British Airways boss Walsh asks staff to work for free

Willie Walsh asks staff to work for up to a month without pay, as he battles to get BA's costs down.

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Last Updated: 31 Aug 2010

BA boss Willie Walsh has come up with a drastic new cost-cutting wheeze: he's asking staff to work without pay for up to a month. More than 30,000 BA employees have been offered the chance to take between one week and one month of unpaid leave - or to work for the equivalent period without pay. After the once-profitable airline made a record £401m loss in 2008, thanks to rising fuel costs, the Terminal 5 fiasco and a dramatic reduction in premium-fare passengers, Walsh is on a mission to slash his cost base. And the implicit argument is that this could be the lesser of two evils...

BA first asked staff to volunteer for a month's unpaid leave a few weeks ago, and apparently about 1,000 people signed up. But that clearly wasn't enough, so Walsh is raising the stakes - this latest version of the scheme allows them to take anything from a week to a month off, or work for free for the same period, with the salary deductions spread out over three to six months in order to ease the blow. Presumably the hope is that this will encourage the majority of employees to sign up (as they have at other airlines like Cathay Pacific, Walsh says).

According to Walsh, desperate times call for desperate measures: 'Our survival depends on everyone contributing to changes that permanently remove costs from every part of the business,' he insisted, a little ominously. 'I am looking for every single part of the company to take part in some way. These are the toughest trading conditions we have ever seen and there simply are no green shoots.' Since BA staff apparently tend to get paid more than their counterparts at rival airlines in the first place, he clearly thinks this is a good place to start.

And the subtext here is that cost-savings here could ward off mass redundancies. There have been rumours about 4,000 job cuts, to include 2,000 voluntary redundancies among cabin crew (cynics speculate that those who volunteer for this scheme might get preferential treatment if this does happen, although BA strenuously denies this). Then again, some argue that staff costs are precisely why BA's in this mess - and actually Walsh could do with reducing headcount to make it a more viable operation.

Walsh is at least leading by example: as well as turning down his annual bonus recently, he's also forgoing his July salary - worth £61,000. Though before you have a whip-round for him, don’t forget he still has the rest of his £735,000 salary to get by on, plus £40,000 from deferred shares. Most of the staff he's asking to go without pay don't have that luxury.

Employees have until June 24 to decide. Don’t all rush at once.


In today's bulletin:

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British Airways boss Walsh ask staff to work for free
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Editor's blog: The abuse of power

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