From pay cuts to mulling a €2.8bn stock sale: A look at BA's week

Suban Abdulla
·3-min read
British airways
Photo: Getty

British Airways (BA) has had a very eventful week. Over the last couple of days, pilots were urged to take voluntary pay cuts to avert more job losses - while investors mulled a €2.8bn (£2.5bn, $3.3bn) stock sale.

BA pilots urged to take pay cuts to limit job cuts

Earlier in the week, BA pilots were asked to accept a package including pay cuts and job losses in a bid to avoid more redundancies.

The package, which was negotiated after nearly three months of negotiations, would protect jobs, The British Airline Pilots Association (BALPA) said.

Voluntary part-time working, voluntary severances and voluntary external secondments, were some of the proposals put to the pilots.

Measures proposed in the deal would be funded by pilot pay cuts starting at 20% and reducing to 8% over the next two years then reducing toward zero over the longer term.

BALPA said around 300 pilots could be placed in a “holding pool on reduced pay,” who would be ready to return to flying as demand picks up.

If agreed, the deal could mean that pilot job losses could be limited to around 270 staff, the union said.

Pilots will vote in a ballot, with the result due at the end of the month.

READ MORE: Coronavirus: UK airports predict £4bn in lost revenue this year

BA parent company IAG upsets politicians

BA owner International Airlines Group (IAG.L), was criticised by unions and MPs after it announced in April it had run out of ways to save cash as the coronavirus pandemic battered the airline industry. IAG said it would axe up to 1,255 pilots and up to 12,000 jobs in total.

Protesting the announcement Unite, staged a demonstration in Madrid outside offices of investors of the IAG, in an effort to persuade BA to not axe jobs due to COVID-19.

Unite executive officer Sharon Graham said: “Public anger is growing and already over 160 MPs from across the political divide are calling for a review of take-off and landing slots in response to BA’s actions.”

The campaign is said to have escalated to Spain as a “direct result” of the behaviour of BA’s management this week.

The union argued that Boris Johnson “needs to be as good as his word” and back his constituents.

Last month, Conservative MP James Sunderland said in a Commons debate that BA had behaved “disgracefully” after taking taxpayers’ cash under the furlough scheme, designed to protect jobs.

In May, it was revealed that BA received £300m from the Bank of England’s Corporate Covid Financing Facility, while sisters Vueling and Iberia claimed €1bn from a similar scheme in Spain.

Unite is also planning to take action in constituencies of government ministers, including the PM’s.

READ MORE: British Airways pilots urged to take pay cuts to limit job losses

BA owner IAG weighs $3.3bn stock sale

IAG (IAG.L) confirmed it was mulling undertaking an equity raise, saying it was “evaluating the merits of a rights issue of up to €2.8bn” to strengthen its balance sheet.

The move came after IAG announced a partnership with American Express on Friday, netting the operator £750m.

Since the start of the pandemic, the group has lost two-thirds of its share price, and the stock dropped another 4% on Friday afternoon.

The operator, which also owns Iberia, Aer Lingus and Vueling, was hit by the grounding of airplanes during the coronavirus pandemic and reduced passengers on services that are operating, which has hit the global aviation industry.

There has been “no decision made yet as to when or whether to proceed with a share issue,” IAG said.