British Airways owner IAG sees shares plummet after job cuts announcement
Shares in British Airways owner IAG plunged this morning after it yesterday announced that it could cut up to 12,000 jobs at the UK flag carrier.
As markets opened, shares in the airlines group dropped nearly seven per cent, in another blow to the firm’s already decimated market cap.
The firm said that the unprecedented fall in passenger demand – which dropped 94 per cent in April and May – necessitated “group wide restructuring measures”.
It warned that demand would likely take several years to recover.
“The [redundancy] proposals remain subject to consultation but it is likely that they will affect most of British Airways’ employees and may result in the redundancy of up to 12,000 of them,” IAG said.
The moves come despite BA having already furloughed 22,626 staff in April using the government’s job retention scheme.
Unions reacted with horror at the announcement, with the British Airline Pilots Association’s (BALPA) general secretary Brian Strutton saying:
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“This has come as a bolt out of the blue from an airline that said it was wealthy enough to weather the COVID storm and declined any government support.
“BALPA does not accept that a case has been made for these job losses and we will be fighting to save every single one.”
GMB national officer Nadine Houghton said: “We believed we had reached some relative, albeit temporary, respite for them following the agreement to furlough 80 per cent of BA’s staff – now this.
“I know our reps will work day and night to limit the impact on our members but 12,000 employees is a staggering number. All our efforts will be out into bringing that number down.”
CMC Markets chief analyst Michael Hewson said the announcement was an indication of the direction in which the travel industry was heading:
“One thing seems certain, while last night’s actions by IAG have attracted some significant criticism in terms of their timing, they also point to the challenges facing the travel sector in the weeks and months ahead.
“While governments have gone some way to keeping airlines afloat in the short term, the actions of IAG yesterday have signposted a direction of travel for an industry that is likely to be quite a bit smaller by year end, than it is now”.