BA wastes no time in axeing 750 airport jobs

British Airways yesterday made an immediate start on its pounds 1bn rationalisation programme by announcing the closure of its contract ground handling business at Heathrow airport with the loss of 750 jobs.

BA also hinted that if other parts of the airline under threat of closure wanted to avoid a similar fate, then employees might have to agree to wage reductions.

BA's chief executive, Bob Ayling, said that part of the reason for the closure of the unit, BA Contract Handling, was because it could not make a profit "at current rates of pay".

The business, which provides ticketing, check-in, cargo and baggage handling services for 25 other airlines at Terminals Two and Three, had suffered from consistent losses running into millions of pounds, a BA spokesman said.

"We could not see any way of turning the business around and in the end there was no future in it."

All 750 staff will be offered voluntary redundancy or redeployment within BA as part of the airline's drive to cut costs by a pounds 1bn.

The plan, announced on Tuesday, will mean 5,000 job losses over the next 18 months but BA has pledged to take on an equivalent number of employees skilled in customer services and languages.

Mr Ayling said: "We have examined at length both the opportunities to increase our prices to our customers and to reduce our costs of the operation but have reluctantly concluded that it is impossible, at current pay rates, to maintain BA Contract Handling as a viable operation."

Some of the business will be transferred to Terminal Four but the rest will be parceled out to rival ground handlers. The BA operation had been losing market share as a result of fierce competition from eight other contract handlers operating at Heathrow.

BA's own ground handling operations are unaffected by yesterday's announcement but they too could be vulnerable in the longer term.

Areas targeted for closure or contracting out under the three-year programme to cut costs by pounds 1bn include check-in, baggage loading and refuelling, cargo handling, accounting and engineering.

Existing contracts being handled by the ground handling unit will be run down over the next six months and the business will close formally in March next year.