Heathrow Airport Pay Talks Falter as Union Ballots for Strike

(Bloomberg) -- Heathrow Airport Ltd. has rejected a union proposal on pay cuts as the London hub struggles to cope with a collapse in air travel, according to labor group Unite.

Management rebuffed a package under which all employees, including top executives, would have returned bonus payments, with most staff reverting to December 2019 salary levels, the union said Thursday. Shareholders also stood to lose 100 million pounds ($129 million) in dividend payments under the plan. Unite is balloting members on strike action.

A Heathrow spokesman said the Unite measures weren’t enough to see it through the coronavirus crisis. The airport’s plan is for a salary reduction of as much as 25% for about half of 4,700 front-line staff -- who include cleaners, security personnel and engineers -- to avoid compulsory redundancies.

Passenger numbers at what is usually Europe’s busiest hub have become stuck at less than 20% of typical levels as travel restrictions put people off flying. The long-haul trips in which Heathrow specializes have been hardest hit, with crucial North Atlantic traffic down 95% last month.

Bonus Cuts

Unite said some workers face pay cuts of 8,000 pounds a year under the Heathrow proposals. The union said its own plan would see the return of bonuses ranging from 700 pounds for the average employee to 566,000 pounds for Chief Executive Office John Holland-Kaye, who it said is also due to receive a 1 million-pound share-in-success payment.

Heathrow said no staff will be taking a bonus this year. About half the workforce would get the same or more pay under its own approach, the spokesman said, with the other half taking cuts to legacy contracts, some of which date back to when the airport was under government ownership.

The airport had losses of more than 1 billion pounds in the first half and says it’s burning through 150 million pounds a month. Other companies at the hub, including airlines, retailers and ground-handling firms, are cutting staff, with Holland Kaye predicting that a total workforce of about 75,000 could shrink by one-third.

Unite’s ballot on industrial action ends on Nov. 5.

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