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Last Updated: Monday, 15 August 2005, 16:20 GMT 17:20 UK
Profile: Gate Gourmet
Airline meal
Many airlines have cut back on-board food in the past few years
Gate Gourmet, the company at the centre of the strikes at Heathrow Airport, is one of the world's largest providers of in-flight meals.

Based in Switzerland, it has been owned since 2002 by venture capital firm Texas Pacific.

Gate's customers include British Airways - whose Heathrow staff went on strike in sympathy with the sacked Gate Gourmet workers - American Airlines, Continental, Delta and Qantas.

It operates in 29 countries and employs 22,000 people, making 534,000 meals per day.

The sacking of 350 employees at Heathrow (the company's own figure as opposed to the widely reported 600) came after a dispute over pay, working conditions and the appointment of part time workers, who - the full time staff believe - are being brought in to replace them.

'Devastating blow'

Gate insists it has to change "outdated working practices" and cut costs at its UK operations in the face of huge losses.

Although enjoying a turnover of 2.4bn Swiss francs (1.05bn; $1.9bn) in 2004, the company has not actually made a profit since 2000.

The whole of the airline supply chain has come under pressure
Graham Dunn, Air Transport Intelligence

Revenues have fallen 35% since then as the airlines have continued to tighten their belts post 11 September 2001.

Several of Gate Gourmet's main customers - including Delta Air Lines, American Airlines, United Airlines and Swiss International Air Lines - have been in severe financial difficulties in the past couple of years, putting severe pressure on their suppliers.

In a effort to save costs, many airlines have opted to scrap free meals on shorter flights or offer them on a pay-as-you-go basis.

Off the menu?

According to industry estimates, the in-flight catering market has shrunk in size by about 30% in the past four years.

The US - one of Gate Gourmet's biggest markets - has been worst affected with volumes down about 40%.

"The whole of the airline supply chain has come under pressure as carriers have strived to cut their costs in the face of a string of global challenges since 2001," says Graham Dunn, European editor of aviation news service Air Transport Intelligence.

British Airways
American Airlines
Continental Airlines
Iberia Airlines
Qantas Airlines
Thai Airways
United Airlines

An already-difficult situation has been made worse by soaring oil prices - which have pushed up airlines' fuel costs by 20% - and by fierce competition among suppliers.

Gate Gourmet lost a valuable contract with Virgin Atlantic earlier this year after the airline reorganised its in-flight services - including catering - and handed them to a single contractor.

"Airlines' onboard catering requirements have been evolving and a number of traditional carriers have scaled back or cut altogether free meal offerings for economy class passengers on short-haul flights, switching towards a pay-for model," Mr Dunn added.

Industry squeeze

Rival catering firms have been facing the same problems as Gate Gourmet.

LSG Sky Chefs has cut 12,000 jobs over the past four years, reducing its workforce from 41,000 to under 30,000.

Gate Gourmet employee
Gate Gourmet has 22,000 workers worldwide

The firm, owned by German carrier Lufthansa, said it needed to revamp its operations at all levels in the face of mounting losses.

It hopes to break even, excluding restructuring costs, in 2005.

Gate Gourmet's managing director Eric Born said the company had tried for months to find a consensual deal with unions and staff at Heathrow "to resolve the financial crisis and secure the future of the company".

The unballoted strike was a "devastating blow", he added.

He insisted that despite cost cutting, the pay deal being offered to the Heathrow employees was the best in the company's history.

See why British Airways is in trouble over catering

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