British Airways Furloughs 30,000 Staff to Cope With Coronavirus
British Airways Furloughs 28,000 Staff After Deal With Union
(Bloomberg) --
British Airways will furlough more than 30,000 employees to save cash during the coronavirus pandemic after extending jet groundings to include almost all of its passenger fleet.
Following labor talks, all idled staff will receive 80% of their usual pay, the Unite union said in a statement Thursday. That will be funded by the U.K. government up to a value of 2,500 pounds ($3,095) a month under a national plan, with the airline picking up the tab for wages beyond that level.
British Airways, which also reached a deal with the GMB union, said the layoffs through April and May will affect cabin crew and ground-based employees, with 4,000 pilots separately agreeing to take four weeks of unpaid leave. Parent IAG SA will increase groundings to 90% of capacity from 75% estimated previously across carriers that include Madrid-based Iberia and Ireland’s Aer Lingus.
British Airways is falling into line with peers around the world in furloughing workers as the virus effectively wipes out global travel demand. Among U.K. rivals, EasyJet Plc laid off cabin crew for two months Monday after grounding its entire fleet, while staff at Virgin Atlantic Airways Ltd. have signed up for eight-week breaks, extended sabbaticals or voluntary severance.
IAG, as International Consolidated Airlines Group is known, said earlier it would cancel a planned 337 million-euro ($366 million) dividend payout and set aside all of last year’s profits to help ride out the travel decline.
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As part of the lay-offs accord, permanent redundancies being sought by BA will be halted, Unite said. Employees will also be able to divert pension contributions into their pay for a short period of time to top up salaries.
European carriers will be worst hit by the crisis, and have enough cash to survive only two months on average, according to the International Air Transport Association.
London-based IAG is better placed, with more than 7 billion euros in cash, according to Chief Executive Officer Willie Walsh, who has said the group has no plans to seek state funding.
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