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Airline Issues Strike Warning

Aerospace: If pilots walk out, British Airways says, it will postpone $10-billion order to Boeing.

July 11, 1996|From Bloomberg Business News

LONDON — British Airways said it would postpone orders for 68 Boeing Co. aircraft worth $10 billion and take a range of other drastic cost-cutting measures if its pilots go ahead with a strike set to begin Tuesday.

It was the latest in a series of warnings from BA about how a pilots' strike would affect its operations. Analysts and observers of the process are unsure whether the measures are bluster or fixed plans on which the airline would follow through.

In a direct threat to the most entrenched group of angry pilots, BA Chief Executive Robert Ayling said the company is considering the sale of its shorthaul Dan-Air carrier, which operates from Gatwick Airport south of London.

"Quite what the transaction would look like, it's too early to say," Ayling told reporters before talking to British Parliament members about an upcoming alliance with American Airlines Inc.

The strike threat, from the British Air Line Pilots Assn., comes as BA is attempting to show its alliance with American won't unfairly restrict competition in the airline business as Europe opens the industry to competition.

And the scuffle over its operations at Gatwick speaks to the heart of what's leading BALPA to strike. The union complains the 280 pilots with Dan-Air receive pay of $31,000 a year, less than a third of the average for the rest of BA's pilots.

BA, which employs nearly 600 at Dan-Air, claims pay must be lower on that carrier because its short-haul operations to European vacation resorts compete with many other airlines.

The airline said it also plans to ban employees from working overtime, stop recruiting new employees, cancel its advertising, end training programs and bar top managers from taking vacations during the strike.

Ayling briefed 200 senior managers earlier this week on the measures after the carrier's board of directors approved them.

The biggest-ticket item in the cost-cutting package was delaying the aircraft orders.

"The main objective remains to not have the strike, but we're concerned about the level of disruption if there were a strike," said BA spokesman Dave Snelling.

BA and BALPA officials resumed contract talks Wednesday aimed at averting the strike. After more than five hours of talks Tuesday, the two sides issued a joint statement saying they wished to resolve the dispute "as soon as possible."

The union, which represents 3,164 of BA's 3,844 pilots and flight engineers, says that a strike would cost the airline $62 million a day and cripple its operations.

Snelling said the airline could keep some planes flying with the 680 pilots and flight engineers who aren't members of the union. He said most of the flights would be grounded, however, because the board had decided to use the down time to accelerate refurbishment and maintenance of its aircraft.

BA carries 100,000 people a day, about two-thirds of them tourists, at this time of the year, Snelling said. He added that although the airline will try to send passengers to other airlines, it could be difficult because the strike would come at the height of the summer tourist season.

The union alleges that it's being asked to shoulder too much of the airline's plans to cut $1.55 billion of costs over the next three years.

It wants higher salaries for lower-paid pilots in BA's European operations out Gatwick Airport. It's also upset about BA's plan to cut the wage scale for new pilots by about 15%.

British Airways has said it's open to discussion on several of the pilots' demands. It has already offered, for example, to raise the pay of the Gatwick pilots by 9% in return for a similar increase in working hours.

The raise would come on top of BA's offer of a 3.6% pay increase for 1996, backdated to Jan. 1, and an increase of a half-percentage point above the rate of inflation in 1997. BA is also offering a bonus worth four weeks of pay.

Snelling said BA might not be able to offer a bonus next year if the pilots proceed with the strike.

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