British Airways will give staff £400 and a free return flight to help make up for missed bonus payments.

The payout, detailed in a letter to workers seen by Bloomberg and confirmed by British Airways will be made to all UK employees. Staff were due to receive only a fraction of their standard bonus because earnings fell short of a £1.5bn threshold and the carrier missed customer service and punctuality goals.

"The 2016 all-colleague bonus scheme has triggered at a much lower level than in previous years," the London-based unit of IAG said in the staff letter. "However, the British Airways board has decided that all eligible colleagues in the UK will receive a bonus with their March pay."

Alex Cruz, who took over as head of British Airways last April, needs the support of staff after embarking on a four-year programme to boost margins. Measures include cutting almost 700 back-office jobs, as well some maintenance posts, switching to paid-for food on short-haul flights and adding extra seats across the fleet to bring seat density into line with rivals.

Employees will still receive a small part of their usual bonus for meeting on-time performance targets in one quarter. For much of the year the carrier struggled to integrate a new check-in system, delaying flights and weighing on customer ratings, while air traffic control strikes also disrupted schedules.

Brexit factor

No profit-related bonus will be paid after British Airways’s earnings were held back by a slowdown in business travel ahead of the June 23 referendum on Britain’s membership of the EU, together with an oversupply of short-haul seats as a string of terrorist attacks crimped demand.

Confirming the one-time payments and additional free flights, British Airways said in an e-mail that it was "proud of how hard our colleagues work to support our customers". The airline wasn’t immediately able to provide the previous year’s bonus figure.

Managers are separately eligible for an award based on individual performance. The terms of the 2017 bonus plan would be detailed later in 2017.

Last week, British Airway’s debt was lifted to investment grade by Fitch Ratings, which cited Cruz’s cost controls as "the driver" of the airline’s profitability, offsetting the effect of economic and political turbulence including the Brexit vote and the possibility of further terrorist attacks in Europe.


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