Unfortunately we’ve gotten to the point where just about any bad news in the airline industry doesn’t come as a surprise. The latest bad news is that it appears a lot of British Airways employees will be without jobs soon…
IAG’s reports first quarter loss
IAG, the parent company of British Airways, Iberia, Aer Lingus, and Vueling, has today revealed some preliminary first quarter results:
- Before exceptional items, the airline group lost €535 million, compared to a €135 million profit for the same period last year
- Total revenue declined by 13%, to €4.6 billion
- IAG faced an exceptional charge of €1.3 billion resulting from unfavorable fuel and foreign currency hedges
- Passenger capacity, measured by available seat kilometers, declined by 10.5%
- Passenger revenue declined by 15.2%
- Seat load factor declined by 4.3%, to 76.4%
- IAG has reduced capacity in April and May by 94%
IAG announced significant losses for the first quarter
British Airways will make up to 12,000 employees redundant
Based on British Airways’ expectation that a passenger demand recovery will take several years, British Airways is formally notifying trade unions about a proposed restructuring and redundancy program.
Proposals remain subject to consultation, but it is likely that we’ll see up to 12,000 British Airways employees become redundant. For context, British Airways employs about 45,000 people.
This follows British Airways using the UK’s COVID-19 Job Retention Scheme, which has seen them furlough nearly 23,000 employees in early.
British Airways will lay off up to 12,000 employees
British Airways’ letter to employees
British Airways CEO Alex Cruz has written a letter to employees with the subject “Preparing For A Different Future,” and in it he outlines what we should expect at the airline in the future. I think the letter is worth sharing in its entirety:
Yesterday, British Airways flew just a handful of aircraft out of Heathrow. On a normal day we would fly more than 300. What we are facing as an airline, like so many other businesses up and down the country, is that there is no ‘normal’ any longer.
The global aviation body, IATA, has said that the industry has never seen a downturn this deep before, and that full year industry passenger revenues could plummet 55% compared to 2019, while traffic falls 48%. Many airlines have grounded all of their planes. Sadly, we will see some airlines go out of business with the resulting job losses.
Our very limited flying schedule means that revenues are not coming into our business. We are taking every possible action to conserve cash, which will help us to weather the storm in the short-term. We are working closely with partners and suppliers to discuss repayment terms; we are re-negotiating contracts where possible; and we are considering all the options for our current and future aircraft fleet. All of these actions alone are not enough.
In the last few weeks, the outlook for the aviation industry has worsened further and we must take action now. We are a strong, well-managed business that has faced into, and overcome, many crises in our hundred-year history. We must overcome this crisis ourselves, too.
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.
We do not know when countries will reopen their borders or when the lockdowns will lift, and so we have to reimagine and reshape our airline and create a new future for our people, our customers and the destinations we serve. We have informed the Government and the Trade Unions of our proposals to consult over a number of changes, including possible reductions in headcount. We will begin a period of consultation, during which we will work with the Trade Unions to protect as many jobs as possible. Your views matter and we will listen to all practical proposals.
The scale of this challenge requires substantial change so we are in a competitive and resilient position, not just to address the immediate Covid-19 pandemic, but also to withstand any longer-term reductions in customer demand, economic shocks or other events that could affect us. However challenging this is, the longer we delay difficult decisions, the fewer options will be open to us.
I want to pay tribute to the thousands of British Airways colleagues who are playing a vital role in the global response to the Covid-19 crisis. Whether you are supporting our repatriation flights or the transport of essential cargo; or one of the hundreds of colleagues volunteering with organisations such as the NHS, you have my sincere respect and thanks.
This has been a difficult message to write and one I never thought I would need to send. I know how tight-knit the BA family is, and how concerned you will be, not just for yourself but for your colleagues, too. We must act decisively now to ensure that British Airways has a strong future and continues connecting Britain with the world, and the world with Britain.
British Airways expects it will take years for demand to recover
It’s so sad to see that 12,000 people will likely be losing their jobs at British Airways. Over the past several weeks it has become apparent that most downsizing at airlines will become permanent, as the industry expects it will take years for demand to recover.
I’ll be curious to see how British Airways goes about layoffs, especially with the controversy surrounding their “mixed fleet” crews.
My thoughts are with those at BA — and in the industry in general — during these tough times.