Thursday, 30 April 2020

A different kind of airline for a different kind of future.

Photo British Airways

In light of the impact of the coronavirus COVID-19 pandemic on current airline operations and the very slow recovery of passenger demand to pre-COVID-19 levels, the IAG's UK airline British Airways will be making around 12,000 staff redundant.  The job losses will be from across the company and in a wide variety of roles,  at this stage, it is hard to say for sure, but early indications ate that over 1000 pilots will be among the 12,000.  British Airways is formally notifying its trade unions about a proposed restructuring and redundancy programme and the proposals remain subject to consultation.  Despite IAG boasting how they were not going to avail themselves of government support and that it has enough money to ride out the crisis, British Airways has since furloughed 22,626 employees during April - meaning the UK government is picking up 80% of the wage bill!

The effects of the crisis on an airline as big and as far-reaching as British Airways can not be underestimated and in the words of the CEO Alex Cruz,  the carrier has to prepare for a different kind of future.  There are some in the industry that believes 12,000 is a rather conservative estimate on the number of jobs that will eventually be lost at the airline. As the airline slims down its operations and global reach, it will trigger further job losses down the supply and service chain, which in turn will have a big impact on the aviation industry in the UK as a whole. Especially, if, as expected Richard Branson and the Virgin group cannot find a buyer for Virgin Atlantic and is not rescued by 49% co-owner Delta Air Lines. 

It is hard to say how quickly recovery will be for the airline industry, some airline CEO's are predicting an almost immediate bounce back and heavy discounting, a view held by Ryanair's Michael O'Leary. Whilst the majority of those that have made their views known seem to think it will take between two and five years to get back to the levels of passenger numbers seen in summer 2019.  One or two have even intimated recovery could take as long as the end of this decade,  it is hard to say who is right or wrong,  there is just no way of knowing for sure,  as there simply hasn't been an epidemic and other such crisis as deep and as global the current situation now evolving around us is. Our own Jason Shaw believes there will be a mini bounce back in the summer when lockdown is lifted and travel restrictions relaxed, yet passenger demand back up to pre-COVID levels won't arrive until the latter part of 2014.

Letter to colleagues from Alex Cruz, Chairman and CEO at British Airways
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.  
Thank you. 

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