British Airways has begun notifying trade unions about a proposed restructuring and redundancy programme which could see up to 12,000 staff made redundant.
The carrier’s owner International Airlines Group (IAG) said that the move was being made “In light of the impact of Covid-19 on current operations and the expectation that the recovery of passenger demand to 2019 levels will take several years”.
Earlier this month BA placed over 22,000 employees on the UK government’s coronavirus job retention scheme, but in a letter to staff, seen by Business Traveller, CEO Alex Cruz said that “we cannot expect the taxpayer to offset salaries indefinitely”.
“We do not know when countries will reopen their borders or when the lockdowns will lift, and so we have to reimagine and reshape our airline and create a new future for our people, our customers and the destinations we serve,” said Cruz.
“We have informed the Government and the Trade Unions of our proposals to consult over a number of changes, including possible reductions in headcount. We will begin a period of consultation, during which we will work with the Trade Unions to protect as many jobs as possible. Your views matter and we will listen to all practical proposals.
“The scale of this challenge requires substantial change so we are 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. However challenging this is, the longer we delay difficult decisions, the fewer options will be open to us.”
Cruz said that on a normal day BA would be operating over 300 flights from Heathrow but that yesterday it was “just a handful”, adding that “What we are facing as an airline, like so many other businesses up and down the country, is that there is no ‘normal’ any longer”.
The letter (which can be seen in full below) was sent out as IAG announced its preliminary results for the first quarter of 2020, with total revenue declining 13 per cent to €4.6 billion.
The group said that its operating results in the first two months of 2020 was similar to that of last year, despite the suspension of flights to China due to Covid-19 from the end of January, adding that “All of the reduction in the operating result in the quarter compared to last year came in March”, with British Airways accounting for the majority of the reduction, followed by Iberia and Aer Lingus.
Pre-tax profit was impacted by an exceptional charge of €1.3 billion relating to fuel and foreign currency hedges for the rest of 2020.
Passenger capacity across the group has been reduced by 94 per cent during April and May compared to last year, although cargo business has seen an uptick, with IAG Cargo undertaking around 350 additional cargo only flights between March 22 and April 26, “primarily on long-haul routes with passenger widebody aircraft”.
Letter from British Airways CEO Alex Cruz to staff.
Subject: Preparing for a different future
Dear colleague
Yesterday, British Airways flew just a handful of aircraft out of Heathrow. On a normal day we would fly more than 300. What we are facing as an airline, like so many other businesses up and down the country, is that there is no ‘normal’ any longer.
The global aviation body, IATA, has said that the industry has never seen a downturn this deep before, and that full year industry passenger revenues could plummet 55% compared to 2019, while traffic falls 48%.
Many airlines have grounded all of their planes. Sadly, we will see some airlines go out of business with the resulting job losses.
Our very limited flying schedule means that revenues are not coming into our business. We are taking every possible action to conserve cash, which will help us to weather the storm in the short-term. We are working closely with partners and suppliers to discuss repayment terms; we are re-negotiating contracts where possible; and we are considering all the options for our current and future aircraft fleet. All of these actions alone are not enough.
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. 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. Any money we borrow now will only be short-term and will not address the longer-term challenges we will face.
We do not know when countries will reopen their borders or when the lockdowns will lift, and so we have to reimagine and reshape our airline and create a new future for our people, our customers and the destinations we serve. We have informed the Government and the Trade Unions of our proposals to consult over a number of changes, including possible reductions in headcount. We will begin a period of consultation, during which we will work with the Trade Unions to protect as many jobs as possible. Your views matter and we will listen to all practical proposals.
The scale of this challenge requires substantial change so we are 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. However challenging this is, the longer we delay difficult decisions, the fewer options will be open to us.
I want to pay tribute to the thousands of British Airways colleagues who are playing a vital role in the global response to the Covid-19 crisis. Whether you are supporting our repatriation flights or the transport of essential cargo; or one of the hundreds of colleagues volunteering with organisations such as the NHS, you have my sincere respect and thanks.
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 concerned 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, and the world with Britain.
Thank you.
Alex
