Administration looms for Gate Gourmet amid BA talks

Gavin Lipsith

Print Article E-Mail Article E-Mail Author

The inflight caterer's UK business may fold unless it can reach a better deal with British Airways after walk-outs at Heathrow airport earlier this month

Gate Gourmet's UK operation, which supplies 80,000 in-flight meals a day to BA, made a loss of £25m ($44.8m) in 2004 and over the last few weeks has been paralysed by illegal strike action in response to the hiring of part-time workers and the subsequent dismissal of 500 dissenting permanent staff.

Last week BA, which has been affected by a knock-on strike by Heathrow airport workers, offered Gate Gourmet an improved contract and an extension until 2010 in July, but no deal has yet been signed. Gate Gourmet has said it will resume providing meals to BA flights this week, and analysts believe that the service could continue without disruption if it goes into administration.

The walk-out, which resulted in 700 flights from Heathrow being grounded, is estimated to have cost BA at least £30m ($54m). The airline could face severe problems if the caterer's operations are disrupted further as none of the other catering companies at Heathrow are large enough to take over the BA contract immediately.