British Airways Pilots Face 50% Pay Cut While Top Executives Give Up 20% Of Their Salary (If Any)

British Airways pilots are facing a 50% salary cut for the coming three months after a management decision about the future and longevity of the company in the current crisis.

Sharp edged detail as reported by various news sources: British Airways top executives such as IAG chairman Willie Walsh will take a pay cut of just 20% in the same period, the airline chiefs including British Airways CEO Alex Cruise haven’t made public how much of their salary they’ll sacrifice.

The communication yesterday wasn’t at all positive in the light of what else the company had to say in recent days, citing an extremely difficult time for British Airways unlike which they’ve never faced before.

Making a decision to administer pay cuts to a group of employees that still earns a substantial salary while essentially not being able to work at all due to current flight bans is one thing but then making a concession of just 20% salary reduction for top management?

The Financial Times reported that IAG and their Airlines top bosses appear to be still flying high while the airline is on the ground.

British Airways pilots are to be hit with a 50 per cent pay cut to their basic salary for April and May, split over three months, as the airline becomes the latest to try to cut costs in the wake of the deepening coronavirus pandemic. The agreement with unions will see BA’s 4,500 pilots required to take two weeks of unpaid leave in each of April and May, with a deduction from basic pay spread over three months.

It comes a day after Willie Walsh, the chief executive of BA’s owner IAG, took a 20 per cent pay cut for the remainder of his contract until the end of June, becoming the latest airline executive to reduce their salary. The chiefs of IAG’s other airlines, which include Aer Lingus and Iberia, will also take a reduction.

… However, a union source said that the pilots’ pay cut would work out at less than 50 per cent based on an agreement that pilots can temporarily suspend their pension contributions, with BA redirecting normal company contributions into their basic pay.

The agreement with pilots follows a doom-laden memo sent by Alex Cruz, BA’s chief executive, last week that warned staff that the carrier would have to cut jobs, suspend routes and ground aircraft because of the coronavirus pandemic. Mr Cruz told 45,000 staff in the message entitled “The Survival of British Airways” that BA was “under immense pressure” despite a robust balance sheet and the support of a strong parent company in IAG. …

Under new emergency measures introduced in Spain this week, Iberia is asking for government permission to lay off for three months up to 90 per cent of flight staff, as well as personnel in areas such as airport handling, line maintenance and cargo.

Staff in the corporate headquarters will be temporarily reduced by up to 70 per cent. Under the new Spanish rules, workers who are temporarily suspended will receive social security payments amounting to about 70 per cent of their salaries; their employers are excused from making social security payments for the duration. …

So Iberia will send home more than 80% of their staff, British Airways warns of imminent job losses and cuts pay for pilots (and likely other staff to follow).

Whilst under local labor laws the employees who are furloughed and incur pay cuts might be eligible for social security supplements such as per the Spanish model outlined in the article the real devil is in the detail of the signal coming from IAG’s boardrooms.

Walsh is taking a 20% pay cut for the next few months? The CEO’s of the group airlines will take “a reduction” and notably not even a number has been given.

That’s a pretty audacious message coming from the upper echelons of the company. As per Sky News Walsh is currently drawing a monthly salary of GBP 71,000 so 20% of that would be roughly GBP 14,000. I wonder how he’ll manage to pull through these difficult times!?

I’d say that a pilot will be ok with half of the substantial salary especially if there is very little work to do (maybe they’ll go to the simulator and undergo their required trainings while the planes are grounded?) but this isn’t the end of the line for cuts over at British Airways.

Conclusion

No doubt airlines  will face hardship this year and possibly the next as well. There is also no doubt in my mind that the governments will introduce a far reaching bailout plan for the aviation industry worldwide to keep the big airlines alive. Many smaller ones might not make it at all.

Other CEO’s like Alan Joyce of Qantas have announced they would work for free until this crisis is over. It’s mind boggling to me how IAG’s top management can paint a 20% pay cut for themselves as a concession and imagine staff, unions and the public would be ok with that? Very poor leadership style. The airline might be on the ground but management is still up on cloud nine!