British Airways has been accused of “heartless” behaviour by slashing thousands of jobs during the coronavirus crisis, after it said 12,000 workers could face redundancy.
Unions rounded on the company after its owner International Consolidated Airlines Group (IAG.L) warned it had run out of other ways to save cash as the pandemic has hammered its revenue.
Analysts said its €535m (£468m, $581m) first-quarter loss was its worst quarter since the 1980s, and warned of more job losses across the sector with recovery likely to take years.
The shock announcement on Tuesday night sparked fury from unions, which had negotiated deals to secure workers’ jobs and pay through the government furlough scheme in recent weeks.
Len McCluskey, general secretary of the Unite union, said the announcement would be felt like a “stab in the back” by staff. He said many had worked “heroically and unnoticed” throughout the pandemic on repatriation flights, putting their own health at risk.
"They simply do not deserve to be treated as a commodity to be disposed of in this way,” he said. “This is a heartless decision in a time of national crisis.”
Brian Strutton, general secretary of pilots’ union Balpa, said pilots were “devastated” by the news. “This has come as a bolt out of the blue from an airline that said it was wealthy enough to weather the COVID storm and declined any government support.”
Unions said staff should have been kept on furlough. Millions of UK workers including 22,000 BA staff are on paid ‘furlough’ leave through the government’s emergency job retention scheme, with HMRC refunding 80% of staff wages up to a £2,500 cap until at least June.
McCluskey called job losses a “conscious choice” rather than an inevitability, arguing other European airlines, unions and governments were collaborating to save jobs. “We simply cannot understand as to why [BA CEO] Alex Cruz is not doing the same,” he said.
Major US airlines have received bailouts worth $25bn, while France KLM and German airline Lufthansa are both likely to receive significant state support.
The Unite leader added: "To reject government support but then expect their own staff to pay the cost of such a misjudgement is irresponsible, dangerous and destructive and utterly at odds with the mood of the country at a time of crisis.”
Labour’s shadow transport secretary Jim McMahon warned aviation workers were key to the UK economy, and should not be laid off by leaders “who have reaped the rewards from their hard work.” He also said the UK government should have stepped in sooner to save jobs, with the chancellor so far rejecting calls for an industry bailout and dubbing it a “last resort.”
But the BA’s CEO laid bare the challenges facing the airline in a post on its website on Tuesday. Cruz wrote that with revenues plummeting, the company was trying to renegotiate contracts and reviewing its fleet, but such measures alone would not save enough cash to “weather the storm.”
Cruz paid tribute to staff still working during the crisis, but said the outlook had deteriorated further in recent weeks, with no certainty when lockdowns and border restrictions would lift. “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. “
Analysts and unions alike fear more job losses in the sector. The industry had already faced significant challenges before COVID-19 hit, from overcapacity to two tragic Boeing 737 Max crashes leading to the grounding of the plane. Monarch, Thomas Cook and Flybe have all collapsed in recent years.
Michael Hewson of CMC Markets said the key long-term issue was now how consumers “hold back and change their behaviour in the wake of this crisis.”
He said IAG’s announcement suggested it wanted to “get in front” of this challenge, with Hewson sharing the company’s expectation that a full recovery in aviation and travel could take years. Airlines are unlikely to need as many aircraft and staff in the months ahead even if more flights resume, as demand may remain significantly lower.
Hewson said airlines would struggle to resume normal service when social distancing could remain “for some time” without a vaccine. Cabins may have to be reconfigured to increase space between passengers, potentially pushing up fares and curbing demand further.
State bailouts may “merely delay some tough decisions,” according to the analyst. “It needs to be done in the knowledge that some of these loans may well never be repaid, and that job losses are likely to happen anyway to ensure that the airline remains viable, unless governments intend to renationalise them completely.”