Coronavirus Outbreak: British Airways puts about 28,000 employees on furlough; to give 80% of their usual salary

British Airways may put about 28,000 employees on furlough in a bid to cut costs as more countries declared lockdowns and sealed their borders for air traffic in the wake of global coronavirus outbreak, said a news report.

The flag carrier airline of the United Kingdom, after conducting talks with the staff, reportedly decided to give 80 percent of their usual salary, reported Bloomberg quoting Unite union. 

The assistance to the British Airways' staff may also include funding by the UK government up to $3,095 a month under a national plan, the report said.

Representational image. Reuters

Meanwhile a Reuters report on Wednesday said that British Airways is expected to announce a suspension of about 36,000 of its employees.

The airline has reached a broad deal with Unite union that will include suspension of jobs of 80 percent of British Airways cabin crew, ground staff, engineers and those working at head office, the report said quoting a BBC News adding that no staff were expected to be made redundant.

With global travel in turmoil as the virus takes hold around the world, British Airways' owner IAG said it would also cut capacity by 90 percent in April and May, and scrap its dividend, in a desperate bid to survive the worst crisis in its history, reported Reuters.

SpiceJet, IndiGo, GoAir cut staff pay

On 31 March, India's budget carrier SpiceJet decided to cut up to 30 percent salary of its employees in March with Chairman Ajay Singh opting for the highest 30 percent trimming in compensation, the airline said in an e-mail communication to the staff.

Moreover, the employees will also be treated as "on leave without pay" for the 25-31 March phase due to the suspension of air passenger services during the period, said the airline, which offered its aircraft and crew to the government for any "humanitarian mission" last week.

Wadia Group-owned IndiGo was the first domestic carrier to announce a 25 percent across-the-board pay cut on 19 March, and it was followed by government-owned Air India, which affected a 10 percent cut in employees allowance to deal with the precarious finances amid coronavirus pandemic.

IndiGo's smaller rival GoAir also announced a salary cut for all its employees in March.

Airline industry braces for prolonged recovery

International seat capacity has dropped by almost 80 percent from a year ago and half the world’s airplanes are in storage, new data shows, suggesting the aviation industry may take years to recover from the coronavirus pandemic.

Carriers including United Airlines Holdings Inc and Air New Zealand Ltd have warned they are likely to emerge from the crisis smaller, and there are fears others may not survive.

The airline is cutting between 70 percent and 75 percent of domestic flights in April and about 80 percent in May. For both months it is cutting nearly 90 percent of its international flights.

Aviation industry needs govt help of $200 billion: IATA

The International Air Transport Association (IATA) forecast the industry will need up to $200 billion of state support, piling pressure on governments facing demands from all quarters and a rapid worsening in public finances as economies slump.

Last month, CAPA Centre for Aviation had warned that the global airline industry might face its worst crisis even as the coronavirus pandemic was expected to cripple the economic activities across the world.

Most airlines in the world will be bankrupt by the end of May 2020 and the world aviation consultancy company Centre for Aviation (CAPA) said that only coordinated action by governments as well as the industry will be able to save the companies.

With the coronavirus cases spreading, the demand for travel and air travel especially has plunged drastically since the last two weeks after countries across the world implemented travel restrictions to curb further spread of the deadly disease, the report said.

Several governments offered financial help to the airlines in a bid to keep them afloat as the COVID-19 impact on the industry is expected to rise.

Last month, there were reports that India was planning a rescue package worth as much as $1.6 billion (Rs 12,000 crore) for the aviation sector, which has been battered after the coronavirus outbreak forced countries to close borders and brought air travel to a near-halt.

The Finance Ministry is considering a proposal that includes the temporary suspension of most taxes levied on the sector, including a deferment of aviation fuel tax, said the sources, who have direct knowledge of the matter.

The rescue package, proposed by the civil aviation ministry, is likely to be worth up to 100-120 billion rupees ($1.3-$1.6 billion), the two sources said.

Last month, New Zealand offered its national carrier a NZ$900 million ($510 million) lifeline, which finance minister Grant Robertson said would help it survive after the government banned all non-resident arrivals to the country.

Similarly, Norway will also back airlines with credit guarantees worth up to 6 billion Norwegian crowns ($537 million), half of them to Norwegian Air Shuttle ASA. Conditions include raising money from commercial banks and the equity market.

Finland, which owns a 56 percent stake in Finnair, said it would guarantee a 600 million euro ($645 million) loan for the state carrier. The firm said it was implementing a funding plan that included drawing on available credit lines, sale and leasebacks of planes. Its stock jumped 16 percent.

Major US airlines sought a government bailout of more than $50 billion (41 billion pounds) as the White House is urgently drafting a financial assistance package in the wake of the steep falloff in US travel demand sparked by the coronavirus pandemic, reported Reuters.

A trade association warned that without action airlines could run out of money by year-end - and even sooner if credit card companies started withholding payments. Without action soon, airlines and others in the sector could furlough tens of thousands of workers.

-- With inputs from agencies