British Airways is flying directly into what businesses call a “people problem”.
The airline isn’t just lamenting a shocking health crisis which has crippled the transportation industry, it’s also dealing with foul bets on fuel trends, which just cost the airline €1.3 billion, according to financial documents from parent company IAG, at a time it desperately need cash.
But all things must pass, and neither covid-19, nor short term fuel losses, will ultimately be British Airways greatest challenge when the world reboots, it will be keeping the support of its employees. Right now, it’s disappearing by the minute.
Why? Because British Airways is choosing to let employees go now, rather than make efforts to retain them as long as possible during the crisis. Furthermore, sources state it’s using a health crisis to front a long held desire to layoff a legacy workforce, and bust unions.
It’s a “rip the band-aid off” move stemming from a unique position BA owner IAG has taken during these challenging times, essentially refusing the possibility of outside help in any form.
Unlike many airlines around the world, British Airways, and parent company IAG, has taken a crystal clear opinion on outside financial support, stating it doesn’t want any. As loses mount, the position is speaking volumes that this is about grudges and other desires, not a desire to protect its people.
British Airways doesn’t want any form of financial support, particularly from a government, and it doesn’t want other airlines to enjoy any either.
The clear motive from this is hoping to “go to ground”, and therefore forcing Virgin Atlantic and other less financially secure competitors like Norwegian under it, in the meantime.
It’s why employees from pilot groups to cabin crew unions are already outraged by the news that up to 12,000 jobs are in imminent jeopardy. It all follows on the heels of CEO Alex Cruz letter to employees which cites tough times ahead, and job losses all but certain.
Unions believe this is an attempt to bust them, and moves are being made in the name of a health crisis to fulfill long held desires for lower wages, fewer concessions and greater scopes of control.
Even the UK banking sector, often regarded as the most cut throat, is delaying layoffs in respect for how tough these times are. HSBC and Morgan Stanley postponed up to 45,000 total layoffs between them, with executives stating that it’s morally wrong to make any non essential redundancies in the middle of a historic recession, particularly when firings would be done via video. Morale matters.
If you wanted to summarize: the airline would rather not accept help from the UK Government, so that other airlines die, than save its own employees, even if the job savings are only temporary. It’s hoping the layoffs will effectively break unions and create a lower wage work force – something it could’ve never managed during ordinary times.
Arguably, the airline is capitalizing on covid-19.
Many of these jobs are unlikely to be around long term due to declining demand in air travel, but for employees facing incredible uncertainty, every paycheck matters. British Airways is telling staff that the airline cannot afford to keep them on, while telling investors through IAG press releases that it’s got plenty of cash. The two aren’t squaring, and employees are angry.
No paycheck presents awful challenges in terrible times, and employees always want to believe all efforts were made to prevent layoffs.
Across the pond, US airlines agreed to accept government funds to hold off job reductions through October. Though it’s unlikely a vast majority of jobs will be retained from that point onward, it gives employees facing redundancy a six month head start on finding what’s next, and making ends meet in the interim.
For BA’s employees, it could make all the difference, but all indications suggest parent company IAG has no interest in this pursuit, and is moving quickly to find where cuts can be made, and execute them. This is the ruthless style Willie Walsh is known for, and directly in line with a man who once put “show me the f**king money” into an IAG corporate investor deck.
It’s going to take years for airlines to reach previous levels, but rather than potentially accept money, or let the UK Government take out a stake in the airline to protect jobs in the interim, British Airways and IAG is choosing to let staff go, in ways beyond the scope of others.
Ultimately, layoffs will be coming to every airline around the world, but choosing not to protect staff right now is a choice. It may be the last waltz on the Titanic, but at least there’s music.
CEO Alex Cruz’s letter to employees states all efforts will be made to keep as many jobs as possible, but statements issued from pilots union BALPA suggest a “this is not good enough” approach. The airline quoted potential pilot layoffs in the hundreds, but new estimates suggest the number is over 1,000.
As employees see friends, colleagues and even family lose work when they need it most, British Airways is flying directly into a people problem. The people problem stems from choice.
British Airways has the capacity to apply for a low interest loan from the UK Government, even though it’s actually owned by a Spanish company (IAG), which enjoys Qatar Airways as its largest single shareholder. It could use this short term loan to boost staff in the interim, in hopes of a best case scenario, but is instead choosing to make future cuts now.
The concept of staff retention via a government loan would ultimately cost the airline (very cheap) interest, which IAG deems as unacceptable, particularly as the cuts would be coming anyway.
In a hard nosed world, ripping the band-aid off may do some good in the long term, but it’s going to create tremendous dissent within the workforce now, knowing jobs could’ve been saved, but greed, or some form of pride prevented it from happening.
GSTP wishes BA employees, and all airline employees the very best of health and luck. The virtual door is always open to bounce ideas, support, contact resources and help to any airline or travel industry employees, in any way. Just click “contact” and get in touch.
It’s not like IAG or BA has shown that they give a s#!t about customers or employees in the last decade. Quite the contrary, they’ve gone after these groups like Bonvoy has after loyal members. Unfortunately it’s up to the flying public to address this situation by flying another airline wherever possible.
You’re very opinionated about BA aren’t you, as an American. I know you live in the Uk.
Not that your nationality makes a difference I suppose. However, you seem to know a lot about everything, no?
Are your US carriers caring Corporations and moralistic ones? How about your ridiculous President? Your country as a whole? Wow, just breathtaking in its’ shitshow, wouldn’t you say? Perhaps you wouldn’t….50/50 I suppose… Republican or relatively normal human being it seems is what you all have to offer the world.
What do you personally know about business, or giving employment etc? I don’t really know much myself… but can perhaps imagine both sides. Actually I was a Virgin Atlantic pilot, (744 captain) so certainly no skin in the game for BA!
One things for sure… I’m not mouthing off like I’m a business guru that has employed hundreds of thousands, or been in the hard knock Aviation service industry for 100 years.
So much anger here, about???
Andy, I’m a Brit who works transnationally and do about 70 sectors a year in normal times… I was a loyal BA customer for years but changes in the past decade, notably in the past 4-5years have made clear that BA is run solely for the benefit of the shareholders and the board. Staff, customers and other stakeholders are used to maximise profits and their track record eg. the recent wholly unnecessary pilots strike and total disdain for customers impacted combined with breaking consumer/aviation law (refusal to rebook on competitors and inadequately resourced contact centres is only one example of the amoral approach that BA leadership have taken.
Nationality simply doesn’t come into it except to point out that BA are in fact more accurately described as SpanglishQatari airways if you look at the ownership and financial structures. Their services are uncompetitive, their workforce demotivated and exploited.
Are you ok Hun? PM me.
Great article Gilbert. Whilst I don’t underestimate the challenges BA face I feel there is a degree of opportunism in their approach. A lot of things (as a BA employee) don’t make sense to me right now.
Firstly, AC’s assertion in his letter that the government is not there for BA. How does he know this? Has BA asked the UK Govt for aid and been refused? No. He says that short term loans will do BA no good. Why not? For a temporary problem does it not make sense to borrow money temporarily if needed at preferential interest rates?
Secondly, for a company that makes out it is scraping together every last cent, why has it not called off it’s purchase of Air Europe? Or they still have a billion euros for that?
It has been clear as day that BA’s biggest aim is reducing and controlling costs. On the cabin crew front they’ve never quite succeeded in getting rid of the legacy crews T&C’s. Now they have the perfect storm. Create a press release touting 12,000 job losses, put the fear of god into employees, their unions main concern will be preserving jobs, a la T&C/money cuts.
The sad thing is it’s actually the poorly paid Mixed Fleet crew that have the most to lose. Unlike the legacy crew they have a clause in their contracts that allows BA to stand them down with little notice and without compulsory redundancy payments so rumour has it that will likely happen then force the legacy crew onto MF style T&C’s.
My love and thoughts go out to ALL BA staff that are affected and this is extremely sad. But at the same time I understand what BA is trying to do. Demand is not coming back to pre-covid levels until about 2022/23 and it will always be capped until some sort of vaccine is found. Why would you keep staff that probably won’t be flying anyway. Let’s not forget that a substantial amount of the fleet is going out the door. If they take a government loan to sustain staff, it would have to be paid back without the corresponding revenue to uphold that staff in the first place.
It is sad.
I think HSBC laid out a good case of why you keep staff. It’s just not the time to send people out of work. They know they’re going, but let’s get past the worst of the health crisis before we throw lives in limbo.
https://www.google.com/amp/s/amp.ft.com/content/47186ac9-c0c9-43b9-a232-9995c46e4918
Cuts were always going to happen. It’s not right to make layoffs during the peak of the virus but there are two things that should be mentioned. Firstly it’s up to 12000 so hopefully that’s just the most pessimistic estimate and that the actual number is lower. Secondly these people aren’t being laid off tonight. BA have alerted the unions to the plan which means it will be at least a few weeks before any actual cuts are made. You make reference to BA’s refusal of government assistance several times. BA have accepted government assistance by using the government’s furlough scheme. They’re not paying around 36000 of their current staff. And if they are it’s at most 20% because the government furlough scheme covers 80%. Every airline is going to have to make at least some cuts it just happens that BA are the first to announce their intentions and they will be vilified for it. BA’s refusal of government funds is not the black and white issue most people have portrayed it as. IAG are refusing government assistance for the rest of their operations but not for their staff. Their staff are still being paid but not from IAG’s balance sheet, the various European governments are. IAG’s €9 billion of liquidity might be enough to allow the group to survive through this but cuts will have to be made and that’s the sad truth of all of this. Airlines who are seeking or have received government aid in the form of grants and loans, will not layoff employees in order to allow them to receive their aid and also sometimes they are not allowed to. They are being forced to hold onto staff in order to gain the government’s approval in whatever country they’re based in. Airlines who aren’t receiving government aid will be the first to layoff staff but they won’t be the last.
From the flying crews perspective, 800 pilots to go. 400 at the top end (those close to retirement) and 400 at the lowest seniority.
There is an understanding that WW / Eutofleet crew will also be targeted – kinda understandable considering how outrageous some of their contracts are.
Don’t be so ridiculous, outrageous are the contracts at the upper echelons at BA……( still chauffeur driven staff) they should employ “ market rate “ across the whole board………Those old contracts aren’t outrageous, new contracts such as the new fleet Mix fleet are the outrageously disgusting ones…… change your perspective.
I’m in complete agreement with you there Carmen..Nigel your comments are unbelievable but to be expected..
Those are not actually correct facts Nigel P. It’s nearer 1200 and will be decided on operational requirements and skill. Nothing to do with seniority whatsoever.
PIlots on 50% pay, Willie Walsh on 80%, other than Cruz, remainder of BA board on 100%
Profits in each of the past 3years almost £2BILLION annually. MAssively greater return than other airlines relative to scale. Cash reserves March 2020 £8Billion.
IT record: Abysmal
Cabin maintenance: Appalling
Cabin cleaning: Utterly inadequate
Catering on board: Farcical
Customer service: Time consuming and hostile
Fares: Average to high
Additional charges: (Seats, short/midhaul catering, etc) High and increasing, imposed on a wider range of services than competition eg. seat reservation in business
BA deliver a simply uncompetitive service, profiteering from their slot dominance and the resultant restricted choice for those in the UK. Their CoVid19 strategy is clear, wait out others bankruptcy to further reinforce this lack of choice and empower them to further exploit the situation with overpriced, substandard services.
It’s looking like there won’t be mass air travel this year; look at Malaysian airlines 2 flights a week to London proposals that barely ramp up into 2021; or Norwegians no flights til 2021. Then there are countries and regional blocks saying no flights til September / Jan 2021.
Most analysts are predicting return to normal will take 3-4 years. You yourself have suggested business travel is dead; and BA relies on that. In these circumstance I see BA being proactive to protect the business in a world where travel is reduced. As they need to work with the unions this is the first warning shot in something that will likely take 8-12 weeks to flow through. If they left it to June they could potentially be on the hock for full salaries which would drain their accounts in weeks,
My surprise is that anybody is surprised.
BA is not the airline it used to be. Why? Because their fickle passengers chose it so by moving away in droves to cheaper airlines with low prices paid for by low service standards. It was not long ago that they were being mocked for perceived antiquated business models and “stuffiness”. Worst of all they were seen as noncompetitive.
So what did they do? They had an almighty shake up. They brought in new leadership from those “clever” low cost airlines. It was not just the leadership that changed but the lower management were charged with change or the dole queue, where many have gone.
Now they lave become leaner, meaner and proactive in matching their new competitors in service (or lack of it), staff salaries (see mixed fleet) and core product changes. Not the dear old BA we had come to love and mock.
Yes BA are shareholder driven and no I personally don’t like it. I left my last company (Hogg Robinson) after they became a PLC partly because I could not in all conscience live with the new ethos that it brings. Ethos? Yes, shareholder value to me is all about minimising risk, accurately predicting (and changing) the future and increasing share price consistently and reliably. The customer becomes an “also ran” behind the city represented by young analysts that wouldn’t know a cockpit from a tail-fin but understand EBITA and EBITDA!
So yes, I think it is wrong to get rid of jobs wholesale for no true reason but to protect shareholder value BUT, get a grip people, you made it so the day you chose cheap flights over “flag carrier” service.
Absolutely correct Michael. As a travel agent, I get the old ‘BA not what it used to be’ mantra daily. You have summed it up perfectly. We reap what we sow.
Unlikely most airlines BA has a pretty robust balance sheet that allows it financial breathing space during the current crisis. It hasn’t like other airlines e.g. AA spent the same amount in billions it has received from the its local government in share buybacks etc. Nor does it require billions of Euros immediately like Lufthansa, KLM and Air France to simply survive the immediate future. I would call that good management from BA. More companies will have to focus on the state of their balance sheets going forward. Lufthansa has also announced job cuts of 10,000 staff. Airlines taking on government bailouts show that the financial markets don’t rate them. These loans wills somehow have to be paid back. E.g. Lufthansa currently has a market cap of €4 billion yet needs €9 billion to go on. Sensible companies need to plan for the future and in the case of airlines this future is not looking good for a significant time. As a fellow CEO we have responsibilities to the rest of our employees in protecting their futures.
Opinions are great but at the end of the day they are just that and very remote from running million £ or in this case billion £ companies. Yes, it is a sad time for all those affected and there is never a good time to do this sort of thing.
My mate quite rightly says that there’s a word missing at the end of the title… “again”
What about Iberia and aer lingus, who form part of IAG.no mention of job losses there.i do think there’s an ulterior motive for BA’s planned job cuts,to tackle some of the old and legacy contracts,which have been a thorn in their side for years.lets also not forget that IAG’s major shareholder is quatari airways.
If BA don’t want any aid then let them go with out, but that should not rule others. Others that don’t have a history of state ownership and all the legacy benefits that brings. So but no matter what this is now about people lives and family homes so please sign this.
https://petition.parliament.uk/petitions/303081
A loan is money that still needs to be paid back. It is not free money and no one can tell the future.
IAG are taking brilliant steps to protect their business and the livelihoods of thousands of employees across multiple airlines.
Of course it is heartbreaking to lose your job in this mess, but is it better to have 12000 jobs lost or 40000 jobs lost?
I certainly wouldn’t be borrowing to fund over staffing now no matter what the interest rate.
Maybe to fund the purchase of a smaller rival, I hear there is an airline next door for sale…..
You wouldn’t happen to have a vested interest here, would you? The “brilliant steps” is a turn of phrase I’ve yet to hear from many unbiased bodies.
Time for BA to pay, huge bill was pass to Iberia to save BA’s bankruptcy and pensions after the merge, including staff cuts for the Spanish wing.
NGO no more.
Enjoy the trip.
I’ll just leave this here as it speaks volumes for the real agenda and motivation behind sacking a quarter of the BA workforce and the lies and deceit BA have engaged in.
https://www.bloomberg.com/news/articles/2020-05-01/iag-s-iberia-and-vueling-sign-1-1-billion-syndicated-loan
Sadly over recent years BA have forgotten that it’s their people who deliver their product – in my day (the 90’s) there was a thing called the service profit chain….happy employees/ happy customers/happy shareholders. Remember how important your employees are, they hold the secret to the success of the airline.
BA is axing 12.000 jobs across the entire workforce and scrapping the contracts of the rest of 30.000 workers whom will be left with new,much lower T&C and they’ll all have to re-apply for the same job! The staff calls them “slavery contracts” especially if you think that you can actually survive in the UK with an average monthly wage of 1,200£ net for a cabin crew whom also have to pay for their own food when abroad! These people have mortgages to pay and kids to support!!! Enjeeneers and ground staff will be even on a lower wage! Flying has its dark sides: accidents,jet lag,air toxic fumes,radiations…. these workers should be paid accordingly to the level of their work risks! Cabin crews are trained in saving lives, putting fire downs,first aid (infact they have been very usefull in volunteering in hospitals)…. I believe that if they ever accept those new contracts with half of the income,less time off,performance pressure,working much longer hours it will not be safe to fly BA anymore; fatigue and anger will eventually take over! BA product has gone down the toilet for the past 15 years,but the professionalism and good manner and the humor of the crew especially on the long range routes has kept the airline wealthy and rich! How many passengers I’ve heard saying over the years “I fly BA just for the crew”,many!!!
BA is not accepting any governments’ loans because they want most airlines like Virgin to go bust in order to buy them; BA is no longer british and they pretend to be in dire straits while they’re buying another airline!!!
The future spanish CEO wants BA to go bust after Brexit in order to make Madrid the main European hub because IAG,thanks to its job cuts,lower paid staff and minimal product offer has become the biggest and most successful alliance in the EU…. they’ve got it all planned: cheap staff,cheap product,no competitors! Many workers will eventually be jobless at Heathrow Airports! There’ll be many more people in poverty within few years in Britain after Brexit because of the demise of BA and all the aviation sector! In the meantime Walsh has earned more than 30 billions and lives happily! If BA goes head with this nonsense job axes I,as a travel agent,will sure suggest my customers to fly with other airlines as soon as the market rises, and it will be sooner than later ’cause holidays demands are already coming in!