British Airways will not reach a key profitability goal this year due to high fuel prices but has ruled out forced job cuts, new boss Willie Walsh said today.
Willy Walsh has ruled out forced redundancies
Mr Walsh also said the airline planned to invest £100 million on new business-class seats and in-flight entertainment amid pressure to improve customer service and increase long-haul traffic.
Mr Walsh, who over the weekend replaced outgoing chief Rod Eddington to head Europe's third-largest airline, said today BA would not this year achieve Eddington's 10 per cent operating margin target.
But he said: "I do believe it [the target] is achievable. With fuel prices where they are, we clearly are flying into very significant headwinds . . . I don't have a date in mind when we will achieve it."
The airline reported an 8.5 per cent operating margin in the first quarter to end-June, but fuel costs have soared since then.
Mr Walsh, former chief executive of Aer Lingus, also ruled out forced redundancies even though the airline has set a target to reduce labour costs by £300 million by end-March 2007.
He declined to confirm reports that BA hoped to cut staff numbers in some areas by 15 per cent when it consolidates operations and adopts new technology as part of a move to a new terminal at Heathrow airport in 2008.
BA currently operates from two terminals at Heathrow. Analysts expect the move to T5 will result in thousands of job losses.
Labour relations will be a priority for Mr Walsh - known for cutting one-third of Aer Lingus's workforce - following three summers of industrial strife at BA's London operations and ahead of negotiations to change working practices at Heathrow.
Mr Walsh also said there would be changes to the airline's regional short-haul business. He signalled there were no plans to lift its stake in Spain's Iberia or merge with a US airline, saying consolidation was not an immediate priority until there were regulatory changes.
He repeated there were no immediate plans to buy new aircraft but said the carrier was evaluating a range of models including the Boeing 787, 777 and the proposed 747 Advanced, as well as the Airbus A350 and A380.