British Airways reaches pilot deal to end row over job cuts

British Airways resolved a bitter dispute with its pilot union, reaching a deal on cuts in pay and headcount that will help the IAG SA unit get through the deep slowdown triggered by the coronavirus pandemic.

The plan reduces mandatory job cuts to 270 from the 1,255 originally signaled, the British Airline Pilots’ Association said late Wednesday. BA will rely on voluntary moves to bridge much of the gap, while also creating a pool of 300 crew idled on reduced pay who will return only when demand picks up.

IAG said in a statement Thursday that it welcomed Balpa’s decision to recommend the settlement to members, adding that the measures are a necessary response “to the Covid-19 crisis affecting the aviation industry.”

The compromise may help quell a debate over how much pain British Airways should pass on to its workforce after accepting government loan guarantees to survive the crisis. The carrier has faced criticism from U.K. lawmakers over a plan to cut as many as 12,000 jobs overall as it seeks to preserve cash and cope with a slow recovery.

Shares of IAG, as International Consolidated Airlines Group SA is known, traded 0.5% lower as of 8:10 a.m. in London. The stock has lost two-thirds of its value this year.

British Airways pilots who remain in service will absorb an initial pay cut of 20%, which narrows to 8% over the next two years, the union said. The ballot is due to close on July 31, with IAG planning to provide a further update at that time.

The House of Commons Transport Committee accused BA of using the global outbreak as an excuse to slash the payroll. Prime Minister Boris Johnson last week refused to join in the condemnation, saying the company was “in severe difficulties.”

As part of the Balpa agreement, British Airways agreed not to follow through on its threat to fire and rehire pilots on new terms if it couldn’t reach a deal with the union.