Job cuts agony looming at BA

BRITISH Airways chief executive Rod Eddington pointed to massive job cuts when he told staff he wanted to raise operating margins to 10%.

That indicates £550m savings from last year when margins were just 4.1%. 'Our costs will have to come down,' he said. Most cuts will have to come from payroll, the biggest slice of overheads at £2.4bn, and one of the few which BA can control.

The shares leapt 7 1/2p to 227 1/2p, but achieving big savings from heavily unionised airline staff can be a slow and bitter process. Eddington's predecessor Bob Ayling provoked a huge and damaging strike when he tried.

Meanwhile, Irish challenger Ryanair (operating margin 23%) unveiled plans to quadruple in size by 2010 to overtake BA as Europe's biggest airline.

'If they can carry 36m passengers with an average European ticket price of £204, we can carry 40m with an average price of £36,' said chief executive Michael O'Leary. It is buying up to 150 new Boeings, carrying 189 passengers each. The shares fell 3p to 389p.