Is BA 'burying' its bad news?

When it comes to bad news, British Airways has an unenviable record. Now the national airline appears to be following the example of Government spin doctors by trying to bury it.

BA has chosen Wednesday - the day Lord Hutton issues his report on the suicide of Dr David Kelly - to announce massive job cuts.

There are suspicions that chief executive Rod Eddington has picked that date because the media will be focused on the Prime Minister's battle for political survival.

Critics are convinced that the timing of the announcement owes more than a little to the example of Jo Moore, the adviser to former Transport Secretary Stephen Byers. She suggested that September 11, 2001, was a 'very good day to get out anything we want to bury'.

Yesterday, a BA spokesman insisted that the date for the announcement had been fixed before it was known when Lord Hutton would be outlining his verdict.

'It is a complete coincidence. There is no intention of burying bad news,' he said.

But in a letter sent on January 19, when the date of publication for the Hutton report was known, Eddington invited union leaders to meet senior managers to hear British Airways' business plans.

'The business plan will be finalised during the next two weeks and will be communicated across the airline on Wednesday, January 28,' he wrote.

And sources at the company had earlier indicated that the details of planned job cuts would not be announced until February - before the airline puts out its thirdquarter results and two weeks later than they will now emerge.

Whatever the date, for the staff at BA, the message will certainly not be welcome- especially as the price of cost savings-will be at least 5,000 more jobs. Eddington first wielded the axe in January 2002. Then he told Financial Mail that cutting costs by £650 million and removing 13,000 jobs over two years would make the company the right size to cope with demand.

But at the time, rivals Michael O'Leary

at Ryanair, Sir Richard Branson at Virgin Atlantic and Ray Webster at easyJet all warned that the cuts would have to go deeper because it was impossible for an airline with 47,000 staff to compete with the lean budget airlines, which have many fewer staff.

As O'Leary said: 'The cost base has got to be reduced, starting with all those people swanking around Waterside - BA's lavish HQ near Heathrow airport --drinking cappuccino and doing bugger-all.'

The future of BA depends largely on the success of attracting premium passengers on the transatlantic route and there are signs that these lucrative customers are coming back.

Traffic for all airlines across the Atlantic rose 14.8% last month and

16.2% on Pacific routes.

BA says the rise in premium traffic was creating 'some improvement' in the revenue outlook.

But even if more passengers choose to travel in style, Eddington faces greater competition in the UK and on the Continent from no-frills carriers. And the only way to compete is on cost. Even though there are signs of recovery in business travel, it has not been as fast as BA had predicted.

Eddington admits the past two years have been 'pretty tough'. Added to that, he says, BA is facing 'fierce and growing competition' from no-frills carriers such as Ryanair and easyJet.

Eddington has also admitted that the airline's pension fund needs to be topped up by a staggering £133 million each year for the next ten years. Just one of those payments is enough to wipe out nearly all of last year's profit.

Next week's announcement will not bring much joy to Eddington. Despite his image as a hatchet man, the Australian has gone to enormous lengths to ensure there are no compulsory job cuts.

He is likely to tell union leaders that this is still his intention. But if he underestimates once again the size of the cuts BA needs, one thing is clear - next time he risks being one of the grim statistics.