British Airways Pilots Get 50% Pay Cut, CEO Gives Up Nothing

Filed Under: British Airways

It’s times like these where airlines need great leaders… and then you have the CEOs of IAG and British Airways.

British Airways pilots given 50% pay cut

Like most major global airlines, British Airways is in a dire situation. Just days ago, British Airways CEO Alex Cruz sent a note to employees with the title “Survival of British Airways.”

The Financial Times reveals that British Airways pilots will be getting a significant pay cut over the next few months, which equates to roughly 50%:

  • For April and May, British Airways pilots are getting a 50% reduction in their basic salary, which will be distributed over three months
  • Pilots will have to take two weeks of unpaid leave in April and May

As the airline described this to pilots, this is intended to address “the immediate threat to the business in the face of Covid-19 and the unprecedented impact this is having on the airline.”

BA CEO doesn’t take a pay cut, IAG CEO takes 20% pay cut

While British Airways CEO Alex Cruz tells employees the company is in a fight for survival, and is reducing pay for pilots, how much of a pay cut has he indicated he’ll take? Nothing so far…

Meanwhile Willie Walsh is the CEO of IAG, the parent company of British Airways. He’s the former CEO of British Airways, but got promoted to CEO of IAG several years back. He’s expected to retire this summer. Unlike Cruz he will be taking a pay cut… but only of 20%.

The story of his retirement is an interesting one as well. He was only expected to retire in a year or two, but it was suddenly announced at the beginning of the year that he’d retire earlier than expected.

No reason was really given, but last year he sold over $4 million in IAG stock to finalize his divorce, and he also allegedly has a relationship with an employee. However, the company claims that neither of those things is related to his departure.

Bottom line

When times are good, airline executives are the ones who benefit the most from it. When times are bad, they are also the ones who should be leading by example and taking pay cuts before anyone else.

In many cases these cuts are more symbolic than anything, since a lot of executive compensation comes in the form of bonuses and stock options, and when executives give up their compensation, it’s typically just their base salary.

It’s incredibly disappointing to see Cruz not take any pay cut before giving pilots a 50% pay cut, and to see Walsh only take a 20% pay cut.

Comments
  1. In fairness to him, his total take home this year will have taken a massive cut as he presumably will get minimal bonus and any shares he gets (or indeed has) will be worth less than last year.

    That said, he has more than enough money as it is and I think it’s idiotic of him not to have taken a symbolic cut to his basic pay to rally the troops, not an inspiring leader

  2. Alex Cruz has always been the lowest of the low. He doesn’t belong at the helm of a full-service mainline airline, he is budget-ceo with a budget-leadership qualities and the sooner BA get rid of this charlatan the better.

  3. The Executive Management will likely be working overtime over the coming months. It would sure “sound” nice as a gesture, but does it make any sense, when compared to employees who won’t be working?

  4. Depressingly predictable position by the “leaders” of what is one of the most buccaneeringly free-market / capitalist of the big legacy airlines.

    Just like bankers in 2008, they believe pain is for “ordinary people” while they themselves are superheroes. Do we not understand just how amazing they are?!

    We’re all in this together, of course. But some animals are more equal than others.

  5. How about this for US carriers: Any US airline CEO requesting a government (ie taxpayer) bailout MUST relinquish ALL personal equity stakes, decline ALL future bonus payouts, AGREE to a base salary cap of no more than $500K annually, and be PROHIBITED from any future stock buybacks. That’s just for starters.

  6. CEOs are generally paid entirely with some form of stock, so when you hear CEOs saying they are taking no salary its really a moot point, yes the optics can be bad when they dont but a CEO taking a pay cut doesnt do anything.

    Saying a CEO should forgo any personal equity? Haha why would you want to work for or buy stock in a business when the manager has no incentive for the company to perform well.

  7. I think it is safe to assume that every C-suite manager of any publicly traded company that size has a decent amount of savings (cash, not stock) that allows to continue their (and their family’s) life style for quite some time, unless they are degenerate gamblers.
    Nobody likes to forgo income, especially if the developments are as acute as they are. But the gain in credibility and the image, both within the company and public, may very well offset the “loss” of such a maneuver in the long term. Even if said company ends up crashing.

  8. @Steve_cc
    The incentive of the vast salary should be enough.

    Or should I tell my employer that the salary they pay me is alright, but I’m going to do a pretty half-assed job unless they give me a serious cash/ stock incentive?

    And as we’ve seen, all that incentivisation has done is use any profits to buy back shares leading to a short-tee ramp in share price — which just serves to make the executives even bigger bonuses. And that’s helping the owners how?

  9. Same with Lufthansa, only a 20% cut.

    Compared to Marriott’s CEO taking a 100% cut until year end and other hospitality CEOs doing similar things the airline industry’s leadership is lacking real empathy. It shows in the airline’s service too.

  10. So the line takes a haircut and the CEO is taking money from the company that’s hemorrhaging.

    Alex Cruz: Leading by looting.

    Not a great look.

  11. Horrendous leadership. Executives want front line workers to take the brunt of impacts – some of whom are living on very meager means – but don’t want to give up anything from their own lifestyles or paychecks is disgusting. Entitlement beyond any comprehension.

    And to people who say they work hard etc. etc. – they are earning millions of dollars a year many hundreds of multiples of their lowest paid workers. They should ALWAYS be working non-stop. That’s the job. You’ll get no sympathy that this is a ‘stressful’ time for them or they’re working ‘overtime’. Every executive / c-suite I’ve ever worked with work long hours and weekends in good times. That’s literally what they sign up for.

  12. Draconian economic measures, but interestingly in every industry, everybody is singing along the same tune.

    I find it really strange that this topic hasnt been debated, or reviewed. Everybody is accepting what is being reported, but nobody questions anything.

    Very soon the world is going to wake up and realize that the medicine was worse than the disease. But then again most of the and World has a genetic herd mentality. is brainwashed, or deadly scared, .

    What is the point of having a healthy body if there is nothing to eat.

  13. I just read Ben Smith AF KLM CEO took a pay cut
    Often wealthy people with probably multiple homes , can retire at any time and a nice bank balance, who tell staff they need to tighten their belts

  14. @JM
    I’m intrigued you still think this is all pretend. Your comment reminded me of the delusional mother watching her son in a military parade, and noting that everyone was marching out-of-step except her clever little Johnny.

    I’m no epidemiology expert but I guess it’s like climate change: when you reach the point where *every* reputable expert is saying the same thing, it probably makes sense to listen to them.

  15. While my comment is unrelated to the travel/airline industry, this is disrupting every business (most in a negative why, while others are up). The point I’m going to make is I predict within a year the headline will be about CEO pay being even more than in 2019 if companies and related stocks bounce back. The longer we stay at these lower levels the longer it will take to recover. But mark my words, the “C” suite will get “free” stock warrants for bargain basement prices. If BA stocks get within 10-15% of it’s stock price in 2019 the CEO will get a very hefty bonus while his employees will get next to nothing. We’ve seen it before, we’ll see it again. And even if BA or AA or other file bankruptcy, they’ll keep the CEO compensation within the new company. The only way these guys get hurt is liquidation.

  16. I don’t think not taking a pay cut in a time of crisis is a way to determine one’s quality of leadership. i do think it’s morally the right thing to do in this situation but it’s not by far necessary if you don’t have to. People bash Alex Cruz and WW but they’re the reason IAG can even withstand what is going on right now. They have very strong liquidity and that’s due to running a tight ship from the get go. Of course to the displeasure of some. Same with easyJet and Ryanair but Look at virgin at the mercy of the government begging for money. Everyone to be fair is at the mercy of the government somewhat but it’s only those that have built a resilient balance sheet that will survive (bar you’re a national carrier). So in my opinion they’re great leaders, do I think they should take a larger pay cut? Maybe but I’m not using that to cloud my judgement about their leadership. Imagine anyone else being at the Helm of IAG at this point besides WW. I won’t have the confidence that the business will survive if WW had not been at the helm.

  17. I think it’s really difficult. On one side he needs to show an example – all taking the pain etc. On the other side, the pilots won’t be working for this entire period, in the meantime he’ll be working harder than ever trying to manage the business through the crisis and hopefully save as many jobs as possible.

  18. Not joining the crowd on this one.

    Pilots work hours reduced by 50% with a resulting 50% salary. Most workers in the next two months would be glad to get 50% of their regular hours instead of being laid off.

    Cruz will continue to work long hours if he is trying to save the company from bankruptcy. Would you be happy to see him working 2 1/2 days a week on your behalf? And golfing alone the rest of the time? (For taking the 50% cut you want?)

    Does anyone on this blog understand that if MR Cruz is “rich” then he probably just lost perhaps 40% of his stock portfolio and thus his real income. Is that enough for you?

    Unfortunately everyone who is living off a pension has just also potentially lost 40% of their pension income as well (if that’s where it stops). The Ontario Teachers Pension Fund (I think it was) was heavily invested in Northern Telecom, a world-wide blue chip company. When it suddenly collapsed every teacher or investor in the pension funds lost almost everything.

    So don’t say the market is for the rich, it pays my meagre pension and almost all my friend’s as well. Pension funds invest as that’s the only way to meet the retirees needs.

    Oh, by the way, “consensus science” may all agree that climate change is the result of bad people with carbon usage. But there are real scientists in the world who do not agree. So if all the models that have been modified and shifted and massaged to try to fit what actually is happening can accurately predict what will happen as a result of the drop in carbon in the environment from Covid then perhaps I might yet be converted to the fold. I suspect a major failure will demonstrate the models are at best so flawed as to be useless.

  19. Did Alex learn “The Art of Leadership” from tiny hands POTUS?

    Ridiculous.

    As a loyal full fare paying F BA flier it disgusts me. I may just take Virgin one or two times next to make a point though it will fall on deaf ears and only hurt the people that make my flights enjoyable. 🙁

    A true leader would either take the same cut or take a pound as salary until things normalize.

  20. Why no story about United’s CEO threatening massive layoffs if the bailout package doesn’t get passed? How about you just use all that money you charge for baggage and change fees…oh wait that went for stock buybacks. Then how about you just reissue all that stock to raise more money?

  21. While I’m ultra left wing (I think there should be a strict pay cap for starters), these stories are always incredibly dishonest.

    The pilots are NOT getting a 50% pay cut, they are taking 2 weeks per month unpaid leave. The CEO isn’t taking any leave and has plenty of work to be doing. The scenarios are not remotely similar.

  22. Cruz was flown from Veulling- an airline that makes Ryan Air look good , to destroy BA as a full service airline and turn it into a cheap – wait in line for 45 minutes prior to boarding type of operation
    Willy was bad but Cruz is awful
    He has succeeded in his mission however and BA as we knew it, is no more .

  23. @Azamaraal

    It’s the gesture that is important.

    A leader should lead by example and it really isn’t on to expect employees to take a pay cut / deferred pay or whatever if you aren’t prepared to do it yourself.

    It just dosen’t pass the smell test.

  24. No surprise at all lots of decent front line staff at BA but remember their absolutely toxic management (that has variously been found guilty of criminal price fixing and the infamous dirty tricks campaign). They are not a nice company.

  25. Disliking a flag carrier may be undiplomatic but I really dislike this airline and it doesn’t surprise me in the least to see BA management behave like this toward their employees. It’s as if they don’t care.

    I don’t know whether the pilots have collective bargaining, but frankly, if the airline is grounded, if they want to hire new people, this makes sense. They aren’t working, they got a pay cut.

  26. This is the very weakest form of leadership. Whatever happened to ‘leaders eat last’. This is a catastrophic mistake by Cruz. He will cited in leadership case studies, for years to come, as the man who destroyed the morale of his workforce, over many years, by poorly thought through cost cutting and by utterly unnecessary confrontations with his employees. Also, he will be slammed for failing to share the pain of a genuine crisis. Leading by example it is not! Cruz – the man who destroyed a once great airline. This is what happens when CEOs are rewarded for short term performance rather than long term success. Sad and weak, weak, weak.

  27. @fine

    They DID NOT GET A PAY CUT.

    They are paid by the hour per contract.

    With all the cancelled flights there are less hours.

    So for most they work less and thus earn less.

    In good times like the last 10 they worked as much as they wanted with the shortage of pilot’s – and thus made a bundle. If they didn’t save for a rainy day they also are to blame.

  28. @Callum and @Azamaraal
    Yes, this is a pay cut. I should know.

    Also, this was agreed to by BALPA. What use they are nowadays.. none.

    Want to know what happens to long-haul crew being sent out on repatriation flights? Quarantined in rooms for days hoping for the next flight to come out. With £3/hr pay. And guards.

    And we haven’t heard from señor cruz for weeks (the conference call transcript means jack as we read that in the papers, not from him).

  29. @Azamaraal

    Yeah, after we took our last pay cut 10 years ago during the “good times” (I’m assuming you’re referring to IAGs good times as we saw no benefit of that, hence the walkout last year) and saw no increase (what you call “making a bundle”), we did save what we could. That’s fast disappearing.

  30. Why BA Boss  have never taken care to create a reserve funds for the difficult days??? Last year he is the one Order 200 MAX airplane where is the money Mr CEO???

     

    The only Solution to Borrow against there assets …There Airplanes, Because the worth a lot of $$$ and soon the will fly again!!!

     

    NOT AGAIN TAXPAERS MONEY TO SAVE THEM…LETS USE THE MONEY TO BUILD HOSPITALS AND HELP THE POOR!!!

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