BA staff may be working for free

According to Bloomberg, British Airways recently asked its 40,000 employees to consider laboring for nothing for up to one month. "Colleagues are being urged to help the airline’s cash-saving drive by signing up for unpaid leave or unpaid work," read an article in BA News, the carrier’s in-house newspaper. Chief executive Willie Walsh, who has pledged to forgo his $100,000 monthly salary in July, said the airline was caught in a "fight for survival

Thumped by a global depression, firms just about everywhere have gone to town on staff costs in recent months, from salary cuts to mandatory unpaid leaves. But BA is going further. Volunteers can sacrifice between a week and one month’s worth of salary, or else spread the pain by taking a reduced salary for three to six months. Union officials have scoffed at the proposal. "Willie Walsh can afford to work a month for free," says a spokesman for Unite, BA’s biggest union. "Our members can’t." Walsh, though, can’t afford to do nothing. Tumbling passenger numbers and a soaring fuel bill pushed BA to a pretax loss of $656 million in the 12 months leading to last April. The year before, BA made $1.5 billion. "The prolonged nature of the global downturn makes this the hardest trading environment we have ever faced," Walsh said as the results were announced in May, "with no immediate improvement visible."

Asking staff to work for free is only the airline’s latest effort to pare costs. BA has said it will idle 16 more planes this winter, adding to the 3% cut in capacity instigated in late 2008. Management bonuses have been shelved. Unpaid leave and temporary or permanent part-time work, meanwhile, have been on the table since last month. And talks with unions are continuing over how to squeeze staff costs still further — BA’s head count has already fallen by 2,500 since last summer.

The firm says it hopes for "large savings" through its work-for-nothing proposal, which closes on June 24. More than 1,000 BA staff have volunteered for unpaid leave or part-time work in the past month. Interest from those willing to work unpaid, meanwhile, has thus far "gone into the hundreds," the spokesman says.

But it’s far from certain that the dramatic — some might say desperate — call for volunteers will be a significant cost-cutting measure. Hit hard by the slump in air travel following the first Gulf War, BA gave away some $10 million worth of seats in what it dubbed the "world’s greatest offer." That move "had a party atmosphere and a confidence and scale that actually built the BA brand despite the fact that it was giving stuff away for free," recalls Rita Clifton, chairman of global brand consultancy Interbrand.

Unlike the Gulf War–related slump of the early ’90s, the causes of BA’s troubles are less clear this time around, Clifton says. Is it internal factors, the global downturn, the problems when Heathrow’s Terminal 5 opened last year? Because of that ambiguity, "staff and observers won’t necessarily think, This is all to do with external forces, so we’ve all got to pull together here," Clifton says. Seems like you can ask for that second pillow, after all.
 

Source: Bloomberg