British Airways To Cut 12,000 Staff Amid Travel Collapse
Airline British Airways has announced a new restructuring and redundancy program that will cut more than a quarter of its workforce amid the global airline industry’s COVID-19 induced collapse.
British Airways’ parent company IAG, who also owns Spanish airline Iberia and Irish Aer Lingus has said in a statement that it has been forced to implement a “restructuring and redundancy programme” until air travel demand reaches 2019 levels. IAG wrote that “the proposals remain subject to consultation, but it is likely that they will affect most of British Airways’ employees and may result in the redundancy of up to 12,000” of its staff members.
IAG has reported a 13% decline in its first-quarter revenues (€4.6 billion) while running an operating loss figure of €535 million. The company estimates that 2020’s second quarter will be “significantly worse,” adding that returning to 2019-levels of travel will be a long endeavor. Bloomberg is reporting that “a 1.3 billion-euro charge from fuel and currency hedges added to the group’s first-quarter operating loss.”
Reports have cited a statistic from the International Air Travel Association that estimates the “mounting financial crisis” in the airline industry is set to gobble up revenues by as much at 55%, or $314 billion in total. A number of airlines have looked to government bail-outs, as well as cash injections from investors to weather the storm. They estimate that this will put 6.7 million jobs at risk in Europe alone, calling on governments to implement measures to “preserve air services.”
BA’s Chief Executive, Alex Cruz has released a letter to staff stating that “in the last few weeks, the outlook for the aviation industry has worsened further and we must take action now. We are a strong, well-managed business that has faced into, and overcome, many crises in our hundred-year history.”
“What we are facing as an airline… is that there is no ‘normal’ any longer,’ Cruz said.
“Yesterday, British Airways flew just a handful of aircraft out of Heathrow. On a normal day, we would fly more than 300.”
“We must overcome this crisis ourselves, too. There is no government bailout standing by for BA and we cannot expect the taxpayer to offset salaries indefinitely… we will see some airlines go out of business,” he wrote.
Cruz wrote to staff that "this has been a difficult message to write and one I never thought I would need to send. I know how tight-knit the BA family is, and how connected you will be, not just for yourself but for your colleagues, too. We must act decisively now to ensure that British Airways has a strong future and continues connecting Britain with the world."
4,500 pilots and 16,000 cabin crews will join the 23,000 furloughed employees receiving 80% of their pay thanks to the UK government’s coronavirus job retention program that subsidises £2,500 of an employee’s salary until the end of May.
Alexandre de Juniac, Director-General of the International Air Travel Association said "this an emergency. Airlines around the world are struggling to survive," adding that "governments will need financially viable airlines to lead the economic recovery. Many of them won't be around to do that if they have run out of cash."
"We could see more than half of passenger revenues disappear," he added. "That would be a $314 billion hit. And without urgent relief, many airlines will not survive to lead the economic recovery."
Brian Strutton of the British Airline Pilots Association said he would fight for every single job cut, and that he was “devastated” to hear the news. “This has come as a bolt out of the blue from the airline that said it was wealthy enough to weather the COVID storm and declined any government support,” he said.“BALPA does not accept that a case has been made for these job losses and we will be fighting to save everyone,” Strutton added.
BA’s chief added that “there is no government bailout standing by for BA and we cannot expect the taxpayer to offset salaries indefinitely… any money we borrow now will not address the longer-term challenges we face.”
Cruz continued to explain that “the scale of this challenge requires substantial change so are we in a competitive and resilient position, not just to address the immediate COVID-19 pandemic, but also to withstand any longer-term reductions in customer demand, economic shocks or other events that could affect us.”
BA’s parent company, IAG has said that its restructuring plans will have to be implemented across the whole group in order to stay afloat. “The majority of the reduction in IAG’s operating result was incurred by British Airways, followed by Iberia and Aer Lingus, while Vueling experienced a modest increase in operating loss.”
Just last week, Air France-KLM announced that after “several weeks of discussions,” with governments and banks, the group had secured a €7 billion loan “to help overcome the crisis and prepare for the future.”
Competitor Lufthansa, who owns a number of airlines in Europe confirmed it would be reducing the size of its fleet, and shutting down one of its low-cost air carriers. Lufthansa says that it will be a number of years before air travel returns to normal levels, and has begun implementing cost-cutting measures.