* BA to consult unions on up to 12,000 jobs
* Airline books 1.3 billion euro charge for overhedging
* IAG swings to Q1 operating loss
* Airline industry worst hit by pandemic
(Adds union reaction, details from CEO letter)
LONDON, April 28 (Reuters) - British Airways plans to cut
more than a quarter of its jobs in response to the coronavirus
crisis, parent company IAG said on Tuesday, forecasting
that passenger numbers will take years to recover.
International Consolidated Airlines Group SA (IAG), which
also owns Iberia, Aer Lingus and Vueling, reported a
first-quarter operating loss before exceptional items of 535
million euros ($580 million), compared with a profit of 135
million a year ago.
Revenue dropped 13% to 4.6 billion euros. IAG said it
expected its losses to be significantly worse in the second
quarter, when it is hit by the full extent of travel lockdowns
imposed during the pandemic.
In a statement it outlined plans for a sweeping
restructuring at BA.
"The 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," the
group said. BA has 45,000 employees, including 16,500 cabin crew
and 3,900 pilots, according to its website.
BA Chief Executive Alex Cruz told staff the airline was
taking every possible action to conserve cash to weather the
storm in the short term, including renegotiating contracts and
looking at options for its fleet, but it would not be enough.
"In the last few weeks, the outlook for the aviation
industry has worsened further and we must take action now," he
said in a letter to staff seen by Reuters.
"There? is no government bailout standing by for BA and we
cannot expect the taxpayer to offset salaries indefinitely. Any
money we borrow now will only be short-term and will not address
the longer-term challenges we will face."
The pilots union BALPA said staff were devastated.
"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 General Secretary Brian
Strutton said.
"BALPA does not accept that a case has been made for these
job losses and we will be fighting to save every single one."
BA had used Britian's COVID-19 jobs retention scheme to
furlough 22,626 employees earlier this month. Under the scheme,
the government takes on part of the cost of retaining staff who
remain on the payroll while being sent home during the crisis.
Echoing comments from rivals such as Lufthansa,
IAG said it would take several years for passenger demand to
return to 2019 levels.
Operating losses in the second quarter would be
significantly worse than in the first given the decline in
passenger capacity and traffic, despite some relief from
government job retention and wage support schemes, it said. It
did not give 2020 profit guidance.
It said it had taken an exceptional charge of 1.3 billion
euros at the end of the quarter on over-hedging on fuel and
foreign currency for the rest of the year.
The measures come after IAG boss, Willie Walsh, a dealmaker
who made his name standing up to unions and cutting costs, last
month put off plans to retire to deal with the industry's worst
crisis.
Highlighting the speed of the damage as governments imposed
lockdowns to contain the pandemic, IAG said all the decline in
operating profit in the first quarter came in March.
($1 = 0.9228 euros)
(Reporting by Josephine Mason and Paul Sandle
Editing by Keith Weir)
International Airlines (IAG)