British Airways cuts a deal with its pilots

In an earlier post, I analysed the implications of a rumoured deal between British Airways and its pilots union, BALPA. Yesterday the terms of the deal that has been negotiated and is being recommended to its members was revealed on BALPA’s website.

How does the deal compare to the rumoured terms?

Job losses

A reduction in pilot numbers of 650 was rumoured three weeks ago, 350 of which were to be permanent and the other 300 were to be achieved by placing pilots into a “holding pool”, to be brought back as demand recovers and more pilots are needed.

BALPA’s release confirms that there are to be 270 compulsory job losses, which on the face of it looks like a reduction from the previously rumoured 350 figure. However, it is possible that BA has concluded that the voluntary part time working, severance and external secondments also mentioned in the announcement will be sufficient to at least bridge the gap. So the overall reduction in operational pilots may in fact be unchanged.

The holding pool concept is still there and remains the same size, at 300. It was rumoured that any pilot in the holding pool would take a 50% pay cut. BALPA have not disclosed the size of the cut but did confirm that parked pilots would take “reduced pay”.

Pay cuts

In addition to pay cuts for pilots “spending time in the pool” (in more way than one, perhaps), an initial pay cut of 20% has been agreed, reducing to 8% over the next two years and the “further reducing towards zero over the long term”. How do this compare with what we were expecting?

Perhaps the most surprising thing is that the initial pay cut has increased from the rumoured 15% level. I don’t have any inside knowledge but if I had to guess it might be linked to the silence on the size of the wage reduction for pool pilots. Perhaps that has been scaled back and an increase in pay cuts for operating pilots was the quid pro quo. That sort of fine tuning of how the pain is shared is the sort of thing I would have expected to come out of the informal consultation that I’m sure BALPA has been doing with its members over the last few weeks.

The “snap back” of pay cuts looks similar but slightly different to expectations. 7.5% has now become 8%. Perhaps “half of the initial 15% pay cut” was only ever an approximate description. The previous linking of snap backs to the date when the pilot pool was fully drained has now become a fixed two year schedule. Maybe BALPA was worried that management would game the system.

It is unclear exactly what mechanism sits behind the commitment to reducing pay cuts “towards zero over the long term”. Maybe there are some triggers linked to profitability. Certainly, BALPA will not want pilots to be left sharing the pain if and when there is no more pain to be shared.

Conclusion

Overall, whilst there are differences in detail, this looks to me like a very similar deal to what was rumoured at the start of the month. It should allow BA to align its pilot numbers to reduced capacity over the next few years and, more importantly, see pilot costs come down proportionately too. From the pilots’ perspective, BALPA seems to have achieved a key aim that pay cuts should only last as long as they are needed.

The focus will now shift to talks with the unions representing the cabin crew and the ground staff. As well as being an important milestone in itself, getting the pilots over the line is an important step to making progress with these other groups too.