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IAG: BA restructuring may cost 12,000 jobs

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IAG: BA restructuring may cost 12,000 jobs

Old 4th May 2020, 12:55
  #301 (permalink)  
 
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M.Mouse: An intelligent observation on the situation. The T and C plus variety of pay scales is reflected among the non flying staff and the CC as well. The management have been to weak over many decades to resolve the issue. Sadly this is their time to abolish the many differences and those serving BA staff plus retired and former staff will be wholly aware of this. I have every sympathy for those in BA and the thousands of others that will be effected by future management actions. Bottom line is however that BA or any other company cannot keep staff on the payroll when there is no immediate work or little future prospect of work. Many of you will have seen the 'BA Standing Together' legend but this has sadly never been the case, its been everyone for themselves!
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Old 4th May 2020, 13:24
  #302 (permalink)  
 
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Intelligent, maybe. Maybe not. We hear more and more now how this is an opportunity to rebuild / new normal etc. Even a 45-50% pay cut (as Lufthansa Pilots have offered) would be better than being made redundant in this job market. As much as I don’t see it happening, perhaps it really is time big business looked after its employees rather than chasing a big profit.
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Old 4th May 2020, 14:05
  #303 (permalink)  
 
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Originally Posted by Busdriver01 View Post
Intelligent, maybe. Maybe not. We hear more and more now how this is an opportunity to rebuild / new normal etc. Even a 45-50% pay cut (as Lufthansa Pilots have offered) would be better than being made redundant in this job market. As much as I donít see it happening, perhaps it really is time big business looked after its employees rather than chasing a big profit.
I'm afraid big business answers to its shareholders, they want dividends and increased share value, so profit has to be the name of the game for any board member, staff costs are an inconvenience that eats into that profit. Lufthansa staff have shown the grim reality of this situation, redundancy effectively means end of career for many so it's a stark choice of accept a new contractual reality or walk away to find another job in an economy that seems to only need fruit pickers or supermarket shelf fillers for the foreseeable future.
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Old 4th May 2020, 14:18
  #304 (permalink)  
 
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Yes unfortunately profit = investability = new planes = new products = secure pension funds - that is capitalism. State intervention = poor decisions & interference = inefficiency = no profit = no investment and so it goes on. Look at BAís performance when it was an extension of the civil service - strikes, old fleet, lack of innovation etc I know itís not normal times but as leaders of business the last thing you want is political interference and poor decisions skewed by politicians. If BA can weather this on their own two feet I am sure that will be their preferred outcome. IB is a different animal in a different place as is AEA investment. Even if it is the same group they are very different businesses - IB went through a lot of restructure pain not so long ago......itís a tough one. I for one would not want politicians interfering in running businesses - thatís why LH have reportedly mulled bankruptcy as a better outcome than the former. A difficult conundrum for the senior bods - who are they accountable to ? Their shareholders whoís money they have been entrusted with. I am not saying in the current climate morally it is desirable or right but pointing out fact.

if they had millions of yours what would you think they should do (a rhetorical question). Look at what Stelios is doing to the EZY board atm.....,

BTW - it is previous government involvement (1970ís agreements and restrictive practices) that they are now trying to unpick.
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Old 4th May 2020, 14:28
  #305 (permalink)  
 
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Originally Posted by M.Mouse View Post
hat makes the pilot only salary bill £22.5m per month.

Currently BA is operating a handful of daily flights
Fair. And let's assume the total staff salary bill is £60m (or even £70m) ( remember most staff are already on comparatively low salaries)
So a year of salary costs equate to £750m ish. About half what the company just lost in fuel hedging...
.
But BA has cash and assets of nearly £10B ..... That's enough for many years of staff costs!

It's likely that neither the 380 or 744 will fly much longer (380 prob finished already). But some sensible VR , PT and redeployment will take care of most manpower reduction.

Whilst most observers forecast a difficult 18 mths or more does anyone really doubt that at some point the aviation market will be back to where it was?
Should we allow the UK aviation industry to be destroyed? And therefore allow others to fill the void.
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Old 4th May 2020, 15:03
  #306 (permalink)  
 
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Originally Posted by The Blu Riband View Post
But BA has cash and assets of nearly £10B ..... That's enough for many years of staff costs!
I doubt much of it is liquid. Property and machinery isn't easy to convert to cash in a hurry. Especially in the current environment.
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Old 4th May 2020, 15:35
  #307 (permalink)  
 
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There is liquidity: cash pile $7 billion + untouched revolving credit facility $2 billion.
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Old 4th May 2020, 15:37
  #308 (permalink)  
 
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Originally Posted by Busdriver01 View Post
. Even a 45-50% pay cut (as Lufthansa Pilots have offered) would be better than being made redundant in this job market. As much as I donít see it happening, perhaps it really is time big business looked after its employees rather than chasing a big profit.
As I read it in the German press, that was only on basic pay, which then - according to that magazine - came out to about - 20%.overall.
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Old 4th May 2020, 15:49
  #309 (permalink)  
 
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I suppose my point is that unlike a lot of jobs, or even careers, Pilots are usually totally invested in the longevity of their career. They cannot simply move to another company. Airlines use this to their advantage, so they should be doing everything in their power (with compromise on both sides) to be retaining their pilots at least in some form of employment until things return towards a more normal operation.
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Old 4th May 2020, 15:58
  #310 (permalink)  
 
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Originally Posted by 777JRM View Post
There is liquidity: cash pile $7 billion + untouched revolving credit facility $2 billion.
IAG have cash and cash equivalents of EUR 7.2 bn; rather different to the GBP 10 bn which was being claimed for BA alone.

The revolving credit facility is exactly that - basically an agreed overdraft. It is not cash.
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Old 4th May 2020, 17:34
  #311 (permalink)  
 
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Originally Posted by Kev Agamemnon View Post
IAG have cash and cash equivalents of EUR 7.2 bn
Ok.. so BA have a significant liquidity

Shareholders may want a return, but remember BA didnt pay a dividend for decades until last year; and any decent investor should be prepared to ride this cycle and look to the med/long term when BA should have a good (possibly better) chance of performing as exceptionally well as the last few years.

Panicking now could result in a significant loss of future market share. Aside from the moral issues of treating staff/people like disposable pieces of sh1t!

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Old 4th May 2020, 18:06
  #312 (permalink)  
 
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Originally Posted by Tartiflette Fan View Post
".... But M, all in the same Group, and with a CEO who has stated he is against intervention for one of the OpCos in the Group but appears to be happy to take it for another.."

Since discrete figures have been published for BA, presumably - as you would expect - each company is run separately and maybe the Spanish divisions are not making much/any profit. IAG may also be being pressurised by the Spanish government to make minimal cuts and being rewarded for not doing so.

Anyway, as MM has pointed out ( and the optics are irrelevant ) no company can afford to use its cash reserves to employ 25% of its staff to sit at home for six or nine months, as it may need those reserves later if this terrible situation continues.
You’re right - it needs those reserves to pay shareholders special dividends (like the €700 million last year) and the directors their bonus and share options. Didn’t the CEO get a pay raise of 62%?

Not forgetting share buybacks, which were €1 BILLION over the last two years.

Oh, and buying other airlines, such as the tabled Air Europa purchase for another €1 BILLION.

If a grounded airline has a cash burn of $10m per day, then IAG’s $9bn liquidity can last approx 3 years, before any further borrowing is needed.

Last edited by 777JRM; 4th May 2020 at 18:41.
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Old 4th May 2020, 18:17
  #313 (permalink)  
 
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As someone who consistently flies 15-20 long-haul returns per year on BA (usually in Club World) I hope things work out as well as they can for everyone. It's a great carrier which I always choose over other alternatives, no matter where I'm headed in the world.


However, as someone who has worked in the tech industry for 20-years, I'd caution people on making comparisons to the 2008 GFC. The company I work for, like many in the tech industry, switched everyone over to working from home in early March and it's been pretty seamless. IT networks and systems have coped without issue. Meeting times and agendas have been adjusted to deal for Europe/U.S./Asia time zone differences. Which is a bit painful for all involved, but no less than multiple hours on an aircraft followed by jet lag. And there's a bonus upside of seeing your kids grow up, not fleeting moments on FaceTime.


The working from home environments we have now are becoming a habit after only a few months. In some case, free from the distractions and interruptions of the office, working from home is more efficient with the software that's available now. As many companies aren't talking about getting back in to the office until deep in the year, these working patterns will become normalised. It will be getting on a plane that feels weird.


Little to none of this was possible in 2008 after the GFC.


Once COVID is over, I fully expect to go back to some level of travel. Customer meetings and some internal meetings simply need to take place in person. You can't maintain or build new relationships over Video Conference alone. Yet I expect it will be 8-10 long-haul trips a year, not 15-20. Moreover, travel is a huge cost to many tech companies, and the finance departments have just discovered that a lot isn't necessary to be effective.


I completely believe the predictions about it taking many years for business related air travel to reach 2019 levels and can understand why the airline business is going to have to change to cope with that. Yet I wish all those impacted in BA the best of luck. You've always got me where I needed to safely, efficiently and with excellent service (no matter which cabin I was in).
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Old 4th May 2020, 18:32
  #314 (permalink)  
 
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I’ve seen a few collective agreements already being thrashed out in the industry in my jurisdiction. Staff are agreeing to various pay cuts, redundancy programmes, reductions in various Ts & Cs of a temporary nature. Thrash out agreed milestones for each eroded item to be reversed, or have an independent panel make that call. When profit returns to X level, Y temporary reduction in expenditure is reversed. I hope all your unions over there insist on this. Best of luck to you all, hope to be chatting to you on the airwaves again soon.
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Old 4th May 2020, 19:22
  #315 (permalink)  
 
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Originally Posted by Woop Woop Pull Up View Post
To summarise the offers on the table for the companies within IAG:

*Iberia - Ä497 million profit in 2019* Ä1 billion in state loans with Vueling - NO REDUNDANCIES
*Vueling - Ä240 million profit in 2019* - Ä1 billion in state loans with IBERIA - NO REDUNDANCIES
*Aer Lingus - Ä276 million profit in 2019* pilots to work 5 days on, 11 days off for the forseeable - NO REDUNDANCIES
*British Airways - Ä1.921 BILLION profit in 2019* - up to 12,000 staff made redundant and currently all 42000 staff told to take a zero hours contract with ALL previous T&Cs ripped up.

This is a business that has £19bln in liquidity (which it announced to the stock markets just 5 weeks ago)
AND
says that it is in a fight for survival however is still managing to find Ä1bln in an all cash offer to buy Air Europa.
I find it disgusting that a very big number of posters are attacking other IAG airlines in order to defend BA.

I cannot speak about AL, but I do know well the other two airlines.

Iberia underwent a deep and harmful restructuring process after the 2008 crisis, with salaries going down and down and down. A BA freshly new cadet on SH makes more than a 6 year old FO on the A330 in Iberia.

Vueling is the low cost company, with low cost salaries. It has improved a bit recently, but it has always been the low cost company.

On top of this, both companies are on ERTE, which means that most pilots are working a maximum of 5 days per month, with state aid (everyone in Spain gets it) and a small top up from the company in order to get a living salary. Spain pays a maximum of 1090 euros (before tax, and taxable) per month for each furloughed employee, very far from the 2500 pounds paid by the British Government. Thus the intervention from airlines.

Moreover, redundancies are expected in very big numbers if things do not improve.

So, to sum up. All IAG airlines are in big sh.... The only difference being that Alex Cruz is taking advantage of this situation in order to restructure BA, something that already happened in Spain 10 years ago.

Stop blaming others, stop attacking others. We are all in the same boat
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Old 4th May 2020, 19:28
  #316 (permalink)  
 
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Vikdream, unless an IB 330 FO earns about £30K year 6, I suspect your facts are incorrect. As is any idea BA hasn’t also been through massive changes since 2008/9.
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Old 4th May 2020, 19:33
  #317 (permalink)  
 
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Originally Posted by vikdream View Post
Stop blaming others, stop attacking others. We are all in the same boat
I'm interested which part of that post was either blaming or attacking - it merely highlights the different approaches by the same company.

BA has also suffered more than its fair of cost cutting in recent years,
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Old 4th May 2020, 20:31
  #318 (permalink)  
 
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Originally Posted by vikdream View Post
I find it disgusting that a very big number of posters are attacking other IAG airlines in order to defend BA.

I cannot speak about AL, but I do know well the other two airlines.

Iberia underwent a deep and harmful restructuring process after the 2008 crisis, with salaries going down and down and down. A BA freshly new cadet on SH makes more than a 6 year old FO on the A330 in Iberia.

Vueling is the low cost company, with low cost salaries. It has improved a bit recently, but it has always been the low cost company.

On top of this, both companies are on ERTE, which means that most pilots are working a maximum of 5 days per month, with state aid (everyone in Spain gets it) and a small top up from the company in order to get a living salary. Spain pays a maximum of 1090 euros (before tax, and taxable) per month for each furloughed employee, very far from the 2500 pounds paid by the British Government. Thus the intervention from airlines.

Moreover, redundancies are expected in very big numbers if things do not improve.

So, to sum up. All IAG airlines are in big sh.... The only difference being that Alex Cruz is taking advantage of this situation in order to restructure BA, something that already happened in Spain 10 years ago.

Stop blaming others, stop attacking others. We are all in the same boat
BA restructured years before Iberia, thatís why it makes so much more money.

BA staff are significantly more productive than Iberia staff, and yet itís the money makers that are under threat of redundancy.

Galling isnít the word for it.
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Old 4th May 2020, 21:00
  #319 (permalink)  
 
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All does not seem well at one of the other large multinationals.

PARIS/AMSTERDAM (Reuters) - Air France-KLMís (
AIRF.PA) French unions on Monday criticised calls by their Dutch counterparts for KLM to be given greater autonomy, amid signs that a multibillion-euro coronavirus bailout is increasing tensions within the airline group.

https://uk.reuters.com/article/us-ai...-idUKKBN22G2Q1
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Old 4th May 2020, 21:37
  #320 (permalink)  
 
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Originally Posted by vikdream View Post
I find it disgusting that a very big number of posters are attacking other IAG airlines in order to defend BA.
mmmm You choose to disregard the fact that BA has restructured continuously since 9/11; earlier if you include the regions.

Make no mistake --- BA pilots are already on very competitive contracts. eg few, if any, Virgin/KLM/AF/SWISS etc pilots transfer to BA. Yes, most new joiners are from LCCs, but even so the benefits are very marginal.

The post you quoted rightly pointed out that BA makes twice the profit of ALL the other IAG airlines combined - and that they have taken bailouts/loans, and not announced redundancies! Nothing unreasonable or nonfactual.
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