New Boss At British Airways
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eTurboNews The former head of Aer Lingus, Willie Walsh, has taken over as chief executive of British Airways. On his first day in the job he praised the record of his predecessor, Sir Rod Eddington, who pursued a cost-cutting program and reduced BA staff numbers by 14,000 over five years. More cuts are expected when BA relocates its Heathrow operations to the new Terminal 5 in 2008.
"Terminal 5 gives us a once in a lifetime opportunity to provide a world-class service for customers to work with the unions in a way that is relevant to the 21st Century. We will address working practices in a structured way," said Walsh. "We have made tremendous progress in the last five years but I've been very impressed by the fact that everyone I've met at British Airways believes there is room for further improvement."
Willie Walsh arrived at BA five months ago and worked alongside Eddington in the hand-over period. It was a period that saw militant action by BA workers who disrupted summer services with wild-cat strikes in the wake of the sacking of some catering workers.
Labor unions at BA are afraid Walsh would introduce wide-ranging cost-cutting measures such as he introduced at Aer Lingus to turn around the ailing Irish national carrier and bring it into profitability. He became Aer Lingus chief executive in the immediate aftermath of 9/11 and transformed the carrier from near bankruptcy to one of Europe's most profitable airlines. But in doing so he cut the workforce by one third.
He moved swiftly to assure BA staff that there would be no compulsory lay-offs in the move to Terminal 5, and that any job cuts would be pushed through by negotiation. The unions have speculated that 15 percent of BA's workforce would lose their jobs as part of a drive to reduce costs in the next three years.
"There are further opportunities for efficiencies all across the airline which we will need to deliver to ensure our financial viability and to allow us to invest in the future," said Walsh.
Last month, BA announced a rise of 36 percent in first quarter profits and managed to maintain yields in spite of increases in fuel costs. Walsh has set a target of reducing BA's cost base to achieve a 10 percent operating margin. "We need to be able to make sure that we can invest in our assets and in our people. If it hadn't been for fuel costs, we would have got a lot closer to ten per cent, but I do believe it's relevant and it is achievable," he said.
There is no chance that Walsh would turn BA in the direction of a no-frills budget airline as he did at Aer Lingus. "Within a year we will make significant investments in our Club World business class cabin, in flight entertainment and in the ba.com web site," he added.
With a much-improved balance sheet, BA may also be eyeing the prospects for taking a lead in air industry consolidation especially in Europe.
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