500 positions that have already been axed since last summer.

Pilots for the airline voted on Monday to accept a 2.6 percent pay cut as part of a package of measures to save BA some 26 million pounds ($41.9 million).

But thousands of baggage handlers and check-in staff are opposed to the cost-cutting plans.

Their union, the GMB, said they are angry that the lowest paid employees at the airline were being asked to give up their family friendly flexible working patterns and accept permanent changes to their salary conditions.

Outside the meeting, GMB and Unite union members handed out letters to shareholders calling for their support and also paraded two cages full of lemmings to make their point.

“We want shareholders to press the company to step back from confronting its workforce and to instead find a sensible way forward through what we recognise are difficult times,” said Steve Turner, a spokesman for Unite.

GMB spokesman Mick Rix said “the broadest backs must carry the heaviest loads.”

“Why should our members … continue to subsidize the highest earners, when the very highly paid in the company are not accepting permanent change and leading by example?” Rix said.

BA called in a government-backed mediator earlier this month to help hammer out a deal with the unions and avoid a potentially damaging strike. Talks are expected to resume on Thursday.

Walsh on Tuesday rejected criticisms that he has exaggerated the crisis facing BA in an attempt to push through the unpopular cost-cutting changes.

“We have pulled no punches,” he said.

The CEO also acknowledged that his pledge to not draw his salary of 61,250 pounds this month — as he called on other workers to do the same — would cause him “little pain.”

Around 7,000 of the airline’s 40,000-strong work force responded to that call, applying for a voluntary pay cut, which the carrier said would save it up to 10 million pounds ($16 million).