British Airways Faces Serious Increases In Costs As Furloughs End

One way that carriers have lowered their rate of cash burn during the worst of the global health crisis has been to place employees on furlough – a temporary leave of absence. With the UK government’s furlough scheme set to end on September 30th, the airline is anticipating a sharp spike in costs as more employees get back on the payroll and off government support.

In 2020, British Airways decided to say goodbye to its 747-400s but also placed many of its employees on furlough. Photo: British Airways

The UK government’s “Coronavirus Job Retention Scheme” (CJRS) was rolled out at the onset of the crisis to keep the economy afloat as businesses shut down amid health concerns and restrictions. Here is how the government describes the CJRS for business owners:

“If you cannot maintain your workforce because your operations have been affected by coronavirus (COVID-19), you can furlough employees and apply for a grant to cover a portion of their usual monthly wage costs where you record them as being on furlough.” 

A “serious” issue

According to Reuters, an internal memo to staff said that the airline’s flight schedule and staff costs would not line up in their current form. Although the airline says that this is just a temporary problem, it also acknowledges that it’s a “serious one which we need to manage.”

British Airways told staff that the furlough scheme had been a “huge help.” However, with the scheme’s impending expiry, the airline said, “our pay costs will steeply increase, and any increase in costs is bad news.” Indeed, British Airways acknowledges that its schedule and operating costs for the remainder of 2021 “will not line up.”

It was at the start of March that the CJRS had been extended until September 30th, 2021. The government says that “for claims relating to August and September 2021, the government will pay 60% of wages up to a maximum cap of £1,875 for the hours the employee is on furlough.”

While travel restrictions have eased, the UK airline industry is far from fully recovered. Photo: Vincenzo Pace | Simple Flying

Blame put on government travel restrictions

Perhaps rightfully so, the airline memo explains to staff that its concerns are due to travel restrictions and regulations, saying that it was in a “constant guessing game” with routine changes in where travelers could and couldn’t go.

“…but the cautious approach of governments to the easing of global travel restrictions has undermined customer confidence, and recovery remains far behind where we need it to be.” -British Airways staff memo via Reuters

Could job cuts be coming to British Airways? Photo: Getty Images

Because of the uncertainty that remains ahead, the airline is warning its workforce that it will have to be “as flexible as possible” when it comes to its operations in order to adapt to the situation in the coming months.

To that end, it tells employees that it is in discussions with their trade union representatives “who are as keen as we are to find a way through the winter season and into growth next year.”

British Airways’ official statement

Responding to our request for comment on the internal memo, the airline said that it was grateful for the support of the furlough scheme but wanted the government to continue to protect jobs beyond September. The airline also added,

“We also want to welcome colleagues and more customers back as soon as possible so we are urging the Government to add more low-risk countries to the green list and allow vaccinated customers to travel without restrictions from green and amber countries.”

British Airways is calling for more low-risk countries to be added to the UK’s green list. Photo: Getty Images

With the scheme expiring one month from now, we will have to wait and see what British Airways decides to do. The airline says that it’s doing everything it can to protect jobs, as it has done throughout the pandemic. However, in the absence of government assistance to protect airline jobs, one has to think that cuts could be on the table. The difficulty is the uncertainty in timing, considering the fact that the airline might need more employees back to work sometime over the next year should the situation improve enough.

What do you think British Airways will do in the face of the job retention scheme expiring? And what do you think they SHOULD do? Let us know what you think in the comments.

from Simple Flying https://ift.tt/38kSPvZ
via IFTTT