British Airways has set out plans to make up to 12,000 of its staff redundant because of the global collapse in air travel in the face of the coronavirus pandemic.
The airlines chief executive, Alex Cruz, told BAs 42,000 staff on Tuesday night that the company “must act decisively now to ensure that British Airways has a strong future” and that means more than one in four jobs must be cut.
Cruz said the UKs flag carrier airline, which has placed 22,600 people on the governments furlough scheme, “cannot expect the taxpayer to offset salaries indefinitely”.
“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,” Cruz said in a letter to staff .
“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
Cruz said the airline and its parent company International Airlines Group, had informed the government and its trade unions about its plans to cut jobs, and would begin a consultation period with staff and unions immediately.
“This has been a difficult message to write and one I never thought I would need to send,” Cruz said.
“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.”
IAG said it had plunged to a loss of €535m (£465m) in the first three months of this year – with all the damage being done in March. In the same period last year the airline group made a profit of €135m. IAG also revealed it had made a one-off loss of €1.3bn – the result of taking out contracts to hedge against the possibility of rising oil prices. In fact the oil price has crashed.
IAG said BA had been hit hardest, with other airlines in the group – Iberia, Aer Lingus and Vueling – feeling less impact.
Brian Strutton, the general secretary of the pilots union Balpa, said staff were “devastated” by the “bolt out of the blue” news and that the union would fight for every job.
“BA pilots and all staff are devastated by the announcement of up to 12,000 possible job losses in British Airways,” he said.
BA, he added, had “said it was wealthy enough to weather the Covid storm and declined any government support.”
The airline industry is facing its biggest ever challenge with the vast majority of flights grounded around the world. It is unclear when governments will allow airlines to resume a regular schedule.
When planes do take to the skies again social distancing measures – which are likely to limit the density of passengers onboard – will make it hard for airlines to make the same profits as before.
The global airlines trade association, Iata, has predicted that airlines could lose more than $300bn (£240bn) in the fallout from the pandemic and warned that 25m jobs are at risk.
“This is an emergency. Airlines around the world are struggling to survive,” Alexandre de Juniac, Iatas director general, said last week.
“Governments will need financially viable airlines to lead the economic recovery. Many of them wont be around to do that if they have run out of cash.
“We could see more than half of passenger revenues disappear. That would be a $314bn hit. And without urgent relief, many airlines will not survive to lead the economic recovery.”
Several airlines around the world are on the brink of collapse and many are urgently trying to secure government bailouts or emergency bank loans.
Germanys Lufthansa is reportedly considering filing for creditor protection, as negotiations over state bailouts collapsed on Tuesday night. The airline is said to be burning through €1m of cash every hour, and has warned it will have 10,000 too many staff when it emerges from the crisis as a much smaller operator.
The budget airline Norwegian has warned that virtually all of its fleet of aircraft will remain grounded until 2021 and is seeking to persuade shareholders to accept a government-backed rescue plan that will wipe out most of their investments.
Virgin Atlantic is trying to find an investor to pump in millions to keep it afloat as it negotiates with the government for a £500m emergency loan. Virgin Australia collapsed into administration last week.
Easyjet has borrowed £600m from the government under its Covid Corporate Financing Facility, allowing it to survive another nine months at the present rate of cash burn.
In a statement to the stock market, IAG said: “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, British Airways is formally notifying its trade unions about a proposed restructuring and redundancy programme.
“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 them.”