Walsh to staff: British Airways future at risk

Willie Walsh has given his gloomiest assessment yet of the future of British Airways, effectively telling staff that the flag carrier faces potential bankruptcy.

In a startling internal email sent to employees, the chief executive confirmed that BA is "definitely at risk" if trade unions reject its call for voluntary redundancies.

He warned that the £401 million loss BA made last year left it in a perilous situation, saying the downturn was "beyond anything that we can save from our costs".

Britain's flag carrier has faced a torrent of criticism in recent weeks, much of which has centred on an audacious appeal by Mr Walsh for staff to work for free.

The BA boss made the plea earlier this month after himself agreeing to forgo one month's salary. Unions were given a deadline of midnight yesterday to respond, with 800 employees reportedly voicing their willingness to sign up to the scheme.

But even when coupled with 7,000 voluntary pay cuts, that goodwill is expected to save BA just £10 million – meaning it must forge ahead with plans for compulsory redundancies.

"There is no immediate threat to our business if we act with speed," Mr Walsh began in the ominous email. "However, the drop in revenue we witnessed in the fourth quarter of last year goes well beyond anything that we can save from our costs.

"Central to our plan for survival is a fundamental and structural change to our employee cost base. If we do not change, then the future of our business is definitely at risk."

BA struck a deal with the British Airline Pilots Association earlier this month in which 3,200 pilots accepted a small pay cut, in addition to 78 voluntary redundancies.

The agreement, however, fell well short of lifting the flag carrier out of its current predicament. Shares in the airline plunged eight per cent on Tuesday (June 23) after Sir Richard Branson, chairman of Virgin Atlantic, said its rival was "not worth much anymore".

On top of the disappointing profit report, BA is saddled with a £2.9 billion pension fund deficit and is also considering axing its much-trumpeted subsidiary, OpenSkies.

© Cheapflights Ltd

Comments

[Terence Booth]

Just desserts for an airline that lost my baggage three times in a row on the same long-distance flight and offered not one penny in compensation!