Blaming the threat of war in Iraq for putting the brakes on recovery, British Airways
insisted yesterday that its new target of a 10% reduction in spending by 2005 could be achieved without further job cuts. BA intends to copy the paper-free “e-ticketing” of its no-frills competitors, and increase online working for employees to help cut costs by encouraging what it calls a “self-service” culture.
“The market has not recovered as far as we had anticipated,” a spokesman said yesterday. “We see our recovery being delivered by cost savings rather than higher revenues.”
The fresh £450m of savings is in addition to the £650m announced in BA`s radical future size and shape program a year ago, which included a target of 13,000 job losses by March 2004.
“One year on, we are on track to deliver, but tough market conditions mean new, additional cost-saving initiatives are also needed over the next two years.” So far, the restructuring appears to have paid off, with the carrier chalking up a £25m profit in the quarter to December, compared with a £335m loss last year. But its share price has slid since the start of the year and analysts have tipped it to drop back out of the FTSE 100 in this month`s index reshuffle.
Mr Eddington denied that now, with war looming in the Middle East, was a bad time to issue a new business plan. “We decided we cannot put our business on hold. Our focus must be on managing what we can control while preparing for the impact of war.”
BA said it wanted to use the Internet “in a better and smarter way” to help achieve the £450m savings. As well as 100% e-ticketing by 2005, it wants to streamline check-ins at some of the busiest terminals and transfer 80% of staff administration online.
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