British Airways’ chief executive Alex Cruz has today appeared before a Parliamentary Transport Committee to answer questions regarding the potential layoffs being planned by the company. While some positive steps have been made, including agreements in principle with many workers unions, the airline is still facing the loss of some 10,000 workers.
The final number close to 10,000
Boss of British Airways, Alex Cruz, is currently in the midst of being grilled by a Parliamentary Committee regarding the thousands of redundancies on the table for the airline. The headline good news is that the final number of redundancies has been reduced from a potential 12,000 to 10,000 through negotiations with the unions. However, that’s still a significant number, and the Parliamentary Committee was keen to find out why.
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Cruz outlined the significant challenges facing the airline, stating that it was “fighting for survival.” He said,
“It’s the worst crisis for BA, and still six months on, still significantly fewer passengers are travelling on a daily basis throughout the British Airways network… we remain worried with regards to the evolution of the rest of the winter season. We are encouraged by the potential decision to get slot relief throughout all European airports, but the fact remains that people are still afraid of travelling.”
The BA boss highlighted the differences between the pilots union and the non-pilots unions in coming to the table to discuss strategies to minimize layoffs. He said that, after British Airways issued the official warning of job losses, the pilots union mobilized “within hours” to begin negotiations. The non-pilots unions, he said, took over two months to begin discussions. He said,
“Unfortunately … the non-pilot unions … decided not to engage with us. We sent them over 500 pages of proposals, ideas for potential mitigations, we invited them to over 520 different meetings which they did not attend. It took 73 days before the trade union representatives were allowed to come and meet with us.”
Already, an astounding 7,200 employees have left the business in July and August. While discussions have moved on with the unions, Cruz maintains that this slow reaction time and unwillingness to engage exacerbated the problem. However, as a member of the Parliamentary Committee pointed out,
“I would argue, perhaps you hadn’t held the metaphorical gun to the head in the first place those negotiations might have happened far more quickly.”
Fire and rehire off the table
Cruz stated that the threat of ‘fire and rehire’ is now off the table. When quizzed on the use of this threat during the initial filing of the redundancy warning, Cruz insisted it was ‘absolutely’ appropriate. Despite assuring that fire and rehire was no longer being used, later in the session, Cruz did admit to most of the contracts under negotiation containing some element of a layoff clause or unpaid leave.
The BA boss said that, thanks to discussions with the non-pilots unions, an agreement in principle had been reached. These agreements include both permanent and temporary measures, but he says that no new contracts will be issued. Rather, unions are voting on changes to existing contracts. He said,
“I’m pleased to tell you that since the non-pilot unions began to engage with us, we have been able to reach agreements and sign agreements. As we speak right now, the remaining areas within British Airways are currently being balloted as we have reached agreements in principle.”
While Cruz was reluctant to give details on the packages currently in the balloting process, stating that the measures were different for every group of workers, he provided some clarity on one employee group. Flight attendants are currently voting on a package that will see more jobs retained in return for a 15% pay reduction.
He further noted that there would be provision to increase salaries back to previous levels as and when travel demand picks up again. He stated that signed agreements had been secured with some groups and agreements in principle with others, which are being balloted over the next few days.
Burning £20 million a day
Cruz outlined the situation being faced by the airline right now. He said that British Airways is flying just 25-30% of its usual capacity, and that it lost £711 million in the first quarter of the pandemic. He compared this to the global financial crisis of 2008, where he said the airline lost £309 million.
He noted the significant drop in cash reserves, stating that at the end of 2019, it had £2.6 billion in cash. At the end of June, that was down to £2.1 billion. He went on to say that the airline is burning through an estimated £20 million per day.
Cruz pushed for more support, calling out the UK’s fluctuating quarantine regulations as being “incredibly disruptive” for the industry. He called upon the government to implement more testing, and to waive Air Passenger Duty in a bid to kick start the sector.
Discussions are ongoing in Parliament; Simple Flying will keep you updated.