British Airways: Workers Can Take 4 Weeks Unpaid Leave — Or You Can Work for Free for 4 Weeks

British Airways, which is facing the biggest financial crisis of its storied history, has offered its staff between 1 and 4 weeks unpaid leave as a means to cut budget.  The odd part of the story is this:  they have also told staff that they are welcome to work during that unpaid leave period if they’d prefer.

I have the sense that if Southwest offered this type of arrangement, that a sizable number of workers would actually show up to work unpaid, because they have built up that goodwill over 30+ years.  If I were a BA worker, though, I think I’d be pretty offended by the idea that I would come to work for nothing.

The larger part of this story is that BA’s CEO Willie Walsh says that there is no sign of recovery any time soon.  US Airways CEO Douglas Parker said something similar yesterday, though he did suggest that leisure bookings may be on their way back.  However, with massive cutbacks in business travel, the airlines are in crisis mode.  One of the world’s most prominent carriers asking their staff to work for free for a month is only the beginning of the rough road most airlines will face over the next 3 months.  I wouldn’t be shocked to see airlines face bankruptcy (again) this year (I’m talking to you, Midwest).

(Quick addition:  United just put out a release saying that their 2nd quarter Revenue per Available Seat mile (RASM) will be down nearly 19% over last year.  That’s a very rough proxy for average fares (very rough) – but the key takeaway is that they’re getting about 20% less revenue to fly 1 seat 1 mile than they were last year.  That’s basically saying business travel continues to shrink dramatically.  Oh, and while we’re adding to this post, Rick Seaney from FareCompare just wrote bascically the same column for – just so he doesn’t think I stole from him :) )

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  1. Aw, I think you’re being too pessimistic here — at least with regard to the US carriers. Indeed, most of them are in much better shape in this recession than in previous ones (hard lessons learned, I suppose). Indeed, the fact that there is absolutely no bailout movement going on — despite the billions going elsewhere — tells you something by itself.

    Obviously, the airlines who made their money transporting high-paying int’l biz travellers are hurting the most here (think BA). But the airlines that are “lean and mean” are doing much better. AirTran has actually seen its fortunes IMPROVE in this economy, and is expected to be profitable every quarter this year. And the other domestically-focused US airlines are also doing reasonably well — and will likely continue this streak as the huge capacity cuts give them a bit of pricing power (note the successful fare hike this weekend). Continental said it will have record domestic load factors this week, and US Airways CEO just said that leisure business is improving in a “material” way.

    The wild card seems to be business travel. As Continental’s CEO says, this tends to get switched off really fast, and then switched back on really fast. If you look around our country, you don’t see the world ending. Indeed, in most cities, it can be very hard to see the recession at all (more affordable menu choices at casual dining chains, and more ads on TV stressing value?). I think there’s going to be more business travel this fall as people “get on with it” — just like leisure travel is now picking up as folks get used to the “new reality.”

    So call me crazy, but I suspect the airfare deals have bottomed, and we’ll see a modest improvement going forward. I suppose some poorly managed carriers could fail, but I think the overall state of the US airline industry isn’t THAT bad here.

  2. The smaller carriers – AirTran, Allegiant, probably JetBlue, are holding their own. But Delta made a big bet on international expansion, and it’s now rolling that back. Plus, losing one business traveler is like losing about 3 leisure travelers since their fares are so much higher. I don’t think the world will end, but I agree with Douglas Parker that I wouldn’t be shocked to see one more merger in the US.

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