Bermuda Aviation Services (BAS) is tightening its belt on spending - and planning staff lay-offs - following a downturn in air travel after the events of September 11.

Chief executive officer Eugene Bean told The Royal Gazette the company - which provides a range of airport services including cargo, technical services, freight, terminal and ramp services; cleaning of aircraft and on board catering, and weather forecasting through a joint venture as BAS-Serco - has had a considerable drop in revenue since September 11.

Mr. Bean said the downturn had already had considerable impact on the company's revenue, and the slump was expected to continue over the next ten to 12 months, or longer.

The company has already made cuts in expenditure, and Mr. Bean said any capital expense is on an as-needed-only basis.

In addition, Mr. Bean said the company has instituted a freeze on hiring, and plans to cut back on staffing. He said full-time staff have been told - over the past weeks - to get their financial situations in order, in advance of cuts.

All overtime has also been banned, and Mr. Bean said most staff have been in agreement with the move.

Mr. Bean said the lay-offs would be "significant", although he did not want to say what that would break down to in numbers - although the company has already looked at that.

But, Mr. Bean said the company is prepared to weather the storm, and has been through similar downturns in air travel, for instance during the Gulf War.

Mr. Bean said past events led the company to diversify its holdings, as it did with its purchase of Crow Lane Bakery about five years ago.

When asked if Crow Lane had been a purposeful acquisition, Mr. Bean said: "Absolutely. The [airport business itself is cyclical, and we saw the need to diversify, so that when there are downturns, that does not completely weaken the company."

But, Mr. Bean said cost cuts being instituted are not limited to airport services, but include the bakery, which has seen a 15 percent drop in its retail sales.

A BAS staff memo called attention to the drop in business; including projected load factors, which, from November, 2001 are below 30 percent and dropping.

And an anticipated drop in already low freight volumes.

Beyond the drop in business resulting from fewer air passengers, the company has also been hit by the loss of catering contracts - as both American and US Airways have decided not to cater on their flights, Mr. Bean said. Amidst the uncertainty, BAS shares saw a jump this week, of 45 cents to $6.70 a share - although this is below the company's 52-week high of $7.15.

Of the share increase, Mr. Bean said, in his opinion, the share price - in consideration of the dividend and P/E ratio - is actually undervalued.

Mr. Bean said he could not attribute the rise in share pricing to the company's current situation: "I would like to think people see the underlying strength of the company and our ability to weather these adverse occurences."

BAS, which was founded in 1947, initially as a venture with British Airways, to provide aviation related services. Mr. Bean said the company is now a public, and fully Bermuda-owned company.