CitiExpress answers bell for next round of cuts

 - October 8, 2007, 11:09 AM

Following recent restructuring, British Airways wholly owned regional subsidiary BA CitiExpress (BACE) “is on track to stop the bleeding,” but will need at least another year to meet profitability targets, company officials predict. The airline has made
significant progress toward its goal of flying an all-jet fleet while it pursues its parent company’s “future shape and size” cost-cutting program, but negative market response to this year’s U.S./ UK invasion of Iraq and severe acute respiratory syndrome (SARS) have forced CitiExpress into more drastic measures.

Manchester-based CitiExpress has evolved from the 2001 consolidation of BA subsidiaries British Regional Airlines (BRAL) and Brymon Airways, having formally opened last year to allow BA to coordinate its short-haul businesses more easily and to reduce fragmentation among partners. Today, the airline also includes
the remnants of BA Regional (the group’s former business unit for non-London based services), as well as Manx Airways (a former BRAL sibling from the Airlines
of Britain group).

The airline maintains its own air operator’s certificate (AOC) and flies the BA short-haul services not based at London Heathrow or Gatwick. Its 73-strong fleet serves almost 100 domestic and European routes from 26 points in the UK (principally Birmingham, Bristol, Edinburgh and Manchester) and Ireland, and a solitary Manchester-New York Boeing 767 service.

According to customer services general manager Bryan Field, CitiExpress has “delivered or is on track to deliver” originally targeted annual savings of £20 million ($32 million) by 2004, while employing the equivalent of 500 fewer people. The original strategy defined four main elements:

  • increase capacity (available seat-miles) and services on key business routes;
  • simplify the fleet and reduce the number of different aircraft types based at regional airports;
  • improve use of assets through better matching of aircraft size with local   markets; and withdraw loss-making services.

Still losing money, however, the airline must go further: “The continuing depressed economic situation, coupled with the detrimental impact of ‘Gulf War II’ and SARS, has required that we repeat the [rationalization] process, and we are now in our third round of cost-cutting and productivity improvements,” Field told AIN. “The company has been restructured from top to bottom, significantly reducing overheads and driving through productivity improvements. We have removed the [BAe] Jetstream 41 fleet and will continue to reduce the turboprop fleet as [BAe] ATP and [Bombardier] Dash 8 leases expire. We have consolidated the number of crew bases and are working assets harder.”

CitiExpress has already relinquished a significant share of routes and aircraft. Along with the 29-seat Jetstream 41s, Humberside-based Eastern Airways has taken over several destinations, while former Brymon routes from London Gatwick to southwest England head to a new operator– Plymouth, UK-based Air Southwest, which plans to fly a pair of ex-CitiExpress Bombardier Q300s from Gatwick to Plymouth and Newquay starting October 26. BA has helped with the provision of flight crews during the initial route transfers in both cases.

Following rationalization, CitiExpress’ fleet now comprises ATPs, Dash 8s and Embraer ERJ-145s flown mainly on UK domestic routes and services to Ireland, and BAe 146/Avro RJ100s used largely on UK-Europe operations. The airline plans to withdraw the ATP equipment this year and all the Dash 8s by the end of next year.

The drive for efficiency has also seen consolidation of BA operations at specific UK regional airports, the number of crew reporting bases (where cabin and flight crew originate for flights) being reduced from 15 to 12 as the airline closed its Aberdeen, Belfast and Jersey bases. CitiExpress has subsequently withdrawn services at Cardiff, Leeds-Bradford and Southampton.

The job cuts–or “manpower equivalent savings”–will happen by next year, according to CitiExpress. Cabin crew will take the hardest hit, as their ranks fall by 233 people, while head office and support departments lose 170. Related reductions include flight operations (48), maintenance (52), and ground services (eight), to achieve an overall manpower cut of 20 percent compared with 2001’s structure.