Picture: REUTERS
Picture: REUTERS

London — British Airways (BA) is in talks with its union about a plan to suspend about 32,000 staff, a person familiar with the situation said, marking one of the industry’s most dramatic moves yet to survive the coronavirus pandemic.

Having already agreed a 50% pay cut for its pilots, the British national carrier is now nearing agreement on a deal to suspend about 80% of its cabin and ground crew, engineers and office staff to see it through the worst crisis in its history.

Owned by IAG, one of the largest and most financially robust airline companies in the world, BA has already said it is in a fight for survival, but, “The deal is not done yet,” the source said.

Separately, on Thursday, IAG cancelled its final dividend, saving €337m. The stock had risen on the jobs plan, but was down 0.5% after the dividend decision.

Hundreds of companies across a range of sectors have scrapped dividends to conserve cash, but the move by IAG marks a particular blow for investors because it was the third highest yielding stock by dividend on the UK’s benchmark FTSE 100.

With planes unable to fly because of travel restrictions, compounded by a plunge in demand over fears of Covid-19 contagion, airlines worldwide have grounded most of their fleets, and many have said they need government support to survive.

BA has joined the global industry race to conserve cash. In recent weeks Qantas Airways put two-thirds of its workforce — 20,000 workers — on leave, while Lufthansa applied for short-time work for about 31,000 crew and ground staff at its core brand until the end of August.

British budget airline easyJet has said it will lay off its 4,000 UK-based cabin crew for two months.

US airlines are set to receive $25bn in grants to cover payrolls over the next six months, but are still encouraging work-week reductions, unpaid leave and early retirement as they face more cancellations than bookings.

The companies are trying to avoid making staff redundant so they can respond quickly to any increase in capacity when a recovery comes.

BA has been in talks with the Unite union for a week. “Unite has been working around the clock to protect thousands of jobs and to ensure the UK comes out of this unprecedented crisis with a viable aviation sector,” a spokesperson for the union said.

IAG, which owns 598 aircraft across its network, which also includes Aer Lingus, Iberia and Vueling, is cutting capacity by 75% in April and May. BA has already suspended flights from Britain’s second busiest airport, Gatwick, and London’s City Airport.

In Europe, more than 20,000 flights departed or landed on January 23. Two months later, after Italy emerged as an epicentre for the virus and travel restrictions went into force, flights dropped to fewer than 5,000 a day.

Britain has launched a job-retention scheme that covers 80% of salary capped at a maximum of £2,500 a month. But some airlines, including rival Virgin Atlantic, have said they will collapse if they do not get more help.


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