British Airways's proposed 3,700 job cuts are essential to the company's survival as it faces the "eye of the storm" ravaging the airline industry, chief executive officer Willie Walsh said Tuesday.

Walsh told shareholders at British Airways PLC's annual general meeting that costs must be reduced to keep the company viable.

The proposed job cuts, to be made by next March, would come on top of the 2,500 positions that have already been axed since last summer.

The airline also wants to freeze the pay of staff for two years, part of drastic expenditure cuts, as the global economic downturn eats away at demand for air travel.

"There is no point trying to skirt around the fact that we need a fundamental and structural change to our employee cost base," Walsh told investors and employees in London. "These changes are essential to our short-term survival and, more important, to our long-term viability."

Opposed to cutting plans

Pilots for the airline voted on Monday to accept a 2.6 per cent pay cut as part of a package of measures to save BA some £26 million (US$41.9 million).

But thousands of baggage handlers and check-in staff are opposed to the cost-cutting plans.

Their union, the GMB, said they are angry that the lowest paid employees at the airline were being asked to give up their family-friendly flexible working patterns and accept permanent change to their salary conditions.

"The broadest backs must carry the heaviest loads and bear a bigger brunt of the savings," said GMB spokesman Mick Rix.

"Why should our members ... continue to subsidise the highest earners, when the very highly paid in the company are not accepting permanent change and leading by example?"

- AP