LONDON – British Airways (BA) CEO Alex Cruz appeared today in front of the Transport Select Committee to discuss the airline’s actions during COVID-19. This comes following the ex-CEO of International Airlines Group (IAG) Willie Walsh also appearing before the same committee.
The meeting with Cruz is seen as more important than that of Mr. Walsh as Cruz oversees the BA wing of the consortium.
Same Sentiments as Walsh
Cruz started the hearing by stating that the overall situation remains challenging, which is the same as what Walsh said, with recovery not expected until 2024. Cruz predicts no short-term return to demand as well as seeing a slow recovery process.
Around 25-30% of the normal BA schedule is operating at the moment, with the airline handling less than 200,000 passengers compared to just under a million compared to the same period last year.
The Topic of Redundancies
Redundancies of staff, particularly at BA, has become quite a significant issue in the United Kingdom. Cruz addressed this to the committee stating that BA and IAG realized in March that COVID-19 would be the worst ever, which would result in permanent restructuring actions.
Mass redundancies were of course the highest on the list but BA offered methods to reduce the number, which was to adjust contracts rather than fire and rehire. It took around 140 days of consultation before agreements were made with non-pilot unions such as Unite.
Cruz said that in total, 13,000 redundancies would be made, with 7,200 already leaving the business. He also said that the end result will be 10,000 people leaving the company.
Cruz “Thankful” for Previous Profits
The BA CEO also said that he was “thankful” for the profits generated by the airline over the last few years. This has enabled the airline to be more resilient over the next few years. However, BA is still burning around £20m per day with around £2.1bn in cash left.
Cruz justified the actions that were taken out by BA by comparing the financial crash to the current pandemic. In the first quarter of 2009, the airline lost £309m, whereas the first quarter of 2020 saw the airline lose £711m, showing a more significant loss.
Cruz Takes Pay Cut
It has also emerged that Cruz has taken a pay cut of 33% for this year, from the original £805,000 that he received in 2019. He was keen to let the committee know that there was no bonus for BA staff in 2019 or this year as well as for “many years to come.”
For Cruz, this may have been an important point for him to make, especially with the political argument swinging that those at the top would receive bonuses whilst those at the bottom would lose their jobs.
This also relates to what Cruz said later on in the hearing, where he vowed that the changes BA is making are huge, structural and conducive to helping BA deal with the aftershocks of the pandemic.
It remains clear from this hearing that Cruz has been placed in a difficult position. The options were to let the airline go into more financial hardship by keeping staff on, or by preserving the airline by making the cuts.
However, the practices behind hiring and re-firing or negotiating new contracts are not seen as acceptable in the eyes of unions and workers, who rely on the airline for livelihoods. This comes especially after the airline received a brand new Boeing 787-10 Dreamliner back in June.
It will always remain a difficult answer about what BA should have done, but in the eyes of Cruz, he will always continue to think about the airline’s survival.
Featured Image: British Airways Airbus A350-1041. Photo Credit: Wikimedia Commons