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Coronavirus: BA 'no longer plans to fire and rehire staff'

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Tom Belger
·Finance and policy reporter
·3-min read
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British Airways CEO Alex Cruz speaks during a news conference in Tel Aviv, Israel November 9, 2017. REUTERS/Nir Elias
British Airways CEO Alex Cruz. Photo: Nir Elias/Reuters

British Airways’ chief executive Alex Cruz has said staff will not be forced to sign new contracts under a draft deal agreed with unions.

Conservative MP Huw Merriman, chair of parliament’s transport select committee, said what had been dubbed a ‘fire-and-rehire’ plan now “seems to be off the table.”

Cruz gave evidence before the committee on Wednesday, updating MPs on long-running negotiations with unions and on BA’s passenger numbers and forecasts.

BA, owned by IAG (IAG.L), sparked a national outcry when it announced up to 12,000 job cuts in the early stages of the pandemic. Unions warned remaining staff also risked losing their jobs if they did not accept new contracts.

Cruz told MPs that “agreements in principle” had been reached with non-pilot unions, with a deal already reached at the end of July with pilots’ union Balpa. But the deals have not yet been approved by union members, and their implications for staff terms and conditions are not yet clear.

READ MORE: UK chancellor says ‘job done’ on furlough despite rising unemployment

“Some of those areas have already balloted and accepted those agreements; some are in the process of balloting,” he said.

“We hope the results of those ballots will be to accept these agreements. That will end this process and ring certainty.”

There would be “no need to issue new contracts” if the deals were approved, with BA instead using a “standard union agreement” to amend existing contracts.

He said he hope the process would “finish” at the end of this week, with Wednesday marking the 140th day of BA’s consultation with unions. BA’s intention had always been to secure an agreement, he added.

Cruz also spelled out the scale of the crisis facing the company, calling it an “impossible situation” and the “worst crisis British Airways has ever gone through” in its century-long history.

The airline flew 187,000 passengers in and out of the UK last week, down from just under a million in the same week a year ago, according to Cruz. Only 25-30% of its flight schedule is running.

It lost £711m ($917m) in the second quarter of the year, compared with a £309m hit in the first quarter of 2009 during the global financial crisis, he added.

The CEO defended BA’s “deep restructuring” in the face of widespread criticism of mass job losses, including among furloughed staff. “The relationship is very clear. Fewer passengers means fewer flights, and fewer flights means fewer people required to actually service them.”

He said he “had to act” fast by cutting staff numbers earlier this year, but said he understood MPs’ concerns and “deeply” regretted the loss of so many staff.

But the Unite union’s assistant general secretary Howard Beckett said last week reports that BA negotiations with unions had concluded were “unhelpful and misleading.”

“Unite remains in negotiations with British Airways in a number of different bargaining units. Even in areas where draft agreements exist, these are still subject to approval from members through a ballot.”