British Airways is set to undertake a restructuring program that may result in the redundancy of up to 12,000 employees of the airline. This was announced today at an IAG briefing.
The proposal is under consultation
The International Airlines Group (IAG) announced its preliminary results for the first quarter of 2020. In these results, IAG stated that it planning a restructuring and redundancy program to cope with the impact of coronavirus.
“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 program,” it said.
Currently, said the program is under 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.”
Currently, the airline has approximately 45,000 employees, some of which have been furloughed.
In April, British Airways furloughed 22,626 employees. At the beginning of the month, the airline also said that it was trying to avoid making staff redundant. Nevertheless, the worldwide situation has rapidly evolved and airlines are trying to deal with it.
Preparing for a different future
Alex Cruz, British Airways’ CEO, sent a letter to his colleagues in the airline. He said that the carrier is currently flying just a handful of aircraft out of Heathrow when previously the number would have exceeded 300. The number of passengers in London’s main airport dropped by over 50%.
No one currently knows when countries will reopen their borders, so airlines have to reimagine for a new future. “We have informed the Government and the Trade Unions of our proposals to consult over a number of changes, including possible reductions in headcount,” Cruz said.
British Airways is not the only airline out there making this kind of statement. Scandinavian Airlines says up to 5,000 jobs are at risk. Norwegian Air Shuttle is reportedly fighting for its life, and even Boeing, Embraer, and Airbus are saying their future is at risk.
No government bailout for British Airways
At the moment, the government of the UK is not considering a bailout for British Airways, Cruz said. He added that the airline can’t expect taxpayers 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,” he said.
During the first quarter of 2020, the total revenue of IAG declined by 13%. Coronavirus didn’t impact the results of January and February, despite the suspension of flights to China. “All of the reduction in the operating result came in March“, IAG stated.
IAG is expecting the operating loss in the second quarter will be significantly worse than in the first quarter. This pessimistic outlook is due to the substantial decline in passenger capacity and traffic.
“The scale of this challenge requires substantial change so we are in a competitive and resilient position […]. However challenging this is, the longer we delay difficult decisions, the fewer options will be open to us,” said Cruz in its letter.
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