Industry | 2009.06.26
Thousands of BA staff to take pay cuts
• Chief executive Willie Walsh\'s pledge to work for nothing for a month is matched by 800 employees
• Cost savings of £10m represent less than 0.5% of airline\'s employment costs
Nearly 7,000 British Airways staff have applied for voluntary pay cuts, including 800 employees who will work for nothing for up to a month.
BA said today that 6,940 employees, or 17% of its workforce, had volunteered for unpaid work, part-time hours or unpaid leave in a move that will save the struggling carrier up to £10m. More than 800 have matched a pledge by their chief executive, Willie Walsh, who is working without pay next month .
"I want to thank everyone who has volunteered to help us pull through this difficult period," Walsh said. "This response clearly shows the significant difference individuals can make." Analysts said the move amounted to a pay cut of about 3% for the staff who have taken part.
However, BA\'s largest union described the work-for-no-pay offer as "insulting" and accused the airline\'s managers of bullying staff into signing up. Unite, which represents about 28,000 of BA\'s 40,000 employees and is locked in talks that could still trigger industrial action this summer, claimed that staff were pressurised by email to accept one of the options or face a meeting with a BA manager.
BA said "absolutely no pressure" was put on staff to volunteer for a pay cut and rejected claims of bullying and intimidation.
Unpaid leave was the most popular option among staff who agreed to accept a pay cut, with 4,000 asking for a break without pay lasting from a week to several months. A further 1,400 will switch to part-time hours, either permanently or temporarily. BA added that 740 staff at the airline\'s Asia Pacific, Africa and mainland Europe operations had also volunteered for one of the wage reduction options.
The airline added pointedly that the programme will be launched again later this year, targeting the 33,000 staff members who did not respond before the 24 June deadline for the first round of voluntary salary reductions. "Staff will have further opportunities to take part in the programme later in the year," said BA.
Staff who sign up to the scheme will not receive preferential treatment if they are being considered for compulsory redundancy. "We acknowledge that not everybody is in a position to do this, so there is no question of preferential treatment," a BA spokesman said.
Analysts said Walsh had done well to secure any take-up for the kind of pay squeeze that would normally be expected to cause strikes at the heavily unionised airline. However, the £10m cost savings secured by the scheme represent less than 0.5% of BA\'s employment costs, which were £2.2bn last year. BA is burning through nearly £3m a day and expects to make a "significant loss" in the three months from April to June, usually its second most profitable quarter of the year.
Gerald Khoo, analyst at Arbuthnot Securities, said: "While the staff are making a sacrifice, £10m is not a great deal of money compared with the wider BA cost base. It is not a big number, unfortunately."
BA said the voluntary pay cuts were not linked to ongoing talks with trade union leaders over securing reduced pay and new contractual conditions. Walsh has set a deadline of 30 June to reach agreement and the pilots union, Balpa, has already recommended that the airline\'s 3,200 pilots accept a pay cut of about 2.6%, which will save BA £26m.
The GMB union which represents 7,000 BA employees, warned that the talks could unravel after today\'s announcement. Mick Rix, a GMB officer, said: "We are absolutely furious. It could derail negotiations. Less than 2% of the BA workforce has volunteered to work unpaid."
Walsh has used apocalyptic language to describe the predicament of an airline that lost a record £401m last year and is expected to record another large deficit this year. His warning that BA is in a "fight for survival" was pounced on by Sir Richard Branson, the co-owner of arch-rival Virgin Atlantic, who said BA was "not worth much any more" and warned the government against bailing it out.
Walsh added that BA is considering charging for beer and peanuts on flights but warned that the airline cannot risk "permanent damage" to its brand.
Industry data published today compounded BA\'s problems. Airline revenues registered their steepest decline since the recession began, according to the International Air Transport Association (Iata), falling by an estimated 30% in May. Passenger numbers fell but appear to have reached a plateau, Iata added, with a fall of 9% indicating that the declines in bookings are not getting progressively worse month-on-month.
However, Iata said passenger numbers could be stabilising because carriers are having to slash fares to fill their planes.
For more information, please visit
http://www.guardian.co.uk/business/2009/jun/25/british-airways-pay-cuts
