Airport operator reveals cost of making staff redundant – and more are on the way

BAA has spent up to £80m on carrying out a “simplification” process under which 200 construction staff have lost their jobs.

In its accounts for the year to 31 December 2007, BAA lists £80m in “reorganisation costs”, of which £54m was “staff-related”, including severance pay, redundancy packages and £26m in pension payments.

It goes on to say the £80m charge is “in relation to severance and pension payments, predominantly associated with the Simplifying the Organisation programme which will be carried out during 2008/09”.

The programme has led to 200 staff being axed from BAA’s construction projects division this year. The accounts suggest that further redundancies will be made during 2008.

The accounts say: “As part of the programme to simplify the organisation, a significant number of managerial and back office staff will be leaving the business.”

The information is revealed in accounts filed this week at Companies House by Airport Development and Investment, BAA’s holding company.

A number of managerial and back office staff will be leaving the business.

BAA accounts

The accounts also list a £40m one-off payment relating to the opening of Heathrow Terminal 5. This, according to the accounts, went on the terminal’s fit-out, as well as “facilitating the mobilisation of key contractors, the recruitment and enabling of staff, testing to ensure the building is ‘fit for purpose’, co-ordinating the overnight move activities, IT costs and running and testing of baggage systems”.

The airport operator’s turnover was £2.24bn, up 7.9% from last year. Pre-tax profit hit £577m, a 50% rise from £384m in 2006.

• Yesterday, after Building went to press, one of T5’s architects was to defend the relationship between British Airways (BA) and BAA, which was blamed for the building’s disastrous opening.

Robert Stewart, an aviation specialist at YRM, did interior design work for both BA and BAA on Terminal 5. Stewart was due to speak at the Passenger Terminal Expo conference in Amsterdam on Thursday of the “spirit of co-operation” that had allowed the building to be opened on time and on budget.

He was due to say: “There has been an enormous collaborative effort to sort out the problems that have manifested themselves at T5. If anything, it has made their relationship stronger.”

In the terminal’s first week, hundreds of flights were cancelled and thousands of pieces of luggage mislaid owing to problems with the baggage system.