British Airways Pilots Take Pay Cut to End Row Over Job Losses

British Airways pilots accepted a pay cut of 20% in a deal to limit job losses, resolving a bitter dispute at the IAG SA unit as carriers seek to weather the global slump in air travel caused by the coronavirus.

Just over one-fifth of the 1,255 redundancies initially planned will now go ahead, and some of those may also be averted, the British Airline Pilots’ Association said in a statement on its website late Friday. Under the terms of the agreement, pilots will accept the initial pay cut of 20%, which will taper to 8% over two years, and then be phased out entirely “over the longer term,” Balpa said.

Airlines have been battered by government restrictions brought in to contain the coronavirus. Carriers had been pinning their hopes on catching the tail-end of the profitable summer tourism season, but disruptions continue amid viral flare-ups in many countries, including France and Spain have led to new curbs on travel.

The industry last week pushed back its hopes of a rebound in traffic levels. A full recovery is unlikely before 2024, a year later than it recently predicted, the International Air Transport Association said. British Airways shared that bleak assessment, saying it does “not expect our company to return to 2019 levels of business until at least 2023.”

“Therefore we need to act now to reshape our company for a very different future,” IAG said yesterday.

The premium markets on which IAG relies may be among the last to recover as economies stumble and people shun long-haul flights. The company also hasn’t received the billions in aid pumped into rivals Deutsche Lufthansa AG and Air France-KLM, with help limited to furlough funds to protect jobs and state-backed loans.

Job Cuts

The carrier has faced criticism from U.K. lawmakers over a plan to cut as many as 12,000 jobs overall -- or about 30% of the total -- as it seeks to preserve cash and cope with a slow recovery.

The House of Commons Transport Committee said in a report in June that while some workforce reductions were inevitable, the carrier had sought to exploit the coronavirus crisis to slash headcount and weaken employment terms for remaining staff.

Under the terms of the new agreement, redundancies will be limited to 270 pilots, a number that should diminish over time “as mitigations take effect,” the union said. The airline also agreed not to follow through on its threat to fire and rehire pilots on new terms if a deal couldn’t be reached.

©2020 Bloomberg L.P.

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