IAG share price: British Airways tables pay deal for staff

Written by: Tsveta van Son
October 21, 2019

International Consolidated Airlines Group’s (LON:IAG) British Airways unit has offered staff a three-year pay deal that will see salaries rise above or in line with inflation, The Sunday Times has reported. The airline hopes that the pay increase will be enough to avert a repeat of the damaging strike in 2010.

IAG’s share price closed little changed on Friday, shedding 0.09 percent to end the day at 544.00p. The shares underperformed the benchmark FTSE 100 index which closed marginally higher. While the London market is closed today for a bank holiday, the group’s shares have gained ground in Madrid, where they were changing hands 0.34 percent higher at €7.18 as of 13:19 BST.
The Sunday Times reported yesterday that British Airways had offered staff a three-year pay which would give cabin crew and baggage-handling staff a two-percent increase this year. The plan, which has been put to the GMB and Unite unions, will then see pay rise in step with the retail prices index (RPI) measure of inflation in 2017 and 2018. The newspaper quoted the airline as saying that the offer would “ensure basic pay will keep pace with inflation and individuals will not fall behind”.

The Sunday Times, however, notes that the flag carrier’s pay deal which ties rises to RPI is likely to cause controversy given its insistence that its pensions be tied to the lower consumer prices index (CPI). British Airways has been locked in a legal battle with the trustees of its Airways Pension Scheme since moving from the RPI inflation rate in 2010.
Analysts meanwhile remain upbeat on IAG, with both Macquarie and Credit Suisse recently reaffirming the company as an ‘outperform,’ with price targets of 700p and 721p, respectively.
As of 14:03 BST, Monday, 30 May, International Consolidated Airlines Grp share price is 544.00p.