British Airways to cut 12,000 jobs

April 29, 2020 09:33

British Airways may be forced to cut more than a quarter of its workforce as the coronavirus pandemic takes its toll on one of Europe's biggest airlines. Parent company IAG (ICAGY) said in a statement cited by CNN on Tuesday that the Airways is notifying labour unions about a restructuring program which will affect most employees and "may result in the redundancy of up to 12,000 of them.

"IAG, which also includes Spanish airline Iberia, said its first-quarter revenues declined by 13 per cent to EUR4.6 billion (USD 5 billion) as it swung to an operating loss of EUR535 million (USD 579 million).

The airline group warned that losses in the second quarter would be "significantly worse" and that it expects that "the recovery of passenger demand to 2019 levels will take several years."

The warning echos a similar decision made by airline group Lufthansa which owns national carriers in Germany, Switzerland, Austria and Belgium. Announcing earlier this month that it was permanently reducing the size of its fleet and shuttering one of its low-cost carriers, Lufthansa said that worldwide demand for air travel will take years to recover from the coronavirus.

"What we are facing as an airline ... is that there is no 'normal' any longer," British Airways CEO Alex Cruz said in a letter to staff that was released to CNN Business.

"Yesterday, British Airways flew just a handful of aircraft out of Heathrow. On a normal day, we would fly more than 300," he added.

The news comes as flight bans and nationwide lockdowns are threatening to bankrupt airlines around the world. The "mounting financial crisis" facing carriers could cause revenues to tumble by as much as 55 per cent this year, or some USD 314 billion, according to the International Air Transport Association.Virgin Australia collapsed into administration last week, while sister airline Virgin Atlantic confirmed on Monday that it was on the hunt for outside investors to keep it alive.

Virgin Atlantic, which is controlled by Richard Branson's Virgin Group, is also seeking a commercial loan from the British government.

Earlier this month, British Airways furloughed 30,000 employees on 80 per cent of their regular monthly pay until the end of May, with the government covering the first 2,500 ($3,100) under its coronavirus job retention program.

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