British Airways Plc, Europe’s third- largest airline, said almost 7,000 employees have applied for voluntary pay cuts to help the carrier cope with the slump in revenue prompted by the global recession.
British Airways will save as much as 10 million pounds ($16.3 million), the London-based carrier said in a statement today. About 4,000 workers will take unpaid leave, while 1,400 will work part-time and 800 full-time for free for one to four weeks, Cathy West, a spokeswoman, said by phone.
“This response clearly shows the significant difference individuals can make,” British Airways Chief Executive Willie Walsh said in the statement. Walsh, who earns 735,000 pounds a year, said in May that he’ll work for free in July
The airline, which employs 40,000 people, is seeking to slash its costs after reporting a 375 million-pound loss for the 12 months ended March 31. Carriers worldwide will lose $9 billion this year, according to the International Air Transport Association.
The program “is helpful, but clearly given the scale of the challenge British Airways has, it still needs to make more cost cuts if it wants to offset the decline in revenue,” Gert Zonneveld, a London-based analyst at Panmure Gordon, said in a phone interview. He has a “hold” recommendation on the stock.
Employees were pressured to take pay cuts, the Unite labor union said in a statement today.
“While we support means to mitigate redundancy, workers were sent intimidating e-mails from senior managers which we believe put pressure on staff to volunteer,” Unite spokesman Steve Turner said. Unite is representing flight attendants and administrative employees in contract talks with British Airways.
“We reject strongly any allegations of bullying or intimidation,” Tony Cane, a British Airways spokesman, said by phone. “There is absolutely no pressure on staff to take up any of these unpaid options.”