British Airways plans to emerge from COVID-19 with greater efficiency even if the rest of aviation does not. That is good news for its passengers and shareholders, but not employees.
The airline has announced up to 12,000 job losses. Most redundancies are due to British Airways planning to be smaller and needing fewer staff.
But it also wants to establish a more efficient underlying base, which will make existing flying cheaper and allow future growth to be less costly.
“Further structural change is proposed,” British Airways told its pilot union in a memo.
British Airways and its staff will have to find balance. Reducing job losses in exchange for greater productivity would mean being over-staffed in the short-term but achieving a more efficient base for the long-term.
Initial proposals are open to “reformulating them where viable to do so,” British Airways told the pilot union.
Management wants to “mitigate the impact and need for redundancies.” Any redundancies, management further warned, would be paid out at minimum statutory obligations.Today In: Aerospace & Defense
British Airways may already be more efficient than Air France, but lags others, partially due to unnecessary complexity. COVID-19 becomes a change catalyst. Don’t let a good crisis go to waste.
Consolidating British Airways’ three Heathrow flight attendant pools into one could create flexibility, a plan reportedly being considered. Even if the lowest contract does not prevail, average cost should come down.
Pilots are targeted for greater productivity. British Airways wants “flexibility and efficiencies” across its pilot workforce, and improve “headcount per hull” – how many pilots are needed to fly one aircraft.
Two-thirds of British Airways pilots fly widebody aircraft. Employment numbers cited by British Airways imply there is a similar ratio of long-haul pilots at each aircraft group. There is not one fleet that is especially under-productive, so efficiency drives would seemingly affect all.
“Those remaining in employment are also likely to be impacted,” British Airways said.
British Airways pilots per aircraft based on company and industry data
The A380, 747 and 777 have about 22 pilots per aircraft. British Airways appears to have managed staffing well despite differences in scale. It has only 12 A380s but 57 777s.
The 787s have a slightly higher headcount with 23 pilots per aircraft, but this might be explained if the 787s on average fly longer sectors and require more relief pilots. Breakdowns between captains and co-pilots are mostly consistent with top-level figures.
Staffing on the A350 fleet is technically high with 27 pilots per aircraft, but British Airways received its first A350 last year and now only has five. It is common to start a new fleet over-staffed.
That leaves the short-haul pilots. They are one-third of British Airways’ pilots but fly just over half of all aircraft.
Whereas the widebodies have around 22-23 pilots per aircraft, each narrowbody has only 10 pilots. The inherent differences of short-haul versus long-haul make it difficult to compare pilot efficiency between the types.
While most airlines are, at best, planning for their immediate future, British Airways wants to restructure for the long-term.
It is rare for an airline to have so much negotiating leverage. Damage is evident and public sympathy is dampened, unlike last year’s pilot strike that came during a multi-billion pound profit period.
“The challenge is two-fold,” British Airways told its pilot union. But it might be more one-part challenge and one-part opportunity.
The challenge: British Airways will need fewer staff, including pilots, as it plans to emerge from COVID-19 a smaller airline with fewer aircraft. Its starting proposal is eliminating 955 pilot jobs, or 22% of its workforce.
Numerous references to this being initial suggests pilots have negotiating room depending how many concessions they grant for British Airways’ second objective: the opportunity.
Efficiency will bring a further 175 pilot job losses, British Airways said, making total proposed losses 1,130 or 26% of current pilots.
Staff costs last year were £2.5 billion, or 22% of operating expenses. There is a limit to how much extra cost British Airways is willing to carry. It warned that after COVID-19 it will have “higher debt levels and lower cash positions than usual.”
Early in the coronavirus outbreak there was a brief window for sector consolidation if weak airlines did not receive government support.
As damage increased, state aid became common. This shifts the outlook from which airlines survive to which airlines are advantaged by out-sized help. British Airways fears such a “distorted market.”
British Airways and other IAG carriers have not asked or received for state help, but most others have.
“Many of British Airways’ competitors in Europe and globally are receiving state aid in various forms,” it told the pilot union. “Some of those competitors will have the option to provide overcapacity and lower fares.”