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British Airways has started consultations with trade unions about a proposed restructuring and redundancy program affecting up to 12,000 staff members, according to owner International Airlines Group.
In its preliminary first-quarter results, IAG said it believes it will take "several years" to recover the level of passenger demand seen in 2019, "necessitating group-wide restructuring measures."
Across the group, which includes the airlines BA, Iberia, Aer Lingus, Level and Vueling along with cargo operations, revenue declined 13 percent to €4.6 billion in Q1, resulting in an operating loss of €535 million compared with a profit of €135 million last year. Furthermore, it said its pre-tax profit took a €1.3 billion hit resulting from fuel and foreign currency over-hedging for the rest of 2020.
IAG said its operating result in January and February was comparable to last year despite the early cancellation of flights to China, where the Covid-19 pandemic began, meaning the major blow to profits came in March, when the group's airlines cut around 75 percent of their global capacity.
With further capacity reductions announced in early April, IAG said it expects to take an even bigger loss in the second quarter despite being able to take advantage of the U.K. government's coronavirus job retention scheme to furlough nearly 23,000 employees.
IAG so far has resisted turning to government bailouts, with CEO Willie Walsh famously coming out against state aid for airlines when the government was considering a package to save Flybe before its collapse.
The group said its liquidity amounted to €9.5 billion at the end of March.
Writing to employees, BA chief executive Alex Cruz said: "In the last few weeks, the outlook for the aviation industry has worsened further and we must take action now. We are a strong, well-managed business that has faced into, and overcome, many crises in our hundred-year history.
"We must overcome this crisis ourselves, too. There is no government bailout standing by for BA and we cannot expect the taxpayer to offset salaries indefinitely… We will see some airlines go out of business."
Commenting on the redundancy announcement, Brian Strutton, general secretary of the British Airline Pilots Association said: "This has come as a bolt out of the blue from an airline that said it was wealthy enough to weather the Covid storm and declined any government support. BALPA does not accept that a case has been made for these job losses and we will be fighting to save every single one."
Unite union general secretary Len McCluskey, who earlier this week said airlines should be forced to keep job cuts to a minimum in exchange for state aid, said: "We say to BA's Alex Cruz that this is a heartless decision in a time of national crisis. With the majority of BA's workers on furlough, we would have expected him to work with both us and the government to honour the spirit of the government's job retention scheme.
"Governments across Europe … are working with trade unions and airlines to rebuild back better, keeping people in work while the sector recovers. We simply cannot understand as to why Alex Cruz is not doing the same, unless he has sought an opportunity to see other airlines fail so that BA can profit. To reject government support by then expect their own staff to pay the cost of such a misjudgement is irresponsible, dangerous and destructive and is utterly at odds with the mood of the country at a time of crisis."
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