IAG CEO Willie Walsh appeared before the Transport Select Committee today, Monday 11 May 2020.
Ostensibly, the hearing was about the aviation industry’s response to COVID-19. Though most of the hearing focused on the proposed restructuring of BA. There had evidently been a considerable amount of lobbying of MPs beforehand.
Those who have seen select committee hearings before will know that the level of knowledge on display and quality of questioning by MPs varies widely. There can also be grandstanding by MPs. That certainly applied today.
Quarantine of passengers arriving in the UK
Willie Walsh strongly criticised the decision by the UK government to impose a mandatory quarantine period on passengers arriving in the UK.
Citing the lack of scientific evidence for this decision, Willie says it will prompt IAG to review plans to restart schedules from July. The government has yet to publish full details of how the quarantine regime will work. It is likely that BA will continue to operate a minimal schedule whilst the quarantine is in operation.
BA at London City & Gatwick Airports
There has been speculation about the future of BA at London Gatwick airport.
Willie Walsh says BA still has a future at London Gatwick. BA flights are currently suspended at the airport until July. It is seen as a better airport than Heathrow in many ways, with a more commercial management team and an attractive customer base.
Willie has long had little time for Heathrow airport management, particularly their lack of commerciality. Heathrow has, historically at least, never had to make any effort to attract airlines due to the fact they will willingly pay tens of millions to operate one single return flight a day.
London City airport, which is still closed, is considered the most challenged London airport due to the fact business travel will take some time to return.
Restructuring Of British Airways
Much of the discussion focused on the planned restructuring of British Airways.
This could lead to up 12,000 job cuts. BA has also proposed to outsource some roles and require retained staff to accept new terms and conditions of employment.
Transport Committee Chair Huw Merriman said he has received around 1,000 e-mails from BA staff, particularly those on older contracts, about changes to terms and conditions.
There is a suspicion that BA is applying the “never waste a crisis” rule to dust off plans to merge its Heathrow cabin crew fleets into one and win long sought after productivity improvements.
Willie, who is not actually responsible for leading trade union negotiations at BA, leant very heavily on the fact that a statutory consultation is underway. The airline will follow UK labour law and engage in meaningful consultation with union representatives.
It was strongly denied that BA had been singled out by IAG for restructuring and that this will take place at other airlines in the group, in accordance with local employment law. It was also denied that certain groups of employees, eg those on more expensive “legacy” contracts, were being specifically targeted.
There was at times visible frustration that some MPs didn’t appear to appreciate the scale of the crisis facing aviation, particularly on airlines’ liquidity when they have no revenue, and that a period of significantly reduced demand will result in job losses.
It was pointed out that BA taking advantage of the UK government’s scheme to cover the wages of furloughed employees only covers about 10 days’ cash flow. The airline still faces a significant cash burn. The option of BA seeking a bespoke support package from the Treasury remains open.
It is enviable that there will be continued political scrutiny of negotiations (some MPs have written to Alex Cruz) and the final agreement.
It won’t be known for some years whether it proved to be necessary and whether those airlines who have obtained several billions in loans from governments – which have to be repaid at some point – merely stored up problems for the future.
On the issue of refunds and these not being available to customers through online channels, IAG says it has issued €1.1 billion in refunds to passengers whose flights have been cancelled.
On other airlines, Willie Walsh strongly criticised conjecture that it was actively seeking the demise of Virgin Atlantic which he described as “badly managed” (due to its lack of profitability), but not “failing”. Rumours that IAG was interested in acquiring Austrian Airlines were also dismissed.