British Airways In Union Talks About Furloughs, Expected To Suspend 36k Staff Company Wide

It’s no secret that airlines are under heavy pressure to cut costs right now and according to media reports British Airways is expected to soon announce the suspension of at least 36,000 employees.

The carrier is currently in talks with the respective unions but there is little hope nor option to avoid this step as BA just like many carriers has grounded the majority of it’s fleet and suspended most flights.

In recent interviews British Airways management has already announced that the company is in a serious situation and has to fight for survival. As such it doesn’t come at any surprise that the airline is now in the final stages of large scale suspensions.

The Guardian reported this morning that British Airways will soon announce 36,000 employees to be suspended.

British Airways is expected to announce it will suspend 36,000 staff, from cabin crew to ground staff, engineers and head office employees, because of the coronavirus pandemic.

The airline, which grounded its planes at Gatwick airport earlier this week, has been negotiating with the Unite union for more than a week.

The two sides have reached a broad agreement but still need to hammer out some details, the BBC reported. A BA spokesperson said: “Talks continue.”

Under the agreement, up to 80% of BA employees will be placed on furlough, but no one will be made redundant. …

Those affected will receive some of their wages through the government’s coronavirus job retention scheme. It covers 80% of salary capped at a maximum of £2,500 a month. …

BA’s parent company, International Airlines Group (IAG), is in a better financial position than other carriers. It has extended a £1.1bn credit buffer by a year to June 2021. This means it has access to €9.3bn (£8.2bn) in cash, cash equivalents and loans.

At least there will be a safety net for the employees affected even though it won’t cover their entire salary and greater London being one of the worlds most expensive cities to live in. They will definitely feel the pain of this crisis that will likely plague the industry for some time to come.

Conclusion

There isn’t any way around this for British Airways. A company that has the vast part of their operations suspended can’t keep on their staff until things are better without a light at the end of the tunnel. The carrier will need their cash reserved to ride this out which will be difficult enough even without the heavy burden of staff costs. Even £8.2bn would evaporate very quickly if BA had to continue paying that many people without generating any revenue at the same time.

Other UK airlines such as EasyJet and Virgin Atlantic have already laid off staff as well. I expect to see the same to be happening industry wide and across the globe. This is just the beginning. Of course many if not most of these employees will move back into the workforce once business starts up again.

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