Affected BA employees will be paid 80% of their salary under terms of state furlough scheme

This article is more than 5 months old

This article is more than 5 months old

British Airways is to suspend more than 30,000 staff, from cabin crew to ground staff, engineers and head office employees, until the end of May under the government furlough scheme for companies hit by the coronavirus pandemic.

Meanwhile Heathrow has announced it will shut down one of its two runways from Monday due to the reduction in flights. A spokesperson for the UK’s biggest airport said: “Although we are seeing significantly fewer flights at the moment, Heathrow will remain open so that we can continue to play a crucial role in helping to secure vital medical goods and food for the nation during this unprecedented epidemic.”

BA, which grounded all its planes at Gatwick this week, said all suspended employees would be paid 80% of their salary under the terms of the state scheme, which caps the payout at up to £2,500 per month.

Quick guide UK government support for workers and businesses during the coronavirus crisis Show Hide Income subsidies Direct cash grants for self-employed people, worth 80% of average profits, up to £2,500 a month. There are similar wage subsidies for employees. Loan guarantees for business Government to back £330bn of loans to support businesses through a Bank of England scheme for big firms. There are loans of up to £5m with no interest for six months for smaller companies. Business rates Taxes levied on commercial premises will be abolished this year for all retailers, leisure outlets and hospitality sector firms. Cash grants Britain’s smallest 700,000 businesses eligible for cash grants of £10,000. Small retailers, leisure and hospitality firms can get bigger grants of £25,000. Benefits Government to increase value of universal credit and tax credits by £1,000 a year, as well as widening eligibility for these benefits. Sick pay Statutory sick pay to be made available from day one, rather than day four, of absence from work, although ministers have been criticised for not increasing the level of sick pay above £94.25 a week. Small firms can claim for state refunds on sick pay bills. Other Local authorities to get a £500m hardship fund to provide people with council tax payment relief. Mortgage and rental holidays available for up to three months.

It has now reached deals with all three unions that represent its staff – Unite, GMB and the British Airline Pilots’ Association. The carrier is also encouraging its staff to join volunteering schemes.

Unite said workers would be able to divert their pension contributions, worth between 9% and 18% of earnings, into their pay for a short period of time. The BA furlough agreement runs up to 31 May.

At Gatwick and London City airport, all BA staff will be suspended after the airline stopped flying to and from both airports until the end of the virus crisis. It is still running short-haul and long-haul flights at Heathrow.

BA employs 45,000 people in total, and has struck a separate deal with its 4,000 pilots, who will take four weeks’ unpaid leave between April and May.

Unite’s national officer for aviation, Oliver Richardson, said: “Given the incredibly difficult circumstances that the entire aviation sector is facing this is as good a deal as possible for our members. The deal protects the jobs of BA staff and, as far as possible, also protects their pay.

“This is what can and should be done to protect workers during this unprecedented time for the airline sector,” he said.

BA’s parent company, International Airlines Group, also announced it had decided to reduce seat capacity further, by 90% in April and May compared with last year.

Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

BA is involved in arranging repatriation flights for the government, which has committed £75m to bringing British nationals home. This week BA flew back more than 1,000 Britons from Peru.

The aviation industry has been hit hard by the travel restrictions imposed because of the coronavirus crisis. Thousands of staff have been temporarily laid off or are taking unpaid leave. EasyJet and Virgin Atlantic are setting up schemes for thousands of suspended crew to volunteer over the next two months with the NHS or work in supermarkets.

Staff from BA, easyJet and Norwegian served breakfast for NHS employees at the Whittington hospital in north London on Wednesday. A paediatric registrar, Priyen Shah, tweeted that he was “completely blown away by the generosity of staff” from the airlines.

Priyen Shah (@PriyenShah86) Completely blown away by the generosity of staff from @British_Airways @easyJet @Fly_Norwegian for welcoming us at the end of a truly horrific night shift with coffee and pastries and, most importantly friendly (socially distant) faces. @SpeaktomeW @WhitHealth #NHS pic.twitter.com/N00eGWUh7W

With future bookings cancelled, European carriers are expected to lose £63bn in passenger revenues this year because of the travel bans, according to the International Air Transport Association (Iata). Globally, the industry body expects airlines to lose $252bn (£203bn), almost halving the industry’s revenues compared with last year.

The estimates assume three-month shutdowns across much of the world. Iata has also said many airlines do not have enough cash to see them through more than two months of shutdowns.

IAG, which also owns Iberia, is in a better financial position than other carriers. It has extended a £1.1bn credit buffer for BA by a year to June 2021. Overall, IAG has access to €9.3bn (£8.2bn) in cash, cash equivalents and loans to ride out the crisis.

However, BA’s main rival, Virgin Atlantic, is in deeper trouble, prompting Airbus, Rolls-Royce and Heathrow to urge the government to bail out the carrier.