BA slashes cabin crew bill by a third

British Airways has slashed the wages bill for some of its cabin crew by nearly one-third since the settlement of last year's strike which cost the airline pounds 125m.

BA disclosed yesterday that a fifth of its 15,000 strong cabin crew had been re-employed on salaries which are 30 per cent lower. The cut in the wages bill helps explain how BA achieved a 7 per cent improvement in productivity in the third quarter even though it took on another 2,200 staff.

The efficiency improvements were not enough to mask the impact of the strong pound, the Asian economic meltdown and last December's Heathrow fire which conspired to lower profits by 29 per cent for the three months October to December.

Profits for the period declined from pounds 113m to pounds 80m due mainly to a pounds 42m exchange rate loss caused by the strength of sterling. However, BA was also hit by an unexpected pounds 32m charge from General Electric for engine maintenance work on the BA fleet.

The slump in bookings and reduction in yields caused by the downturn in Asia is estimated to have reduced profits by pounds 15m-pounds 20m.

Sir Colin Marshall, BA chairman, said: Overall trading conditions are expected to remain favourable despite difficult conditions in the Far East and the political situation in the Gulf."

- Michael Harrison

Investment column, page 20