Gate Gourmet, the airline caterer at the heart of the British Airways dispute, has said that thanks to a deal to modify its £130m catering contract, it won’t have to put its UK operation into administration.

The announcement is a step towards safeguarding the jobs of the 1,400 workers the caterer employs at its kitchens at London’s Heathrow airport.

Chairman of Gate Gourmet David Siegel said: “We thank BA for adjusting the contract and recognising the need to provide us some relief given the new realities of the industry.” 

Gate Gourmet said progress continued to be made over the 670 dismissed employees that went on unofficial strike after 130 casual workers were bought in to cover the peak travel season.

But Siegel reiterated that although he wanted to resolve the dispute he would not – against union wishes – be reinstating those that instigated the walk-out and harassed other employees from the picket line.

As part of the restructuring deal the company has said redundancies are likely as well as “improved labour practices”.

Regardless, the company remains in serious financial trouble. It has been on the verge of bankruptcy since missing debt repayments in December and the ending of a three-month freeze on bankruptcy filing on 11 April.

Gate Gourmet has not made a profit since 2000 and is expected to make a £25m loss this year. Over the past four months, the company has been trying to negotiate new working practices, plus wage cuts and a loss of benefits, in an attempt to reduce its labour costs.

American union Unite Here, which represents 6,000 Gate Gourmet employees, has demanded the reinstatement of the sacked workers and threatened industrial action of its own if not.

Buy this week's Caterer magazine for more industry news and analysis