"Analyse and evaluate British Airways decision to cut jobs and routes"

This is clearly a financial exercise, aiming to reduce overheads for the currently un-profitable company. Making many management staff redundant should succeed in reducing overheads by having to pay fewer salaries. It may also reduce some of the dis-economies of scale associated with large companies with many layers of management, such as poor vertical communication. In the airline industry which has a very uncertain future already however, making large numbers of staff redundant is only likely to de-motivate remaining staff, who will not know if their own jobs are safe or not, therefore making them less productive.

British Airways have seen that low-cost airlines such as EasyJet and Go have remained very profitable post September 11th and are trying to focus their operations to compete more closely in this market segment. By doing this they are likely to lose many customers however. British Airways should concentrate on the market segment they are good at; long haul, high quality travel for a predominately business market. Trying to compete in an already competitive market such as the low-cost airlines is likely to prove difficult as the companies in it are all very established with large market shares, and much smaller aircraft than British Airways have, making them more flexible and able to travel to a wider range of destinations, which customers want.

Overall I feel that British Airways executives are very worried at their financial figures for the last six months and are reacting to this by the proposed "downsizing" of the company. Although likely to reduce overheads and therefore increase overall profitability of the company, company image will suffer, and stakeholders in the company, such as the employee's are likely to become de-motivated and therefore less productive at work. British Airways are also likely to lose customers if they don't focus themselves at one market segment, but instead try to compete in several different segments which they have less experience of.