The impact of the coronavirus pandemic on the aviation sector Contents

5. Restructuring, redundancies and terms and conditions

Redundancies in the aviation sector

57.As noted in Chapter 4, several aviation companies including British Airways, Virgin Atlantic, easyJet, Ryanair, Rolls Royce and Airbus have announced thousands of redundancies. This is despite many of these companies accessing the Government’s Job Retention Scheme (CJRS), which was implemented to help businesses severely affected by the pandemic to retain employees and protect the economy.113

58.On 12 May the Chancellor of the Exchequer extended the CJRS until October 2020.114 Later that month, the Chancellor also announced changes to help employers bring staff back to work part-time from July and for employers to begin to share salary costs with Government from August, until the scheme ends in October.115 There have been calls from some in the industry to extend the CJRS for the aviation sector beyond October.116 Aviation trade unions, including the Trade Union Congress, and the New Economics Foundation have called for the CJRS to be extended for the aviation industry “until the sector has stabilised”, with Unite calling for a “planned, tapered approach to the end of the CJRS”.117

59.The threat of redundancies is particularly acute in the airline industry, given the potential for the pandemic, and the subsequent economic consequences, to suppress passenger numbers for at least two to three years. The extension of the CJRS to October, supported by airlines, has not prevented UK carriers from proceeding with these plans. For instance:

The situation is not unique to the UK. Airlines in other countries are proposing to make large-scale redundancies,121 including where governments have supported carriers with significant sums of state aid.122

60.The motivations of some airlines in announcing redundancies has been questioned. Some have been accused of seeking to exploit the crisis to restructure their organisations and emerge more profitable. We heard that carriers were engaged in a “turf war” with each other, with the expectation that some might fail. The British Airline Pilots Association (BALPA) told us that airlines are “egging the pudding too much to take advantage of the crisis to make changes and downsize their workforce unnecessarily.”123

61.We heard evidence that many of the decisions about redundancies, especially by UK airlines, were being made prematurely, in isolation, and without clear information from governments about when air travel can resume. John Holland-Kaye, Chief Executive of Heathrow Airport, told us that business leaders across the sector were currently making decisions about job losses in a “vacuum”:

If the Government say, “Here is the plan. When the community transmission level is down low enough, you can get flying again,” although that might be three, four or five months away, we will save tens of thousands of jobs. Those decisions will be made within the next few weeks.124

62.BALPA said that companies needed to avoid making “knee-jerk”125 decisions about jobs and called for a stronger message from the Government: “[the] Government should be saying that the right time to take those decisions is not while we are working out a holistic way forward for the industry […] they need to be when we have our plan.”126

63.Government guidance states employers can make employees redundant while they are on the CJRS,127 although the Prime Minister and the Minister for Aviation both disapproved of this practice.128 The Minister told the House on 3 June:

The recent announcements about redundancies from companies such as British Airways, Virgin and easyJet will be very distressing news for employees and their families. These are commercial decisions that I regret, particularly from companies that benefit from the job retention scheme, which was not designed for taxpayers to fund the wages of employees only for those companies to put the same staff on notice of redundancy during the furlough period. The Government stand ready to support anyone affected, with the Department for Work and Pensions available to help employees identify and access the support that is available.129

64.The loss of some jobs in the aviation sector may sadly be inevitable. But such fundamental decisions about people’s livelihoods should not be made prematurely and until there is clearer information about the industry’s recovery. We urge UK-based aviation employers not to proceed hastily with largescale redundancies or restructuring to terms or conditions of employees until the Job Retention Scheme ends in October 2020 and they have had the opportunity to consider the Government’s plans to help the sector restart and recover.

British Airways: consultation on redundancies and changes to terms and conditions

British Airways plans to change staffing structure

65.In late April, British Airways wrote to trade unions about its plans to consult on a reduction of up to 12,000 jobs (out of a workforce of 42,000) and downgrade the terms and conditions of the bulk of its remaining employees.130 The consultation will end on 15 June. In particular, the company is consulting on plans to:

66.In letters to Unite the Union on 28 April 2020, British Airways said that if the company was “unable to reach agreement on these proposals as part of the consultation process (and we were unable to implement these proposals by relying on the reasonable changes clause in an employee’s contract)” British Airways would propose “to give all employees notice of dismissal by reason of redundancy and/or some other substantial reason,” and then “offer a proportion of them employment under new terms and conditions.”135 Unions have referred to this approach as “fire and rehire”. The same arrangements now apply to British Airways’ 4,300 pilots.136 Unions have strongly objected to British Airways’ threat to “fire and rehire” staff and are reported to have made its removal a condition of their full engagement in the consultation process.137

British Airways staff on the Job Retention Scheme

67.Over half of all British Airways staff (22,000) have been furloughed as part of the CJRS.138 Willie Walsh, Chief Executive of British Airways’ parent group IAG, told us that British Airways had received close to £35 million from the CJRS as of 14 May.139 The CJRS does not alter existing employment law, rights and obligations, which means companies can make employees redundant while they are on the scheme. This is stated clearly in the Government’s guidance.140

68.The extension of the CJRS to October has not changed British Airways’ timescale for consultation. Unions have criticised British Airways’ decision to conduct the consultation while some of its staff are furloughed because it prevents them from engaging in meaningful consultation.141 Mr Walsh told us that British Airways “would not pause the consultation” or put its plans on hold because “we must act now to secure the maximum number of jobs possible.”142

British Airways’ financial situation

69.At the end of 2019 British Airways’ profit after tax was £1.1 billion. The company also had cash reserves of £2.6 billion and £5.8 billion in shareholder equity.143

70.British Airways has received £300 million from the Bank of England, under the Covid-19 Corporate Financing Facility (CCFF).144 Mr Walsh told us that, within IAG, decisions to apply for financial support are generally taken by individual companies, based on their specific financial requirements. He told us that “if IAG separately can access financing, we will do so, and that is something that we might look at”. Neither British Airways nor IAG have to date approached the UK Government for a bespoke support package.

71.Unions have argued that British Airways could survive even if all its planes were grounded for one year, due to cash reserves and liquidity held by the company and IAG.145 Mr Walsh told us it was difficult to predict how long the company could survive with planes grounded but cautioned of the dangers of taking on additional debt which “will make the future even more difficult for all the airlines in the group, given that that debt will have to be repaid”.146

72.We were also told that Iberia, another IAG airline, was planning to acquire Air Europa while British Airways was planning large-scale redundancies. Mr Walsh told us that it was Iberia, not IAG, that planned to acquire Air Europa and it had “nothing whatsoever to do with British Airways.”147 In addition, there have been reports of IAG non-executive directors in March purchasing shares in the company worth hundreds of thousands of pounds, after the price dropped due to the coronavirus pandemic.148

Reactions to the consultation

73.We received thousands of emails, letters and tweets from employees of British Airways who are concerned about their job security, or employment terms and conditions, following the company’s announcement.149 Many hold deep reservations about the motivations behind the changes the airline is proposing (see box). We were told that the proposals under consultation—particularly for its cabin crew and pilots—resemble changes that have been features of previous industrial disputes between British Airways and its staff.150

Views of British Airways staff in written evidence

[Employee of 22 years]: “[British Airways] are using COVID19 as an opportunity to unnecessarily cut jobs, decimate working conditions and drastically reduce salaries.”

[Captain]: “It seems to us that our employer is using this crisis as an opportunity to ‘land grab’ further shares of the market and make efficiencies all with scant regard for its employees and their lives”151

[Cabin Service Director with 30 years of service]: “[British Airways’] current approach risks obliterating the morale of the whole workforce and damaging the British Airways brand.”

[Cabin Crew]: “Throughout my employment I have been told by investors and CEOs that a factor of the mass profits made year after year by British Airways is down to its employees […] This immoral greedy company must not be allowed to take advantage of hard working people at this fragile time.”

74.Unite the Union told us that British Airways staff have reported high rates of anxiety, depression and lack of sleep.152 Unite told us that some employees who kept their jobs could lose between 55–70% of their income, as well as end up on poorer terms and conditions.153

75.BALPA has reportedly been in talks with the Royal Air Force about temporary secondments for British Airways pilots who could be made redundant.154 Some British Airways pilots previously served in the military and British Airways has signed the Armed Forces Covenant, which includes a commitment to support the employment of veterans “young and old”.155 Such secondments would depend on British Airways’ willingness to allow pilots to return to the organisation.156 Mr Walsh told us he was receptive to the idea but did not want to prejudge the consultation.157 We note that such secondments could be a viable option to mitigate the impact of redundancies.

76.When we questioned Mr Walsh on 11 May, he repeatedly said that details of the proposed redundancies and changes were a matter for discussion with the unions. He said that the restructure, including the redundancies and terms and conditions, was “solely driven” by the fact that “we are now in the deepest downturn that the aviation industry has ever seen”.158 He refuted the claim that British Airways and its parent company were exaggerating the problem in a subsequent letter to us.159 However, he did not provide any reassurance that British Airways staff would have their pay, terms and conditions restored, should the company’s financial situation improve after the pandemic.160

77.For legacy reasons, British Airways hold the most lucrative slots at Heathrow Airport.161 Some parliamentarians and trade unions have suggested that the Government review British Airways’ slot allocation in light of the redundancy plans. The slot allocation process is complex and governed by international rules, including at present the EU Slot Allocation Regulation. It would be difficult for the UK Government to directly intervene in the slot allocation of any one airline, given these global rules. There are circumstances where the Competition and Markets Authority could intervene and order the release of slots to other airlines should circumstances change (for example, were the Government to take a share in an airline or one airline to acquire another).162

78.The Minister for Aviation told us that she was aware of British Airways’ actions and was monitoring the situation. Although this was ultimately a matter for the company and its employees, the Minister said it was “not an ideal situation”.163 She told the House on 3 June that she would not expect employers to “use the pandemic as a chance to […] slash terms and conditions” and that “in crises such as this we would hope that all organisations that are taking such measures treat their employees with the social responsibility that one would expect”.164

79.When asked about British Airways at the Liaison Committee on 27 May, the Prime Minister said he was aware of the case, although he refused to comment on individual companies. However, he did make clear that “people should not be using furlough cynically to keep people on their books and then get rid of them. We want people back in jobs.”165

80.Some redundancies at British Airways, as with other airlines, may be sadly inevitable in the current crisis. Having questioned the Chief Executive of British Airways’ parent company and trade unions and received hundreds of submissions from British Airways employees, our view is that British Airways’ current consultation on staffing changes is a calculated attempt to take advantage of the pandemic to cut jobs and weaken the terms and conditions of its remaining employees. The behaviour of British Airways and its parent company towards its employees is a national disgrace. It falls well below the standards we would expect from any employer, especially in light of the scale of taxpayer subsidy, at this time of national crisis.

81.We urge British Airways to extend its consultation period to allow meaningful consultation to take place as per its legal requirements, and without pre-conditions, so that all parties can consider the proposed staffing changes in the context of the Government’s plans to help the aviation sector restart and recover.

82.The Government’s Coronavirus Job Retention Scheme was designed to help businesses affected by the pandemic to retain jobs and protect the economy. Some companies, such as British Airways, have proceeded with plans for large-scale redundancies while taking advantage of the scheme. This is regrettable. We recommend that the Government revise the rules of the Coronavirus Job Retention Scheme to prevent, or strongly penalise, companies for making large-scale redundancies, while in receipt of funds from the taxpayer.

83.There have been calls from parliamentarians for the Government to strip British Airways from some of its slots, especially from Heathrow Airport where it is the dominant airline. Given the global nature of slot allocation rules, and international legislative restrictions, there are clear limits on what the UK Government can do. However, there has been considerable structural and market change within the aviation industry as a result of the pandemic, including the consolidation of airlines at specific airports. These changes may go on for years and could have serious impacts on consumer choice. We recommend that the Department for Transport and the Civil Aviation Authority explore every avenue available to ensure that recent changes and their impact on the availability and distribution of airport slots do not unfairly impact passengers. This should include referring the whole aviation industry to the Competition and Markets Authority for a market study and possible investigation.


113 The Coronavirus Job Retention Scheme has allowed employers affected by the pandemic to furlough employees and apply for a grant to cover 80% of their wages, up to £2500 per month, plus the associated Employer National Insurance contributions and pension contributions on that subsidised furlough pay.

116 WELCOME INCREASED JRS FLEXIBILITY BUT NEED TO EXTEND BEYOND OCTOBER, Airport Operators Association, 29 March 2020.

121 Emirates cuts jobs as coronavirus hammers aviation, The Financial Times, 31 May 2020

123 Q198

124 Q84

125 Q224 [Brian Strutton]

126 Q224 [Brian Strutton]

128 Prime Minister Liaison Committee, HC Deb, 3 June 2020, col 847

129 HC Deb, 3 June 2020, col 847

131 Letter from Amy James, Head of IFCE at British Airways, to Oliver Richardson, National Officer for Aviation at Unite the Union, on 28 April 2020.

132 Letter from Amy James, Head of IFCE at British Airways, to Oliver Richardson, National Officer for Aviation at Unite the Union, on 28 April 2020; Letter from Al Bridger, Director of Flight Operations at British Airways, to John Moore, Head of Industrial Relations at Balpa on 28 April 2020.

133 Letter from Amy James, Head of IFCE at British Airways, to Oliver Richardson, National Officer for Aviation at Unite the Union, on 28 April 2020.

134 Letter from Al Bridger, Director of Flight Operations at British Airways, to John Moore, Head of Industrial Relations at Balpa on 28 April 2020.

135 Letter from Amy James, Head of IFCE at British Airways, to Oliver Richardson, National Officer for Aviation at Unite the Union, on 28 April 2020.

137 BA ‘dismissal threat’ undermines talks, pilots’ union Balpa says, BBC News, 8 June 2020; Letter from Huw Merriman MP to all Members of Parliament on 8 June 2020. Available at: https://twitter.com/HuwMerriman/status/1270034390282899458/photo/1; Unite the Union, How is BA betraying Britain?, accessed on 10 June 2020

138 Not including pilots; Q240

139 Letter from Willie Walsh, Chief Executive of International Airlines Group, to Huw Merriman MP, Chair of the Transport Committee, on 20 May 2020. Available at: https://committees.parliament.uk/publications/1350/documents/12213/default/

140 There are questions whether a decision to make someone on furlough redundant would constitute a fair dismissal, while the JRS remains in place: a legal decision in any case would consider the specific facts involved, such as the financial circumstances of the company at the time. FAQs: Coronavirus Job Retention Scheme, CBP 8880, House of Commons Library, May 2020

142 Letter from Willie Walsh, Chief Executive of International Airlines Group, to Huw Merriman MP, Chair of the Transport Committee, on 13 May 2020. Available at https://committees.parliament.uk/publications/1091/documents/9156/default/

144 Q124

146 Q128

147 Q120

148 IAG directors buy on coronavirus crash, The Financial Times, 13 March 2020

149 Committee publishes open letter to public, Transport Select Committee, 18 May 2020

150 BA flight attendant comment, The Telegraph, 30 April 2020; British Airways pilots vote to settle dispute over pay, The Guardian, 16 December 2020;

151 Anonymous (CIT 0089) para 10, Ms Susan Mayne (CIT 0096) para 2, John Hughes (CIT 0093) para 1 and 6, Benjamin Hanna (CIT 0057) para 4

152 Q202 [Ms Holland]

153 Q202 [Ms Holland]

155 Ministry of Defence and British Airways PLC, Armed Forces Covenant, September 2016

157 Q148-Q149

158 Q131, Q126

159 Letter from Willie Walsh, Chief Executive of International Airlines Group, to Huw Merriman MP, Chair of the Transport Committee, on 20 May 2020. Available at: https://committees.parliament.uk/publications/1350/documents/12213/default/

160 Q134

161 HC Deb, 3 June 2020, col 847

162 Airport slots, Number CBP 488, House of Commons Library, June 2017

163 Q266

164 HC Deb, 3 June 2020, cols 847–848

165 Prime Minister Liaison Committee, HC Deb, 3 June 2020, col 847




Published: 13 June 2020