Update 3 August: The British Airline Pilots Association (BALPA) said its members have voted to accept a temporary 20 per cent pay cut and 270 pilot job losses at BA in order to avoid 1,255 redundancies and the mass firing and rehiring of the airline's pilots. The pay cut will reduce to 8 per cent over the next two years and remuneration will eventually return to normal, according to the union.
British Airways owner International Airlines Group (IAG) is
looking to raise €2.75 billion in capital as it announces a first-half loss of
more than €4 billion as a result of the Covid-19 pandemic.
The group said the fundraising, supported by its largest
shareholder Qatar Airways, will help to boost its balance sheet by reducing
financial leverage and increasing its overall liquidity position, which as of
30 June stood at €8.1 billion – only €500 million less than its liquidity at
the end of 2019. The group has also completed the sale and leaseback of five
aircraft, raising about €380 million and recently agreed to extend its
partnership with American Express in a deal worth £750 million, part of which
is the pre-purchase of Avios points that American Express will utilise in the
UK and globally for its BA-branded cards and membership rewards programme.
Passenger traffic across the group fell 98.4 per cent in Q2,
with capacity down 95.3 per cent as the coronavirus pandemic gripped the world
and brought air traffic to a virtual halt. IAG chief executive Willie Walsh
said the company does not expect passenger demand to recover to 2019 levels
until at least 2023, causing each of its airlines to “adjust their business and
reduce their cost base to reflect forecast demand in their markets not just to
get through this crisis but to ensure they remain competitive in a structurally
changed industry”.
BA, which placed a large number of its staff on furlough
under the UK government’s Coronavirus Job Retention Scheme, is planning to make
up to 12,000 redundancies as it restructures. The airline last week reached an
agreement with its pilots through the British Airline Pilots Association (BALPA)
and is expecting the results of a ballot on the deal soon.
The European short-haul arm of IAG’s low-cost carrier Level ceased
trading and entered insolvency in June.
Despite the crisis, IAG’s board said it remains committed to
completing the proposed acquisition of Air Europa, though it is in discussions
with current owner Globalia Corporacion Empresarial SA to restructure the €1 billion deal
to reflect the impact of the Covid-19 pandemic. However, the group does not
plan to use the money raised through the capital increase to purchase the
airline.
Walsh commented: “Our industry is facing an unprecedented
crisis and the outlook remains uncertain. However, we strongly believe that now
is the time to look to the future and strengthen IAG’s financial and strategic
position. While we have had to make tough decisions on both people and costs,
these actions are the right ones to protect as many jobs and serve as many
customers as feasible and put IAG in the strongest position possible. The
industry will recover from this crisis, though we do not expect this to be
before 2023, and there will be opportunities for IAG to capitalise on its
strength and leadership positions.”
Walsh will be stepping down in September after delaying his
retirement to see IAG through what it believed at the time would be the worst
of the impact of the pandemic. Iberia CEO Luis Gallego will succeed him as
group chief executive.