LONDON: British Airways may be forced to cut more than a quarter of its workforce as the coronavirus pandemic takes its toll on one of Europe’s biggest airlines.
Parent company IAG (ICAGY) said in a statement day that British Airways is notifying labor unions about a restructuring program which will affect most employees and “may result in the redundancy of up to 12,000 of them.”
IAG, which also includes Spanish airline Iberia, said its first quarter revenues declined 13% to €4.6 billion ($5 billion) as it swung to an operating loss of €535 million ($579 million).
The airline group warned that losses in the second quarter would be “significantly worse” and that it expects that “the recovery of passenger demand to 2019 levels will take several years.”
“What we are facing as an airline … is that there is no ‘normal’ any longer,” British Airways CEO Alex Cruz said in a letter to staff.”
The news comes as flight bans and nationwide lockdowns are threatening to bankrupt airlines around the world. The “mounting financial crisis” facing carriers could cause revenues to tumble by as much as 55% this year, or some $314 billion, according to the International Air Transport Association. Some have sought government bailouts as they buckle under the financial strain.
Earlier this month, British Airways furloughed 30,000 employees on 80% of their regular monthly pay until the end of May, with the UK government covering the first £2,500 ($3,100) under its coronavirus job retention program.
But Cruz said the outlook for the aviation sector had worsened in the last few weeks and measures taken to conserve cash were not enough.
“There is no government bailout standing by for BA and we cannot expect the taxpayer to offset salaries indefinitely,” he added. “Any money we borrow now… will not address the longer term challenges we face,” he wrote.
“The majority of the reduction in IAG’s operating result was incurred by British Airways, followed by Iberia and Aer Lingus, while Vueling experienced a modest increase in operating loss,” it added.
The collapse in air traffic puts about 6.7 million jobs at risk in Europe, according to IATA, which has called for urgent government action to “preserve air services.”
