LONDON - British Airways is risking its first major strike in a decade as Chief Executive Officer Willie Walsh presses unions to accept almost 4,000 job cuts he says are needed to reduce costs and survive the recession.
"There is every sign that a conflict is looming if this last throw of the dice does not succeed," Mick Rix, the leader of the GMB union, said in an interview before the start of talks at the Advisory, Conciliation and Arbitration Service. "BA needs to seriously shift its stance in the negotiations." British Airways, once the world’s most profitable carrier, wants to slash jobs and wages after total pretax earnings for the past 10 years were 1 billion pounds ($1.6 billion) lower than in the previous decade. Sales have been squeezed by competition from discount carriers Ryanair Holdings Plc and EasyJet Plc.
Walsh says lucrative business flights may never reach previous levels as a slump in demand forces a lasting change in travel habits. A strike would be the first major dispute involving directly employed staff at British Airways since July 1997, when flight attendants walked out for three days in a protest that wiped 110 million pounds from earnings.
Andrew Light, an analyst at Citigroup Inc., said that Walsh is right to press his case. "Strike risk is high but worth taking for permanent cost savings," Light wrote in a July 6 note. Walsh says British Airways needs more cost cuts even after the carrier reduced the workforce by 25,000 to 40,000 over the past nine years througha combination of job losses and less hiring.