BA is splashed across the front pages today with the announcement yesterday that it plans to shed 12,000 jobs (see European, Airline News below). The unions are claiming that BA has “jumped the gun” and should continue to negotiate with the UK Treasury department for an aviation sector bailout.
Gary Pearce, GMB London Regional Officer said that BA “cannot know with any certainty what the future is in terms of how soon airline passenger numbers will recover” and called for it to withdraw its statement and push for further government support and an extension to the furlough scheme beyond June.
The unions are clearly concerned about such a huge loss in jobs at a flag carrier but they are wrong about the recovery of airline passenger numbers. Even the most recent IATA forecast predicts a slump in traffic until 2021 and then a slower recovery because of the accompanying recession caused by the pandemic lockdown. Some airlines are predicting that their fleets will remain grounded until 2021 as a base case.
Without an end in sight to the lockdown phase and when airlines will be allowed to resume operations, the forecasts will continue to be bleak. To survive, airlines need to hoard cash. As Cruz says in his letter to employees, the only commercial debt it can access is short-term but it will need long-term cash security to ride out the storm. IAG has strong cash reserves but any prudent company needs to restructure and make cuts – unfortunately for airline workers, reduced fleets mean a reduced workforce.
A more cynical observation on BA’s announcement, however, might be that such a high number of redundancies from a blue chip UK company may force the UK Treasury’s hand to agree to an aviation bailout. More likely is that BA is shedding costs where it can. Scandinavian airline SAS has also announced redundancies of 5,000 and without government aid, more announcements are likely from other airlines once the furlough schemes in respective jurisdictions come to an end and those that have been granted government money eventually runs out.