In today’s update, BA continues union talks to furlough 36,000 staff, Boeing offers layoff packages, transport minister grant Shapps says airline tycoons must “feel the pain” alongside UK taxpayers, easyJet’s founder continues his campaign to get an order for 107 Airbus aircraft scrapped and urban air platform Voom ceases operations.
British Airways expected to announce suspension around 36,000 staff.
The BBC has reported that British Airways is in talks with the Unite union over the furlough of an estimated 36,000 staff. British Airways suspended flights from the UK’s second biggest hub Gatwick Airport at the beginning of the week and has grounded most of its fleet. Last month CEO Alex Cruz said the airline was in a “battle for survival.”
The broadcaster reported that the two sides are believed to have reached a broad deal but are yet to sign on some details. The agreement will mean that up to 80 per cent of BA’s cabin crew, ground staff, engineers and those working at head office will have their jobs suspended. No staff are expected to be made redundant.
80 per cent of cabin crew, ground staff, engineers and head office staff affected
The decision will affect all of the airline’s staff at both Gatwick, where the airline’s operations have been suspended for at least one month, and London City Airport, which was closed to commercial flights last week. Parent company IAG said the airline’s flying capacity had reduced by 75 per cent for April and May.
Furloughed employees are expected to receive some of their wages through the government’s coronavirus job retention scheme, which covers 80 per cent of a worker’s salary and is capped at a maximum of £2,500 a month.
BA has not asked the government for any other specific financial assistance.
Boeing to offer voluntary layoffs
Boeing will be offering voluntary layoffs to its 150,000 employees worldwide as the manufacturer battles the downturn caused by the coronavirus outbreak.
The move will include buyout and early retirement packages for its employees who are mainly based in the Seattle area. According to news reports, Boeing Chief Executive Dave Calhoun is expected to detail a voluntary layoff plan to employees as early as today.
The manufacturer was already experiencing a reduction in aircraft deliveries following the grounding of the 737 Max last year following two fatal crashes that killed 346 people. The company is lobbying for a $60bn bailout package from the US government.
Virgin Atlantic seeks £500m bailout
Virgin Atlantic is being backed by Airbus, Rolls-Royce and London Heathrow Airport as it lobbies the government for a £500m bailout package to survive the freefall in demand caused by the coronavirus pandemic.
In the letters, reported by both the Financial Times and Sky News yesterday, Warren East, chief executive at Rolls-Royce, wrote: “Virgin’s business is of significant importance to Rolls-Royce, our extensive UK supply chain, and manufacturing operations.”
John Harrison, general counsel at Airbus and a board member, warned that Virgin’s collapse could have an “extremely negative impact” on the manufacturer’s A330 aircraft programme, which has its wings designed and manufactured in the UK.
Virgin Atlantic to ground 85 per cent of fleet
Virgin plans to ground 85 per cent of its fleet and terminate its route between Heathrow and Newark.
Transport Secretary Grant Shapps has warned that wealthy tycoons who have made fortunes from the airline industry in the good times should also expect to ‘share the pain’ with taxpayers. Shapps said funding options from shareholders and founding tycoons must be exhausted before airlines demand bailout packages paid from the UK taxpayer.
Shapps: tycoons must “put their hands in their pockets”
Shapps told Radio 4’s Today programme: “We do want there to be competition in the airline market.
“We think that’s absolutely right when we come out of this crisis for that to be there. Having said that, we also are very firmly aware that a lot of the large airlines have shareholders who will also be expected by the public to put their hands in their pockets.”
“It can’t be right for example that in the good times the shareholders benefit and in the bad times the taxpayer pays. So we’ve got to get that balance right.”
Shapps said ‘detailed discussions’ are taking place with airlines, airports and ‘ancillary services’, which include specialist contractors employing airport workers.
Virgin Atlantic founder Sir Richard Branson, who is believed to have a personal wealth of £4 billion, has come under fire for quickly putting 7,300 employees on unpaid leave before the Government’s announcement of its wage support package for furloughed staff. He has since pledged £215 million from his personal fortune and the Virgin Group’s coffers to help rescue Virgin Atlantic.
Last week Chancellor Rishi Sunak did a u-turn on a pledge for a specific aid package for the aviation industry. He said the Government would make decisions on individual airlines on a “case-by-case” basis and would only step in to help as a ‘last resort’ and once all other options had been exhausted.
easyJet founder piles on pressure to cancel Airbus order
easyJet plc’s founder and main shareholder Stelios Haji-ioannou is stepping up his campaign to get a 107 aircraft order with Airbus scrapped.
Haji-Ioannou has stated that he would remove the airline’s non-executives one by one over the next seven weeks if they don’t cancel the US$4.5bn Airbus order. The majority shareholder claims that if the order isn’t scrapped, it will put the airline’s survival in question in the current environment.
easyjet has come under fire for paying out a £174m in dividends, including £60 million to its founder, just days before grounding its fleet on Monday and putting its staff under the umbrella of the UK government-funded furloughing scheme.
Haji-Ioannou argued that the airline needs to raise cash through a right issue, not government loans. “If we don’t pay Airbus we don’t need government loans. It would be an abuse of taxpayers’ money to obtain loans to pay Airbus for an unprofitable investment in 107 aircraft.”
Helicopter platform Voom ceases operations
Voom, the online helicopter booking platform, backed by Airbus has ceased operations due to the COVID-19 outbreak.
The company closed on March 30 after four years with chief executive Clement Monnet, said Voom was faced with some “hard choices”.
“On March 23 we made the difficult decision to cease global operations due to the virus, and today with our Airbus leadership, we have made the tough call that Voom will not resume its operations.”
The company was launched in 2016 with the ambition to transform how people move in urban environments. Voom grew from a project inside Airbus’s A3 innovation centre in Silicon Valley, to a multinational company operating in Sao Paolo, Brazil, Mexico City and San Francisco.
A network of operators provided helicopter flights, which could be booked via an app or online.