British Airways may offload managers

British Airways Plc, Europe's third-largest carrier, will offer incentives to quit to as many as 2,000 managers as it seeks to slash the wage bill amid an economic slowdown and higher fuel costs.

About 300 managers are expected to accept the terms, Chief Executive Officer Willie Walsh said today in a Bloomberg Television interview. Walsh said he is “accelerating” job eliminations planned by March and will require managers to decide by Dec 31. Severance packages will be offered to managers including senior executives, Michael Johnson, a spokesman for the London-based carrier, said today.

“We are in the worst trading environment the industry has ever seen and, like all airlines, we have to identify areas where we can reduce costs,” Johnson said. “It is entirely for individuals to decide what is best for them.”

The fuel bill at British Airways probably will surge 50 per cent this year, even after the price of oil has declined from a record $147.27 on July 11, the spokesman said. More than two dozen airlines have ceased flying or filed for bankruptcy this year. British tour operator XL Leisure Group Plc collapsed today and Zoom Airlines, a trans-Atlantic service from London's Gatwick airport, folded Aug 28.

British Airways rose as much as 8.75 pence, or 3.5 per cent, to 259.75 pence in London trading and was up 1.4 per cent at 11:14 am. The stock has dropped 18 per cent this year, valuing the carrier at £2.93 billion ($5.19 billion).

Fare Increases: Walsh said on Aug 1 that fare increases are “inevitable” and that the carrier will trim seating capacity. The CEO plans to combine the airline with Madrid-based Iberia Lineas Aereas de Espana SA to lower spending on planes, maintenance and staffing. British Airways is seeking US antitrust approval to deepen ties with AMR Corp's American Airlines.

As chief executive officer of Aer Lingus Plc, Ireland's second-largest airline, from October 2001 to January 2005, Walsh rescued the carrier from bankruptcy by eliminating one-third of the workforce and reducing fares.

British Airways had 45,140 employees as of March, down 6 percent from a year earlier.

The job reductions at British Airways may shave as much as £170 million from costs, the Daily Mirror reported, citing a person at the airline it didn't identify.

Letters offering severance deals to managers earning £40,000 to £250,000 will be sent out on Sept 25 and firings may follow at the end of the year if a majority do not accept, the newspaper said.

Traffic at the carrier fell 1.6 per cent in August as slowing economic growth restrained demand for leisure travel. “We continue to see difficulties in North America and the UK,” Treasurer George Stinnes said on Sept 3.