BA considering pay freeze after €80m loss

British Airways today said it was considering a pay freeze for its 42,000 staff after reporting a £70m (€80m) loss in the first nine months of its financial year.

The group is also looking at possible further voluntary redundancies and has opened talks with employee unions over “pay and productivity”.

BA made the announcement as it said the airline slumped into the red in the nine months to December 31, compared with profits of £816m (€933m) a year earlier.

It reported a £1bn (€1.1bn) increase in costs to £7bn (€8bn) in the nine-month period following last year’s record fuel prices and more recently the weakness of the pound.

BA warned last week that it expected to report full-year operating losses of about £150m (€171m) after the slump in sterling.

Fuel costs rose 50% to £2.2bn (€2.5bn) and non-fuel by £335m (€383m) to £4.7bn (€5.3m), hit by currency movements.

BA has already taken action to cut costs, shedding a third of its management team – 478 staff – at the end of last year after a voluntary redundancy programme.

It said there were not likely to be widespread job losses, but the group confirmed it would “review every aspect of the business to control costs”.

It declined to say how many more posts would be affected.

A spokesman added: “Given the current economic climate, we do not envisage making an increase in basic pay, but we are talking with unions and want to discuss the options.”

GMB trade union national officer Mick Rix said: “GMB negotiators and senior shop stewards at BA will be meeting next week to discuss BA’s economic situation and its impact on pay and jobs.

“BA have made it clear in recent meetings that its senior management is determined to work with the unions to work this out.”

The British Airline Pilots’ Association also responded to today’s news and said it would not accept “arbitrarily-imposed cost targets”.

Its general secretary Jim McAuslan said: “There will be a need for detailed discussions and we are ready for that.

“We have clear reasons to help, but with a great big health warning – we are not prepared to vary terms and conditions only to find that these are not reinstated in some form when the economy, and BA’s trading situation, improve.”

BA is also temporarily grounding some planes to cut costs and plans to reduce its capacity further over the year ahead.

The carrier flew 13.7% fewer premium-fare passengers last month as the market suffered amid the economic woes.

Total passenger traffic fell 4% to 2.33 million in January, with a 6.6% plunge in the UK and Europe.

BA chief executive Willie Walsh sought to assure that its merger talks with Spanish airline Iberia were still on track.

He said they had ironed out issues over pension fund arrangements and were making “good progress”.

Speculation has been mounting over its ambitious expansion plans after BA last month announced merger talks with Australian rival Qantas had ended.

Shares rose as much as 8% today as investors took heart from the assurances over the Iberia merger.

BA is also seeking to tie up with American Airlines and said today the group was “optimistic” over striking a deal.