With consumers still unwilling to spend on unnecessary luxuries, it is not just the retail industry feeling the pinch. During the recession, many people chose to remain in the UK and have a “staycation”, especially with the summer of sport in London drawing crowds from all over the world earlier this year. However, while this may be good for hotels, shops and the UK tourism industry in general, airlines lost a large amount of custom and as such are looking for ways to save money in order to make up the deficit.
BA: “No plans to make compulsory redundancies.”
The International Airline Group (IAG), which operates both the British Airways (BA) and Iberia brands, has had more than its fair share of troubles in the past few months. As well as competing with increasingly successful budget rivals such as Ryanair and easyJet, it has had to deal with the threat of a pilot’s strike at Iberia in the lead up to Christmas to protest against proposed job cuts.
Willie Walsh, chief executive of the IAG, has recently confirmed that the Spanish airline would be cutting 4,500 jobs as a result of the poor performance of the brand this year. In the past 12 months, Iberia has lost 262 million Euro – partly due to the Eurozone crisis resulting in fewer tourists visiting Spain.
These cuts mean that more than 20 per cent of Iberia’s current workforce will be out of a job, which could pose a significant problem for those living in recession hit Spain. Yet even those who remain employed by the airline will have to considerably rethink their household budgets, as Iberia will be imposing a 35 per cent wage cut upon all remaining employees.
This is necessary, according to directors at IAG, because Iberia is currently in a “fight for survival”.
The airline group is also taking the pilots union Sepla, of which many pilots at Iberia are members, to court as a result of strike action late last year and earlier this year. The previous strikes were in retaliation to Iberia’s plans to create a subsidiary business called Iberia Express which was to offer a low cost alternative to the present airline. Yet pilots argued that the creation of a lower cost business within Iberia would violate the company’s collective wage bargaining agreement with their staff.
IAG released the following statement with regards to the court case; “The claim is made under European law which provides that airline groups should be free to establish air services across Europe.
“IAG is seeking a declaration its EU rights were infringed and British Airways is seeking damages because the strikes affected its business, causing it to incur financial loss.”
Yet the bad news does not end there, as this week British Airways announced its intention to cut up to 400 senior cabin crew jobs. However, these redundancies would be on a voluntary basis, as the airline was keen to point out none of their crew members would be forced out of their jobs.
A 90 day consultation period began this week between British Airways and leaders of the Unite union, with representatives of both parties attempting to come to an agreement about the voluntary redundancy package.
BA was keen to stress that the package, once agreed upon, would only be offered to those crew members who worked exclusively on either long or short haul flights – those who work across both remain secure in their jobs. The first wave of job cuts, should negotiations with Unite prove successful, are expected to take place in March.
A spokesman for BA said; “This is a purely voluntary scheme.
“We have no plans to make any compulsory redundancies.”
Do you think IAG has a chance of winning their court case against the Spanish pilots union, or is the financial situation so unstable in Spain at the moment that the courts are more likely to side with the union? Will the voluntary redundancy package offered by BA prove to be popular, or are too many workers in this country afraid of a triple dip recession and reluctant to step forward and offer to leave their job? If BA fails to offload 400 employees, will the redundancies become compulsory in your opinion?
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