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Owner of British Airways and Iberia Issues Profit Warning as a Result of Pilot Strikes

Owner of British Airways and Iberia Issues Profit Warning as a Result of Pilot Strikes

British Airways

The owner of British Airways says it has taken a £121 million ($149 million) direct hit from a 48-hour walkout by pilots at the Heathrow-based airline on the 9th and 10th of September, as well as a third planned strike on 27th September which was later cancelled by the pilot’s union.  The financial damage caused by the strikes is significantly more than the £30 million per day cost the airline had originally estimated.

In contrast, the BALPA pilots union says the gap between BA’s current offer and what the union is demanding is estimated to cost the airline an additional £5 million.  British Airways has offered an 11.5 per cent pay rise spread over three years but has repeatedly refused the pilot’s demands for a ‘share save’ scheme.

International Consolidated Airlines Group (IAG) which also owns Iberia and Aer Lingus, as well as the low-cost brands Vueling and LEVEL says it cancelled 4,521 flights over a period of seven days as a direct result of the pilots strikes.  Passengers were also able to either cancel or rebook on an additional 4,070 flights not directly impacted by the strikes.

Despite the BALPA union “taking the initiative” to call off a third day of strike action on the 27th September in order to pave the way for more talks, IAG has confirmed that the two sides have not got back around the negotiating table.  BALPA has reserved the right to call further strikes – the union’s mandate for industrial action runs until early next year.  At least two weeks notice of a walkout must be legally provided by the union.

Iberia Opens Up Cabin Crew Recruitment for Short and Medium-Haul Fleet
Photo Credit: Iberia

In addition to the costly pilot’s strike, IAG also says British Airways was hit by the threat of strike action by employees at its hub at Heathrow Airport.  Despite the fact that the walkout never actually went ahead, British Airways and Iberia made changes that have resulted in a £29 million hit.

If that wasn’t enough, IAG has also told analysts this morning that bookings for its low-cost brands are likely to be down £39 million on original estimates for the year.

At current fuel prices, the airline group is currently estimating full-year profits to be down £190 million on 2018.  Last year, IAG was one of the most successful airline groups in the world – the business made a profit of over £2 billion, which was a 44 per cent increase on post-tax profits from the year before.

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