British Airways inks an agreement to layoff 300 of its pilots amidst COVID-19
- British Airways inks an agreement to layoff 300 of its pilots amidst COVID-19.
- The airline places 300 pilots in a pool to be rehired once the demand recovers.
- The UK's flagship air carrier proposes pay cuts for its cabin crew.
The Sun reported on Sunday that British Airways had inked an agreement with its pilots to layoff 350 of them. Another 300, the company added, have been placed in a pool to be rehired once the demand recovers.
Shares of BA’s parent organisation, International Consolidated Airlines Group (Lon: IAG), are currently more than 1% up on Monday. At 225 pence per share, IAG is roughly 65% down year to date in the stock market after recovering from an even lower 170 pence per share in mid-May. Learn more about value investing strategy.
British Airways saw a £183 million penalty last year
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As the Coronavirus pandemic brought the global airline industry to a near halt in recent months, British Airways announced plans of cutting roughly 12,000 jobs representing a quarter of its workforce. The company also said that its cabin crew is likely to face pay cuts in the upcoming months. The airline’s ongoing financial struggles are also ascribed to a data breach scandal last year that resulted in an unprecedented £183 million fine.
BA’s proposals, however, were not well received by the trade union that held talks with IAG investors last week to accentuate the threat to the air carrier’s profits if its suggested strategy is realised.
According to British Airways, the pooled captains and first officers will remain on half-pay as they are not currently operating an aircraft. Salaries for the rest of the operating flight crew will be slashed by 15%.
Once the demand for air travel recovers and the company rehires its pilots in the pool, 7.5% of the deducted salaries will be reimbursed to the operating flight crew. Its staff, however, will not be eligible to be compensated for the rest of it.
British Airways to resume flights to Dubai in July
The London-headquartered air carrier also highlighted that the said pool will comprise primarily of first officers who operated Boeing 747 jumbo jets. According to British Airways:
“Constructive talks are ongoing with BALPA (UK pilots union) to save as many jobs as possible.”
BALPA is yet to make an official statement on the news.
In separate news, British Airways said on Sunday that its 1st Boeing 787-10 has finally been delivered after 6 months of delay due to COVID-19. The airline is scheduled to resume flights to Dubai in July.
At the time of writing, IAG is valued at £4.47 billion and has a price to earnings ratio of 2.94.