IAG: BA restructuring may cost 12,000 jobs
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BA needs to remain a particular size to service the huge debts run up in the IAG group. Economies of scale and that fact will mean BA will have to remain a certain size- what this size is, we don't know. There will be further reduction over the winter for sure, but I personally agree with the above that further CR will not be necessary unless S21 flying plan significantly changes. The late publication of slot alleviation's makes it particularly difficult to plan and its already a known issue that if the alleviation is not extended into S21 the Airbus fleet will be short of P2's. Further pay cuts and 'efficiencies' on the way I think, but CR (I hope) is done for the immediate future.
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JM quote, we are over on headcount for the winter which we knew but crewed for summer 21. The problem comes if S21 is bad. Regardless of being 4000 on the list or 400. Engineering or cabin crew etc we will all be in trouble.
The email today from the management committee backs that up. Not enough flying for everyone over the winter but they are looking to make the most of the JSS alongside other temporary measures such as VUPL and part time. The big difference is “temporary” not permanent like last time. They could just make a large number of cuts and blame it on the end of the JRS but they are not.
Difficult times but I think the talk of more CR right now is premature.
Hopefully that is right
The email today from the management committee backs that up. Not enough flying for everyone over the winter but they are looking to make the most of the JSS alongside other temporary measures such as VUPL and part time. The big difference is “temporary” not permanent like last time. They could just make a large number of cuts and blame it on the end of the JRS but they are not.
Difficult times but I think the talk of more CR right now is premature.
Hopefully that is right
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MikeAlpha320
Not so sure about pay cuts but more unpaid leave/ standown will probally be likely and makes sense. Cash in the bank is key to survival for any business at the moment.
Not so sure about pay cuts but more unpaid leave/ standown will probally be likely and makes sense. Cash in the bank is key to survival for any business at the moment.
bex88
Depends which department you work in. Targeted emails were sent out yesterday to certain engineering staff with the threat of CR quite openly expressed.
Depends which department you work in. Targeted emails were sent out yesterday to certain engineering staff with the threat of CR quite openly expressed.
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I can't see more redundancies at the moment but the longer we go on without a successful vaccine the more damage is being done to BA.
BA can't afford to send heavies across the Atlantic with 15 people onboard for that much longer. The reality is that this situation, 8 months in now is only getting worst. £5bn/£6bn liquidity in a group employing what, 100k people in this decimated industry won't last that much longer.
BA want their cake and they want to eat it. They won't want any more pilots off their books if they can afford it but they will not want to pay the pilots for sitting idle at home for too much longer. Something has to give and they will soon need to strategically rethink this.
BA can't afford to send heavies across the Atlantic with 15 people onboard for that much longer. The reality is that this situation, 8 months in now is only getting worst. £5bn/£6bn liquidity in a group employing what, 100k people in this decimated industry won't last that much longer.
BA want their cake and they want to eat it. They won't want any more pilots off their books if they can afford it but they will not want to pay the pilots for sitting idle at home for too much longer. Something has to give and they will soon need to strategically rethink this.
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It is the governments of the world who need a strategical rethink. Those countries which can afford to, have a plan A - suppress the virus as much as possible (almost without any regard for the cost or collateral damage), to delay deaths and hope a useful vaccine presents itself. They have no plan B.
It will be interesting to see how the countries who could not afford the above plan A emerge from all of this. I suspect they will have no need of a vaccine, will have a similar overall death toll, and will bounce back far more quickly.
It will be interesting to see how the countries who could not afford the above plan A emerge from all of this. I suspect they will have no need of a vaccine, will have a similar overall death toll, and will bounce back far more quickly.
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I agree wholeheartedly but the damage has been done. Until people stop dying in 'great numbers', government are not going to make life easy for airlines. I read this morning about a "sharp rise in cases in China from 17 to 42". Until this madness stops things are going to deteriorate. Only an effective vaccine will achieve this. If not, the landscape is forever changed.
Paddingtonbear
At this point I think we’re requiring a miracle for Summer 21 to be in any way reminiscent of years gone by. The likelihood is that even if there is a successful vaccine in the coming weeks that is going to take months to distribute to the general population and, as a result, the quarantine restrictions that are crippling the industry are likely to be in place until well into next summer if not the entire year. In that case I think we’re looking at two possible scenarios and precious little in between; state intervention or bankruptcy. It’s that stark. Will Boris (or Gove/Rishi) want to begin “Global Britain” with the embarrassment of having no flag carrying airline and having to rely on Emirates, Qatar, Lufthansa and KLM to connect us to the wider world?
At this point I think we’re requiring a miracle for Summer 21 to be in any way reminiscent of years gone by. The likelihood is that even if there is a successful vaccine in the coming weeks that is going to take months to distribute to the general population and, as a result, the quarantine restrictions that are crippling the industry are likely to be in place until well into next summer if not the entire year. In that case I think we’re looking at two possible scenarios and precious little in between; state intervention or bankruptcy. It’s that stark. Will Boris (or Gove/Rishi) want to begin “Global Britain” with the embarrassment of having no flag carrying airline and having to rely on Emirates, Qatar, Lufthansa and KLM to connect us to the wider world?
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I think more flight crew CR in the immediate future is, on balance, unlikely. It has been clear for a very long time that winter this year was going to be murder for the aviation industry. As incompetent as I believe our managers sometimes are, even I can't believe they really thought they were going to reach breakeven cashflow in Q4. They must have known it was going to be a disastrous winter, and if their intention was to crew accordingly they would have needed to start the process earlier than now. Any new redundancies will require a 45 day consultation period, followed by a 3 month notice period (or pay in lieu) plus redundancy pay. Even if you started today, that almost gets you to spring 21. A costly exercise reaching its conclusion just as things may be starting to improve. Far more likely in the short term is further unpaid leave, which is a lever we know BA is willing to pull (unlike part time).
The real problem is summer 21. Today, Heathrow reduced their passenger forecast for next year from 62 million to 37 million (2019: 81 million). If that is even close to being accurate then further CR will be inevitable next year. There are some reasons for optimism however. First, scientific opinion seems to be that we will get a vaccine or vaccines by the end of Q1/21. We don't know how effective they will be but it's a fair bet they will make an appreciable difference to the trajectory of the epidemic. Additionally there are several promising trials of therapeutics nearing conclusion. Testing technology is rapidly advancing and pressure will only increase on the government to find a workable replacement to reduce or eliminate quarantine in time for summer next year. More broadly, I think we will see public opinion starting to shift soon, not just here but elsewhere, when the cost of all this (both societal and monetary) starts to become more obvious. The public have been mostly shielded from the worst effects of restrictions by bailouts which cannot continue for much longer.
In terms of it being existential if I'm wrong and things drag on and on, on a political level I have never personally believed that the government, and particularly this government, would be prepared to see British Airways completely disappear. In terms of optics, as a first step out on to the world stage as a newly "independent" and global free trading nation it would be a spectacular own goal. A national embarrassment. Not that they don't have form of course - pick your fiasco/u-turn of choice from the last 6 months - but when push came to shove would they really watch the national carrier sink? I find that hard to believe personally. That's not to say government intervention would be especially pleasant for staff or shareholders, but I suspect it would happen nevertheless. Let's all hope we don't get to find out if I'm right.
The real problem is summer 21. Today, Heathrow reduced their passenger forecast for next year from 62 million to 37 million (2019: 81 million). If that is even close to being accurate then further CR will be inevitable next year. There are some reasons for optimism however. First, scientific opinion seems to be that we will get a vaccine or vaccines by the end of Q1/21. We don't know how effective they will be but it's a fair bet they will make an appreciable difference to the trajectory of the epidemic. Additionally there are several promising trials of therapeutics nearing conclusion. Testing technology is rapidly advancing and pressure will only increase on the government to find a workable replacement to reduce or eliminate quarantine in time for summer next year. More broadly, I think we will see public opinion starting to shift soon, not just here but elsewhere, when the cost of all this (both societal and monetary) starts to become more obvious. The public have been mostly shielded from the worst effects of restrictions by bailouts which cannot continue for much longer.
In terms of it being existential if I'm wrong and things drag on and on, on a political level I have never personally believed that the government, and particularly this government, would be prepared to see British Airways completely disappear. In terms of optics, as a first step out on to the world stage as a newly "independent" and global free trading nation it would be a spectacular own goal. A national embarrassment. Not that they don't have form of course - pick your fiasco/u-turn of choice from the last 6 months - but when push came to shove would they really watch the national carrier sink? I find that hard to believe personally. That's not to say government intervention would be especially pleasant for staff or shareholders, but I suspect it would happen nevertheless. Let's all hope we don't get to find out if I'm right.
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Absolutely Northern Monkey. Kate Bingham (Head of UK Vaccine TaskForce) and a real expert said today that two of the Oxford vaccines will be rolled out starting this year. Age and occupation targeting initially subject to government conformation. As it is the elderly and unwell most at risk they will be top of the list. She is very confident that they will be successful.....maybe not 100% but enough to make sure death rates from covid plummet. She also scoffed at the notion offered by some that there is no such thing as herd immunity.....Sweden was her one word answer before answering in detail.
So, S21 should (fingers crossed) be so so much better and hopefully we will start to see an end of the serial doomsters that live here and in the media.
So, S21 should (fingers crossed) be so so much better and hopefully we will start to see an end of the serial doomsters that live here and in the media.
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Plastic787
I'm not sure its that simple. Given the ownership structure of BA with it being simply part of a Spanish based Company then any nationalization may only be possible with the agreement of IAG - they may want a significant payment for the brand name even if you can have the assets for free. In that scenario and with the current demands on the Treasury will Rishi see any value in spending money to buy an airline that will be a drain in the exchequer for possibly years to come?. If the Government is unwilling to pay then there is probably more value for IAG in breaking up the airline and selling off the assets, slots etc.
I'm not sure its that simple. Given the ownership structure of BA with it being simply part of a Spanish based Company then any nationalization may only be possible with the agreement of IAG - they may want a significant payment for the brand name even if you can have the assets for free. In that scenario and with the current demands on the Treasury will Rishi see any value in spending money to buy an airline that will be a drain in the exchequer for possibly years to come?. If the Government is unwilling to pay then there is probably more value for IAG in breaking up the airline and selling off the assets, slots etc.
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I don't agree with that. The UK government will likely only get involved post IAG bankruptcy. At which point it will pick up the remnants of BA at fire sale prices. BA will then be re-privatised in the future. I expect that the taxpayer will make money out of the deal in the long term. In my view though, the government will not touch the shorthaul, it's not in their interest to compete on routes that are already served by British carriers. Longhaul that's different, they'll see the need for an intercontinental flag carrier serving destinations which other British carriers do not.
Unfortunately the slots do not belong to IAG to sell off. They operate them or they lose them.
Unfortunately the slots do not belong to IAG to sell off. They operate them or they lose them.
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Over 50% of BA traffic is connecting traffic from short haul to Longhaul. BA operate a hub and spoke airline at LHR. LH and SH can really only co exist or not at all.
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If BA is nationalised, which is very likely. As you say, the company relies on SH to feed the LH but that won't happen.Therefore you're looking at a much smaller, LH only company.
The company is saving the jobs in hope of restarting in April and therefore keeping the slots. But it's just a gamble.
The company is saving the jobs in hope of restarting in April and therefore keeping the slots. But it's just a gamble.
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But if IAG are at risk of bankruptcy then then it is quite likely that they will have a fire sale of assets in the group to try and prevent their collapse. So BA and Iberia could be broken up and sold off long before any collapse of the parent company IAG. Of course in that scenario IAG would love to sell BA as a going concern to the Government - but will the Government want to buy?
