Coronavirus cuts: British Airways slashes up to 12,000 jobs

The British flag-carrier takes painful steps as it forecasts a long downturn.

By Bloomberg News, April 29 2020
Coronavirus cuts: British Airways slashes up to 12,000 jobs

British Airways will slash its workforce by almost 30% in a painful restructuring aimed at shrinking the airline group to make it through a downturn that could last for years.

As many as 12,000 jobs will be lost, while a US$1.4bn charge from fuel and currency hedges added to the group’s first-quarter operating loss – and with its planes on the ground, BA parent IAG said operating results are likely to be “significantly worse” in the current period because the virus has pushed down demand.

BA, which has already placed 22,626 workers on its furlough plan, will now start discussions with labor groups on permanent reductions.

The harsh steps are likely to be repeated by other airlines in days and weeks to come, after flight restrictions aimed at fighting the coronavirus threw the industry into its steepest downturn ever. Carriers are in desperate need of cash, with peers such as Air France-KLM and Lufthansa chasing multibillion-euro bailouts. IAG has so far avoided tapping government-supported fundraising plans.

“In the last few weeks, the outlook for the aviation industry has worsened further and we must take action now,” British Airways Chief Executive Officer Alex Cruz said in a letter to employees. “Any money we borrow now will only be short-term and will not address the longer-term challenges we will face.”

Fatal mix for airlines as travel slump meets oil price drop

Like other European carriers, British Airways was hit with a double-whammy from fuel-hedging contracts that failed to protect it against the sudden drop in oil prices.

European airlines typically hedge most of their fuel costs to protect against a sudden jump in one of their biggest expenses. But because of the way some of the contracts are structured, the unexpected drop has forced many of them to hand cash over to banks even as many ask governments for multibillion euro taxpayer bailouts.

Lufthansa and Ryanair have already said they’ve lost money on hedging contracts, with more revelations expected with quarterly results.

IAG doesn’t expect passenger demand to recover to 2019 levels for “several years.” The company said its operating loss before exceptional items was €535 million in the period ended March 31.

Now its fleet is almost fully grounded, sapping revenue further. With cash and undrawn credit lines totaling 9.5 billion, the carrier is undertaking painful cuts to stretch its resources during the downturn.

Shares of IAG have declined 65% so far this year, giving it a market value of US$5.4 billion.

The job cuts are also a blow for the U.K. government, which is paying part of the wages of furloughed workers in the hope of preventing a sharp spike in unemployment as the country remains in lockdown. Britain’s economy will contract by 7.6% this year, the biggest annual fall since 1921, according to Dan Hanson of Bloomberg Economics.

Syndicated

This article was published under license from Bloomberg Media and the original article can be viewed here

Singapore Airlines - KrisFlyer

14 Jan 2014

Total posts 310

BA continues its race to the bottom!!

20 Oct 2015

Total posts 41

By standing down staff who aren't needed due to BA having so many fewer flights, no lounges open across the UK, etc? That's not a race to the bottom, it's a race for survival.

AT
AT

Qantas - Qantas Frequent Flyer

14 Sep 2012

Total posts 293

I predict network cuts included and wouldn't be surprised if B777 Singapore-Sydney leg doesn't return. Maybe a non-stop London-Perth on 787 would make more sense in post CV world.

Joe
Joe

03 May 2013

Total posts 443

Get rid of the ghastly 777 and the old 'business class' before they make a comeback.

Qantas - Qantas Frequent Flyer

25 Sep 2013

Total posts 1190

Not going to happen. I can't imagine BA wanting to incur additional costs on refurbishments at this time.

29 Apr 2020

Total posts 3

Stop being a troll. We all get it you don't like the 777.

22 Jan 2018

Total posts 78

I read on the Simply Flying blog that some Usa flights might get the chop, like New Orleans and Pittsburgh. I also suspect their increased frequency to BLR from 7x to 10x weekly won't happen. Some JFK flights may also get cut.

Qantas - Qantas Frequent Flyer

11 Nov 2015

Total posts 37

It's fascinating to see how each airline responds to this threat.

My guess is a few of those old gnarly well run outfits (QF anyone ) will end up expanding their links.

Owning no, but running certainly, other National Airlines.

First cab off the rank... that pesky Cathay...and then BA.

BAEC

10 Jul 2019

Total posts 5

I wouldn't say the home grown fave is better suited or will favour any better than the current management do at running the two airlines mentioned, they are all very different airlines afteralll in vastly different markets.

It will be interesting to see how or if airlines work together post COVID. Cathy certainly reducing capacity and routes. BA for sure, however cutting Australia I don't see happening in a post Brexit and post COVID world UK PLC will need to strengthen relationships with key partners not weaken them.


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