Is BT on the edge of serious financial trouble?

As we see British Telecom offering staff up to one year off in exchange for a 75% pay cut there are serious concerns that the UK recession has hit companies harder than first thought. When you consider this particular issue with British Telecom and the British Airways saga, these are two of the U.K.'s leading companies struggling to cut their costs bases and ultimately possibly struggling to survive. So what exactly is going on?



There is no doubt that companies around the UK, and around the world, are looking to reduce their cost bases as the recession continues to hit business levels and profitability. The short-term pain they will feel with regards to redundancy payments and other expenses could be minimal compared to the long-term beneficial impact it will have on a company's balance sheet and ultimately profitability. While BT and British Airways have hit the headlines, there are concerns that more leading UK companies will experience significant financial troubles before the recession is well and truly over.



Even though some observers believe the likes of BT and British Airways are using the recession as an excuse to reduce their cost bases, this would seem a fairly strange move bearing in mind the sizeable costs associated with these offers.