BA Embarks On Three-Year Cost Cutting Plan

<H1> BA Embarks On Three-Year Cost Cutting Plan</H1><I>New York </I>- British Airways will attempt to reduce its costs by $1.6 billion over the next three years as part of a second post-privatization transformation.

"For nearly 10 years, we have competed successfully and flourished as a private company," said British Airways chief executive Bob Ayling. "But the market in which we are operating is changing rapidly. The competition is getting better and more efficient. Our customers expect more, but our cost of providing a seat has risen faster than the price customers pay in a highly competitive marketplace."

Ayling compared the effort to Delta's Leadership 7.5 program, which led to the commission cap. British Airways' announcement comes amid widespread speculation that an international cap is at hand, particularly since the settlement of the domestic commision cap case (<I>BTN</I>, Sept. 9).

However, BA spokesperson John Lampl said this program does not target agency commissions. "The business efficiency program is focused on all aspects of the way the company does business, but it is not aimed at curtailing any sources of revenue," he said. "That's the way it is today; I don't know what will happen tomorrow."

Lampl said that although BA has not set any cost-per-available-seat mile goal, Delta's 7.5 "would be a good benchmark-it's an enviable goal."

Although the program aims to phase out 5,000 employees starting in November and continuing through the spring of 1998, the company has not indicated any specific changes to the sales force, and Lampl said the number of sales staff will likely remain the same.

The airline expects to improve on-time performance, restructure European alliances with TAT and Deutsche BA, make better use of technology, revamp its World Traveller and Euro Traveller coach products next year and create new loyalty programs for "infrequent flyers." Details were not available on any of those initiatives.