British Airways Will Work Better with Fewer People: CEO

More consolidation is on the way in the airline industry, Willie Walsh, the CEO of BA, told CNBC Thursday, as British Airways and Iberia confirmed their long-awaited merger.

British Airways planes parked at Heathrow Airport in London, Wednesday Aug. 1, 2007. A British regulator on Wednesday fined British Airways 121.5 million pounds (US$ 246 million; euro 180 million) after the airline admitted colluding with a rival over surcharges on long-haul flights. BA said it accepted the fine from the Office of Fair Trading and expected to be hit with another penalty from the U.S. Department of Justice later in the day. (AP Photo/Kirsty Wigglesworth)
Kirsty Wigglesworth

At the same time, layoffs at British Airways are unavoidable in the short term as the company can work better with less staff, Walsh said in an interview in Los Angeles.

United Airlines' parent company UAL and US Airways have begun merger talks, sourced told CNBC and the New York Times, as the airline industry has been suffering from huge overcapacity for years.

Beset by strikes by cabin crew angered at proposed job and cut costs, Walsh believes their remains a lot of waste in his business and has pledged to lower costs despite the threat of strike action.

"We can run our business better with fewer people," he told CNBC.

"That may sound a bit cruel but it is something we have to do. ...there is no doubt in my mind that in the short term we will see further job cuts, longer term it makes the business stronger," Walsh added.

Walsh is confident further strike action can be avoided.

"I remain optimistic that we will convince the trade union to allow their members to exercise their democratic rights to ballot on the proposals and if that happens I think that will be an end to the threat of industrial action," he said.

  • Watch the CNBC interview with Willie Walsh here >>>

- Reported by Kaori Enjoji, Written by Patrick Allen, CNBC