Opinion: "Don't put additional direct and indirect jobs at risk!"

The implications of COVID-19 have sent shockwaves throughout the aviation industry, sending a myriad of liquidity-strapped airlines across the globe into administration or part government ownership. The inherent uncertainty levels that are synonymous with current times have left a wide array of airlines across the globe struggling to navigate through uncharted territories. Even a legacy carrier like British Airways is not able to survive this crisis without the financial and non-financial support from the government and the stakeholders. Apart from close collaboration between airline and stakeholders, the downsizing the business is one of the keys to survive a crisis and this action needs to be handled sensitively (e.g. axing of 12,000 jobs). 

In various parts of the world like Australia and Germany, the worst has been behind them and the domestic/continental markets are about to kick off the recovery phase. In the UK, it could become very challenging to kickstart travel within Europe since the UK government’s botched handling of the current COVID-19 crisis has played its part. First, by bungling the initial COVID-19 response, and secondly, by imposing a misguided 14 days-quarantine on passengers arriving in the UK in the near future. The government’s lack of cooperation and commitment to the aviation sector during the crisis to date has led to this following event: Forcing the UK flag carrier British Airways to put every single cost-cutting measure out from the drawers, at the cost of the BA employees. 

Lawmakers complaints about the airline’s job cuts seem to be one-sided and it would lead to a higher complexity of that ongoing unsolved conflict. Criticizing airlines has become a national pastime for people across the globe including the UK. However, blasting the company for trying to prevent its own collapse due to COVID-19 is unfair and irresponsible. British Airways is burning about GBP 600m of cash every month and from a sustainable and economical point of view, countermeasures have to be taken immediately in order to save that airline from the collapse. 

British Airways was very profitable in pre COVID-19 times, by achieving a 14.5 per cent operating profit margin in 2019. The company cash reserves therefore are decent, however, British Airways’ current operating model could eat up the cash reserves quickly. A full-service network carrier like British Airways rely heavily on business travel and under these circumstances with the imposed 14 days-quarantine rules, the recovery process for them will take longer than usual. 

The union’s lack of cooperation and economic understanding also led to the ongoing toxic conflict between the management of the airline company and the union. Even if bailouts and wage subsidies buy an airline time, they do not change the economics at the end of the day. Therefore, regrettably, job cuts are inevitable in every single crisis like COVID-19 and the union therefore should actively return to the negotiation table with British Airways to find realistic solutions.  

From my point of view, the best approach to solve these issues would be following: 

• Conversion of full-time jobs into secured part-time jobs, which could be returned to full-time jobs from 2023 on (in alignment with capacity and demand growth)
• A salary cut for 3000-5000 pilots by up to 30 per cent until 2023, leading to additional savings of up to GBP 250m
• For the protection of jobs, airline workers shall join together to form action committees, which are independent from the partly politically motivated unions

The constant and sustainable safeguarding for UK’s flag carrier British Airways should be top priority for the employees, union, and the UK government. In addition to that, it should be in the interest of all stakeholders to sacrifice these measures in order to safeguard jobs in the long-term since the demand for travelling by plane will ultimately return to the long-term growth trajectory. 

A closer cooperation between the airline (British Airways/IAG), the UK government, and union (+ employees) is essential in this case. It could contribute to a reduction of the amount of upcoming redundancies. Thousands of jobs at British Airways could be saved from this close cooperation, because the longer the battle goes on, the more jobs (direct and indirect) will be put at risk. And it would also do more harm than good on all involved parties (e.g. economy). The airline must handle such tough measures sensitively and the lawmakers and unions shouldn’t attack the airline during its fight to survive. 

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Author: Linus Benjamin Bauer, Visiting Lecturer at City University of London and Managing Consultant at Bauer Aviation Advisory

Disclaimer: This article does not necessarily reflect the opinion of the consulting firm Bauer Aviation Advisory and the City University of London.