IAG haemorrhaging cash at £178m a week, says BA boss Cruz
British Airways boss Alex Cruz has said that parent company IAG was burning through £178m a week due to the coronavirus crisis, raising fears it might not survive.
In an internal note seen by Reuters, Cruz said that IAG’s dire financial situation meant its 12,000 job cuts were necessary.
The airline came under heavy criticism in parliament yesterday over its treatment of its workforce, especially in its use of the government’s furlough scheme.
In April BA announced the job cuts and moves to change terms and conditions for its staff, just weeks after it had placed 30,000 of its staff on the job retention scheme.
Transport select committee chairman Huw Merriman said that BA was “effectively sacking” its entire workforce and replacing it with 30,000 staff on inferior contracts.
On behalf of the government, aviation minister Kelly Tolhurst said: “The scheme 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.”
Before the Open: Get the jump on the markets with our early morning newsletter
In his letter, Cruz wrote that BA did not have “an absolute right to exist” and that in the future the carrier would have to compete with other airlines for customers.
He urged unions Unite and GMB to engage with the airline over the redundancies, adding that it was “working constructively” with pilots union Balpa.
Alongside the existing damage done to the aviation industry by the coronavirus crisis, BA now faces another threat to its recovery in the government’s decision to impose a 14-day quarantine on all incoming travellers to England.
IAG’s boss Willie Walsh has already criticised the measure, which Cruz called “another blow to our industry”.
In a session with the transport committee last month, Walsh had said the airline will have to revise its plan to ramp up services from July as a result of the decision.
The government faced a revolt from Tory MPs over the decision, with many backbenchers hitting out at the plans after home secretary Priti Patel unveiled the details yesterday.
Former prime minister Theresa May said that without the aviation industry “there is no global Britain”.
Former cabinet minister Theresa Villiers also called on Patel to scrap the “blanket quarantine” and bring in “air bridges” to save jobs.