British Airways is hopeful that outstanding contract revisions covering changes to pay and conditions for 30,000 staff members can be concluded shortly, as the carrier hunkers down to weather a “long and protracted” recovery.
Giving evidence to the UK parliament’s transport select committee today, BA chief executive Alex Cruz said that the airline had thrashed out agreements or agreements in principle with all its union groups.
The final membership ballots are being conducted this week, he says, “and I very much hope the results will be to accept these agreements”.
Cruz says that the move effectively removes a threat to “fire and rehire” staff on reduced terms and conditions – an ultimatum previously condemned by MPs and unions alike – instead implementing the changes via revisions to existing contracts.
Although Cruz admitted he had agreed to a personal 33% salary cut in 2020 – and to receive no bonus this year – he ducked questions on whether his own employment contract was subject to permanent change.
While the revisions contain a promise to return to the negotiating table should the airline’s fortunes improve, Cruz stresses that this is unlikely in the short term as the airline fights for its survival.
He says that the airline “cannot find much data” supporting an optimistic outlook for air travel at present, while plenty points to a “long and protracted recovery” during which there will be “fundamental changes” to the make-up and profile of global passenger demand.
In addition to the changes to pay and conditions for 30,000 remaining staff members, BA is cutting around 10,000 positions across the company, down from a previous forecast of around 13,000 thanks to workforce concessions.
While Cruz says he “deeply regrets” the job losses, he says they are necessary for the airline to survive the “worst crisis” it has ever experienced due to the coronavirus-induced collapse in air travel. To illustrate the scale of the problem, he says that last week BA transported around 187,000 passengers, down from around 1 million in the same period in 2019.
BA is currently operating around 25-30% of its normal flight schedule, he says, but warns that this figure is unlikely to improve over the winter season. The airline is burning cash at a rate of £20 million ($26 million) per day, he says.
Despite this, Cruz is hopeful that BA’s liquidity position – which has been improved by £600 million raised from fleet financing, plus a €2.75 billion capital raising at parent company IAG – will provide the airline with “a little bit more room” to weather the recovery.
Although MPs on the committee were broadly sympathetic to BA’s plight, Cruz did face allegations that the airline is using the crisis as a cover to push through a sweeping restructuring plan it discarded in 2010 after union pressure.
However, Cruz denies this is the case. “The position we are in is impossible. There is no way we would have pursued this degree of structural change at this pace if we did not have the pandemic.”