BA cuts flights as it struggles to rehire after laying off 10,000 staff
British Airways has been forced to cut flight times further as it struggles to hire staff quickly enough to meet renewed travel demand after cutting nearly 10,000 jobs during the pandemic, raising fears the carrier not miss an exceptional summer for European airlines.
The airline is reducing its flight schedules by 10% between March and October, just as its parent company IAG and other major European groups Air France-KLM and Lufthansa are planning a strong recovery in travel this summer.
BA chief executive Sean Doyle said the airline had cut the equivalent of 8,000 round trips, three-quarters on short-haul routes, in a blow to the carrier just as passengers were returning with the easing of travel restrictions.
The hiring issue means IAG now expects flight schedules to reach 80% of pre-pandemic levels this year, up from 85% forecast in February. This includes restoring almost all of its normal capacity on transatlantic routes this summer.
“Rebuilding is difficult. . . US carriers had similar rebuilding issues earlier in the process, we are seeing issues in Europe and UK industry getting the system back up and running,” Doyle said.
The carrier plans to hire 6,000 employees this year after cuts during the pandemic.
More than 20,000 people have applied for jobs with the airline, but like other parts of the industry, it is facing major delays as government security screening procedures process an unusually high number of cases.
The Cabinet Office said it was prioritizing requests for screening from the aviation industry, but added: ‘It is up to the aviation industry to manage resources at airports and staff absences, particularly during busy times of the year.”
Doyle partly blamed the owners of Heathrow Airport for not reopening all of its terminals quickly enough, but said he was ‘extremely aware’ of the problems facing BA, which has also suffered IT outages and customer service complaints.
Despite the problems, IAG issued an upbeat forecast, saying it expected to return to profit this quarter, putting two years and more than 10 billion euros in losses behind it.
However, shares fell 7% to 132.88p in early Friday afternoon in London as timing issues and bigger losses than analysts had expected unsettled investors. Shares in the group have lost about a third of their value in the past 12 months.
Air France-KLM and Lufthansa, the other two airline groups in the comparable network in Europe that offer short- and long-haul flights, issued dynamic updates 24 hours earlier, but suffered fewer operational difficulties.
“IAG adopted an optimistic but more measured tone [compared with Air France-KLM and Lufthansa]said Bernstein analyst Alex Irving.
Holiday Inn owner InterContinental Hotels also released an optimistic outlook for travel on Friday and said demand had increased in nearly every market around the world.
Luis Gallego, chief executive of IAG, said demand for flights had “recovered strongly”, including the return of business travel, which reached its highest levels since the start of the pandemic.
Doyle said business travel at BA rebounded to between 65 and 70% of 2019 levels this spring.
He added that the recovery had been led by the financial sector, but included accountants and consultants, and more recently the IT and pharmaceutical sectors.
“Big companies are now booking [again],” he said.
IAG posted an operating loss after tax and exceptionals of 787 million euros in the first quarter, compared to a loss of 1.1 billion euros the previous year. Turnover increased from 968 million euros to 3.4 billion euros and cash increased slightly to 8.2 billion euros.
The losses reflect weak winter demand, the impact of the Omicron coronavirus variant and the costs of resuming operations, Gallego said.
IAG’s new chief financial officer, Nicholas Cadbury, says the group has no plans to turn to investors for new capital to help it deal with $11.5 billion in net debt euros, indicating 8 billion euros in cash and the prospect of a return to profit.
“When this business recovers, it generates a lot of money,” he said.