Coronavirus: BA pilots urged to take pay cuts to limit job losses

Tom BelgerFinance and policy reporter
Yahoo Finance UK
British Airways pilots have been urged by the BALPA union to accept a pay cut deal to save jobs. Photo: Steve Parsons/PA vía AP
British Airways pilots have been urged by the BALPA union to accept a pay cut deal to save jobs. Photo: Steve Parsons/PA vía AP

A union is urging British Airways (BA) pilots to accept drastic cuts to pay and hours to limit mass job losses, under a deal agreed with airline chiefs.

Thousands of pilots will vote over the next week on a deal negotiated between the UK’s flag carrier and the British Airline Pilots’ Association (BALPA) over the past three months.

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International Airlines Group (IAG.L), which owns BA, came under heavy fire from unions and MPs after announcing plans to axe up to 1,255 pilots and up to 12,000 jobs in total earlier this year. The company warned in April it had run out of other ways to save cash as the pandemic has hammered its revenue.

The deal could see compulsory pilot job losses limited to around 270 staff, according to the union.

BALPA’s general secretary Brian Strutton said forced redundancies were “a matter of huge regret,” but said the union had negotiated the best package possible.

READ MORE: UK airports predict £4bn in lost revenue this year

Pilots are being urged to accept 20% pay cuts, which will eventually drop to 8% over the next two years and then towards current levels “over the longer term.” The package would also see voluntary redundancies, part-time working, and external secondments to limit costs.

Around 300 pilots would be placed in a “holding pool” on reduced pay, “ready to return to flying as demand picks up,” BALPA said in a statement late on Wednesday.

The union said the measures would avoid any controversial “fire and rehire” measures for pilots, but acknowledged BA had not accepted all of its recommendations to prevent any job losses. “Given BA's intransigence we have put together the best package we can to save as many jobs as possible,” said Strutton.

IAG’s chief financial officer Stephen Gunning said on Thursday the company welcomed the union’s plans for a consultative ballot over the deal reached with the ariline. “This is in response to the COVID-19 crisis affecting the aviation industry,” he said. A further company statement will be released after the ballot closes.

The pandemic has taken a heavy toll on BA and the rest of the aviation industry. The company announced last week it would retire its entire fleet of 747 jumbo jets earlier than planned.

The announcement of 12,000 potential job cuts came after its worst first-quarter losses since the 1980s. It sparked a backlash from unions and MPs across parties.

Conservative MP James Sunderland said in a Commons debate last month that BA had behaved “disgracefully” after taking taxpayers’ cash under the furlough scheme, designed to protect jobs. Another Conservative, Jerome Mayhew claimed BA had used the furlough scheme as a “convenient funding scheme for a long-planned corporate restructuring.”

READ MORE: Tory MPs revolt over BA job losses

The storm even saw transport minister Kelly Tolhurst warn the furlough scheme was “not designed” to support firms who swiftly handed staff redundancy notices.

But IAG saw passenger numbers and revenue plummet as global air travel collapsed after the pandemic hit earlier this year. BA is gradually increasing flights to short-haul destinations but does not expect passenger demand to return to 2019 levels until 2023.

BA’s CEO Alex Cruz laid bare the company’s troubles in a blogpost when the job cuts were confirmed. He paid tribute to staff, but wrote: “There is no government bailout standing by for BA and we cannot expect the taxpayer 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.”

The government has faced criticism for not offering aviation more support. Transport secretary Grant Shapps would not be drawn on potential suspension of air passenger duty on Sky News on Thursday.

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