British Airways to suspend thousands of employees, owner dismisses dividend

LONDON: British Airways (BA) has reached an agreement to suspend thousands of employees in one of the airline industry's most dramatic measures to survive the coronavirus pandemic, its union said.

The Unite union said it had reached an agreement with the British-flagged airline to suspend workers with 80% of wages, with no limit on earnings and without anyone being fired.

A person familiar with the situation had previously told Reuters that BA was working on a deal to suspend about 32,000 employees, but they still agreed to the terms.

British Airways declined to comment in response to Unite.

Having agreed to a 50% pay cut for its pilots, the deal addresses around 80% of its cabin and ground staff, engineers and office staff to overcome the worst crisis in its history.

Given the incredibly difficult circumstances facing the entire aviation sector, this is the best possible deal for our members, said Unite National Officer Oliver Richardson.

The settlement protects the jobs of BA staff and, to the extent possible, also protects their wages.

Owned by IAG, one of the largest and most financially robust airline companies in the world, British Airways has already said it is in a fight for survival.

Separately, on Thursday IAG canceled its final dividend, saving 337 million euros ($ 366 million). The stock had risen on the jobs plan, but closed with a 1% drop.

Hundreds of companies in a variety of sectors have scrapped dividends to conserve cash, but the IAG move marks a particular hit for investors because it was the third-highest-dividend-yielding stock in the UK benchmark FTSE 100.

Because planes cannot fly due to travel restrictions, compounded by falling demand for fear of contagion, airlines around the world have wiped out most of their fleets, and many have said they need the support. government to survive.

British Airways has joined the global industry race to conserve cash. In recent weeks, Qantas Airways put two-thirds of its workforce - 20,000 workers - on leave, while Lufthansa applied for short-time work for around 31,000 crew and ground staff at its core brand until the end of August.

British low-cost airline easyJet has said it will fire its 4,000 cabin crew in the UK for two months.

US airlines will receive $ 25 billion in grants to cover payrolls in the next six months, but they continue to encourage reductions in the workweek, unpaid vacation and early retirement as they face more cancellations than reservations.

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Companies are trying to keep staff redundant so they can respond quickly to any increase in capacity when a recovery comes.

British Airways had been in talks with the Unite union for a week.

IAG, which owns 598 aircraft in its network that also includes Aer Lingus, Iberia and Vueling, is reducing capacity by 75% in April and May. BA has already suspended flights from Britain's second busiest airport, Gatwick, and London City Airport.

In Europe, more than 20,000 flights departed or landed on January 23. Two months later, after Italy emerged as an epicenter of the virus and travel restrictions took effect, flights fell to less than 5,000 a day.

Britain has launched a job retention scheme that covers 80% of salary limited to a maximum of 2,500 pounds ($ 3,093) per month. But some airlines, including rival Virgin Atlantic, have said they will collapse if they don't get more help.