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BAA, the owner of Britain’s three biggest airports, is planning to cut up to 2,000 jobs, leading airlines to give warning that a lack of staff could result in even poorer service than passengers suffer already,The Times has learnt.
Ferrovial, the Spanish company that borrowed heavily to buy BAA last year, may be preparing to sell one or more of its airports. It has ordered each of its seven airports – Heathrow, Gatwick, Stansted, Edinburgh, Glasgow, Aberdeen and Southampton – to conduct a rigorous review of costs and staffing levels.
Despite heavy criticism throughout the summer over standards at Heathrow, Gatwick and Stansted, in particular concerning long delays at security and the shoddy state of terminals, the company is planning a significant cost-cutting programme to increase profits. Redundancies are planned in all departments except security, where the number of staff has risen recently in response to extra restrictions but is still insufficient to prevent the delays.
The cuts, which the company had hoped to keep secret until much later this year, will heighten concerns that Ferrovial is not focusing on the long-term interests of Britain’s key international gateways.
Ken Livingstone, the Mayor of London, said that Heathrow “shamed” the capital, and Kitty Ussher, the City Minister, claimed that the problems there could undermine London’s status as a leading financial centre.
Tony Douglas, who resigned as Heathrow’s chief executive last month, had said the airport was “bursting at the seams” and in some places “held together by sticking plaster”.
A BAA source told The Times: “Ferrovial have a huge debt burden and they can’t sustain that. They are really drilling down costs and there is going to be a complete restructuring of the business, with a couple of thousand jobs going. It cannot be the security staff but every other element of the business is up for review.”
BAA employs 15,000 people world-wide, including 13,000 in Britain. About 5,000 of its British employees are security screeners. Two thousand work in World Duty Free shops, another 1,000 work on airport operations, such as runway maintenance and inspections and allocating stands to aircraft, while about 4,000 work in support roles such as human resources, IT, planning and marketing.
A spokesman for easyJet said: “Any cuts which result in a deterioration in service in return for Ferrovial lining its pockets would be completely unacceptable to the travelling public. It sounds like a fast way of losing the few friends they have got left.” The spokesman added that the weak way that BAA’s monopoly was regulated meant that any cuts in staffing costs would translate into higher profits for the company rather than lower costs for the airlines and passengers using the airports.
Nigel Turner, bmi’s chief executive, said he would not be concerned about the job cuts if they were restricted to back-office staff who played no direct role in running the airports. “But I would be very concerned if there were any cuts to frontline staff.”
He said Ferrovial inherited an inefficient company that had provided a poor service for years. “We have only started to notice, in some perverse British way, since the Spanish took over. But the management are much more responsive than their predecessors.”
Gwyneth Dunwoody, the Labour chairman of the Commons Transport Committee, said last week that it was probably not in the national interest to have Heathrow run by a private foreign company focused on profit.
Douglas McNeill, transport analyst at Blue Oar Securities, said a cost-cutting programme would distract senior staff at a time when the company was dealing with two Competition Commission investigations. It will learn next month how much it can charge airlines at Heathrow and Gatwick for the next five years. Ferrovial has threatened to reconsider plans for a £4 billion reconstruction of Heathrow’s central terminals if the cap is set too low.
The commission is also investigating BAA’s near-monopoly in London and may announce as early as January that it is considering requiring Ferrovial to sell one or more of its airports.
A BAA spokesman admitted that there would be job cuts but said: “There is no final number. This is a simplification exercise aimed at support staff much more than frontline staff. It’s not simply about costs. It’s about building a much leaner and more efficient business.”
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It's good to have the spanish to blame for the disaster that Heathrow is now. Situation wasn't much better 3 years ago. Let's make the french buy our railways and we can blame them for that disaster as well...
Sunil Puri, Leeds,
Silly Ferrovial. Since it was formed in 1966 BAA had been characterised by rot, decay and dilapidation and not just in the infrastructure. It was a living advert for the perils of monopoly. Little more than twelve months after a quite possibly misguided acquisition Ferrovial now discovers that racism and sneering snobbery remain well entrenched in Britain today.
Ubi, Edinburgh, UK
It just shows how foolish putting public utilities and services into private hands can be. As long as operations like BAA can make enough to provide employment and develop the sites to a high standard that should be enough. Given all the envirionmental damage that an airport can deliver the obligation of an airport should be employment.
Surplus profit, fat cat directors and shareholder returns should not be on the agenda.
The lesson seems never to be grasped, e.g. Sea containers and GNER.
GNER a rail operator doing well, S.C a parent company in trouble. Remedy: Cut GNER to the bone, milk it and hope the paying customer won't notice or hand over the franchise. But what's to say the same won't repeat and do the end users ever benefit?
Tony Waller, London, England
Incompetents playing monopoly with the real world. You just gotta love it.
Governments should own the airports (& ports) and rent/lease space to airlines. In this way, voters could climb all over politicians when something is amiss. Where is the accountability here? What about security at these cash stripped airports?
DanO, Mount Vernon, USA
Yes, Ferrovial expect to make a profit on their investment. Why else would they have invested in the airports in the first place. The question is: do they plan upon making this profit through ongoing operation of the airports; or by resale. Either way, they need to make the airports more efficient. Two obvious ways are (aimed at the same productivity enhancement end point): outsourcing various functions; and increasing the productivity of the notoriously ineffective labour utilization - this is not to knock the employees necessarily, but rather the complacent management that has permitted gross inefficiencies to become accepted practice. I say lets give them the chance to improve things, after all they could hardly be worse than the legacy they have inherited from the prior management team.
Don Luker, Ellison Bay, USA
Watch out ICI employees !!!!!!!!!!!!!!!!! I guess that customer satisfaction is now completely unimportant in the quest for the mighty dollar/pound/euro.......
Bill Atkins, Rehoboth Beach, USA
Ferrovial bought BAA a year ago. I don't think they have any guilty of the bad working. Build new terminals and runways isn´t easy nor cheap. They are going to build a new terminal for BA in Heatrow and other runway in Stansted. Give them time to work. Or the problem is they are spanish? Now BA want buy Iberia. If they bought it, they don't want the Spanish Goverment split Iberia for competition problems. Just when a british company buy it..
Aitor, Granada,
I suppose it's a coincidence that their 5 year price review is under way at the moment.
colin f, Shrewsbury,
Looks like the British gov't have been watching how the Russians do business - i.e. let a foreign company get over committed and then critisize / threaten them to death. What price they will be revieved of Heathrow before 2012?
Brit, Moscow,
And the chaps in the City that put this deal together and the former shareholders will have already taken their pound of flesh and will claim no responsibility. They must be really proud.
Scamp, Aberdeenshire,
the service cannot get much worse!!
Chris, dubai, uae
Time to get tought with BAA and Ferrovial. If they have overborrowed and are now feeling the pressure then that is their problem. Britain's airports are too important to be treated as a cash cow by imprudent bankers. Break the company up and have the London airports managed separately and thus forced to compete. That is the only way we will get decent services and an end to the misery.
Paul Owen, Birmingham, UK
If any employees have to go, surely it should be the 2,000 working in duty-free. I've never understood this notion. Some people never fly at all. Why should those who do be rewarded by having access to duty-free goods? In any case, buying them adds to the weight of the aircraft and hence to the amount of fuel burnt, while the shops take up space that could be used to improve passenger comfort.
Barry, Wallington, UK
Ms Dunwoody obviously does not know it, but Heathrow is already run as a nationalised airport. The Government appoints its chronies to run the economic regulator (the Civil Aviation Authority) who in turn are rightly criticised by easyjet for being weak and ineffectual. In recent years, regulation of the airport by the CAA has focussed on promoting 'dialogue' between the airport and its customers, as it is these two parties that the CAA thinks 'know best'. In practice all this means is that the CAA has shirked from its regulatory responsibilities in the absence of a credible regulator. It has however allowed the CAA to maintain a low profile - not rocking the boat, and no doubt this in itself should secure a knighthoods for the CAA board. Shame that the travelling public lose out in the process.
Simon B, Surrey, UK
Ferrovial needs to recouperate some of its outlay the British government want to breakup the monoply of ownership.
If the British Government stopped passing onerous legislation which divert attention from the primary object of providing and good and prompt service to the passengers.Why does it take 14 yes FOURTEEN YEARS to give planning permission so the service at Heathrow can be improved.
Robert Peake, Malaga, Spain
So we now hear from the inside that Ferrovial overpaid for BAA, and now seem to be stuck with expensive debt they cannot afford. Maybe selling Heathrow will be the way out for them, as this seems to the political hot potato.
John Smith, London,
In the U.K. we sell any of our companies to anyone, we only have ourselves to blame.
We could learn a thing or to from the so called free market partners in Europe on there ability to break the law and protect there own companies from foreign ownership.
Adrian, Aldershot, England
Is anyone else concerned that there are twice as many people employed in their shops than there are employed than to make their airports actually work?
Simon, Sevenoaks,
I think this is disgraceful. Recently i travelled via standstead at the height of the summer season after checking in, i went straight to the gate and it took me an hour to go through security. I hasten to add this wasnt because of heightened security measures, it was because they didnt have enough staff on. If my flight had not been delayed i would have missed it. Franky our airports are an embarrasment to this country.
Stevie Middleton, Glasgow, Scotland
With the dramatic increase in the use of the internet and online booking technology it should be no surprise that Ferrovial are doing their bit to take advantage of this and streamline the airport side of the equation. They are just exploiting new technology. I think everyone would agree that anything to improve the check-in experience is a good thing. The unfortunate loss of jobs will soon be taken up by more useful employment in this still rapidly expanding industry.
Derwent Smithurst, Norwich, UK
remember how English pirates used to loot the Spanish Main.Now the Spanish pirates are looting us.
Dave Robins, West Drayton,
Well, I did well in selling my shares in BAA, and am glad I now no longer hold shares in an airprot company. I thought it pritty daft that a foreign company should own major UK airports. Sadly Heathrow has gone to pot of late , as other airports around the world have become better and more enjoyable to pass through. What a pitty some good UK person cannot buy up Heathrow and turn it into a first class airport. But , Mr Bown the Prime Miniters being scottish would not allow it,. But he is a non elected prime minster, or a dictator imposed by 20 people who so on the UK . we need a General Election to ieth afirm him in the job or get rid of him.
Patrick Walesby, Hereford,
So only one in thirteen BAA employees in the UK is actually trying to make the airport work? The other 12 are checking octagenarians' handbags for traces of nail polish, trying to flog you overpriced alcohol or fannying around at Head Office. Even the NHS manages to have a majority of medical staff compared with administrators, though only just.
Frank Upton, Solihull,
Whilst airlines try to put more and more aircraft into congested airports the airport owners will make no attempt to improve services. Once the airlines wake up to operating flights from less crowded airports and BAA starts losing business only then will things improve. Passengers are already avoiding Heathrow, sooner or later the airlines will realise, and then something will change.
Steve, Kegworth, UK
Sounds like the start of asset stripping to me!
David Grant, Belfast,
Britain 2007 - Sliding into the Abyss.
Price increase after price increase. Employers only wanting to pay minimum wage. House prices beyond reach of many people.Immigration out of control.Crime out of Control.
And many large organisations cutting staff, making the remaining staff work longer for less.
Turn the lights off someone.
Dave, Lincoln,