BA has persuaded its pilots to agree to a 2.6% salary cut, in exchange for long-term share pay-outs. Earlier this week CEO Willie Walsh’s latest cost-saving wheeze – asking staff to work for a month without pay – went down like a lead balloon with unions. But on this occasion, pilots’ union BALPA has not only agreed to the deal, but has been actively encouraging others to follow suit. It seems they’ve come to the same conclusion as their CEO: that unless BA acts quickly to cut its costs, they could all be out of a job.
Under the terms of the ‘ground-breaking’ deal, BA’s 3,200 pilots would get a 2.6% pay cut from October, as well as a 20% reduction in their flying time allowances and 78 voluntary redundancies. All of which is expected to save about £16m a year. They’re also promising to deliver £10m in productivity savings, by working more non-flight hours, turning short-haul flights around more quickly, and cutting cabin crew duties. In exchange, they’ll benefit from a long-term incentive scheme that will see them receive £13m worth of BA shares in 2011 (if certain performance targets are met), which they won’t be able to sell until 2014.
The good news for Walsh is that BALPA (the British Airlines Pilots Association), which has been negotiating the deal with the BA top brass for weeks, has agreed to recommend the deal. ‘We have always said that as a union we would share the pain if our members shared in the gain,’ said BALPA general secretary Jim McAuslan, who clearly buys Walsh’s argument that desperate measures are needed: ‘Our research indicates that BA is facing a real business challenge and this is not the case of the employer crying wolf.’ How refreshing. Though as an ex-pilot himself, of course, Walsh clearly knows the right buttons to press.
Since BALPA’s members account for 95% of BA’s pilots (and the rest will have to fall in line anyway), there’s a good chance the deal will be passed. And better still for Walsh, McAuslan was on Radio 4's Today programme this morning encouraging other unions to strike similar deals, while endorsing the CEO as the right man for the job. That’s a big fillip for Walsh, who’s desperate to avoid industrial action that could lead to cancelled flights. As he stressed at the Paris air show yesterday, the worst of the economic turbulence may still be ahead of the airline industry.
On the other hand, these pilots apparently get paid an average of £107,000, including basic pay of £80,000. So a 2% pay cut will hardly leave them on the breadline. Like Walsh, who has offered to waive his July pay, they can afford this kind of gesture a lot more easily than the cabin crew and ground staff.
In today's bulletin:
Goodwin offers to reduce pension pot as borrowing soars
BA pilots' union agrees to swap salary for shares
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