Strike Is Set After Talks Fail at British Airways

Strike Is Set After Talks Fail at British Airways
By NICOLA CLARK
Copyright by The New York Times
Published: March 12, 2010
http://www.nytimes.com/2010/03/13/business/global/13airline.html?ref=global-home


British Airways cabin crew are preparing to walk off the job for seven days later this month after talks with management broke down without an agreement, a trade union that represents the carrier’s 13,500 flight attendants said Friday.

The union, Unite, said members agreed Thursday to stage an initial three-day strike beginning March 20, followed by a further four-day action from March 27.

Unite acknowledged a revised offer by the airline that was submitted to union officials on Thursday and said members would be invited to vote on it next week.

But union leadership said it could not recommend the new proposal to members and was therefore setting its strike dates in order to meet a legal requirement of seven days’ advance notice.

“It is right that cabin crew should be given the opportunity to consider this offer, although it falls short of what we believe is needed to address the legitimate concerns they have about crew complement and service delivery,” Len McCluskey, Unite’s assistant general secretary, said in a statement.

Mr. McCluskey said the vote on the airline’s latest offer would be concluded by March 19, the eve of the proposed strike.

Britain’s prime minister, Gordon Brown, called on both sides to continue talks in order to avert a walkout. “The disruption to the services is totally unacceptable,” he said Friday during a press briefing in London. “I’m not only disappointed but want to see a resolution as soon as possible.”

If it goes ahead, the strike would be the first by British Airways employees since the summer of 1997, when a three-day walkout left 25,000 passengers stranded in a dispute over changes to pay and working conditions.

British Airways is seeking to save £60 million, or $90.7 million, per year in costs through a two-year wage freeze for cabin crew and what it says are “minor” changes to work contracts. The airline said Friday that it had rejected a union counterproposal because the savings it contained fell “significantly” short of its target.

According to Britain’s Civil Aviation Authority, British Airways cabin crew members are among the highest paid in Britain, earning twice as much, for example, as their counterparts at Virgin Atlantic. Long-haul cabin staff members earn between £35,000 and £56,000 a year, depending on rank and experience, while short-haul salaries range from £18,000 to £52,000.

The economic downturn that began in late 2008 has been disastrous for British Airways, which is struggling to adjust to steep declines in revenue from its first-class and business-class service — the mainstay of its business. The carrier slashed operating costs by 10.5 percent last year and eliminated around 5,000 jobs, roughly 13 percent of its work force.

Such efforts have begun to pay dividends. The airline last month reported a meager operating profit of £25 million in the three months to Dec. 31 — its first quarterly operating profit in more than a year. But revenues are still falling sharply and the company expects a record annual loss for the year to March 31.

“Passengers are coming back, and you are starting to see a glimmer of recovery in premium-class” travel, said Peter Morris, chief economist at Ascend, an aviation consultancy in London. But he worried that a strike now could undermine the airline’s recovery. “This does not seem like the moment to be taking any decisions that are going to set them on the back foot again,” he said.

The International Air Transport Association said Thursday that while air travel demand has picked up in the first months of the year, European carriers were still expected to lose a combined $2.2 billion in 2010. Globally, first- and business-class travel is showing signs of improvement, the I.A.T.A said, but is still 17 percent below the peak levels reached in early 2008.

A British Airways spokeswoman declined Friday to estimate how much the threatened job action could cost the company. The airline said it had trained around 1,000 staff from other departments to fill-in as cabin crew on some flights in the event of a strike and has made plans to lease 23 planes with full flight crews from charter companies. It said it was also trying to obtain available seats on competing airlines for use by its passengers.

With these measures in place, British Airways said it expected to maintain all of its flights from London City airport, including long-haul services to New York. From Gatwick Airport, the carrier plans to operate all intercontinental services and about 50 percent of its European flights. From Heathrow, it said it expected to maintain a “substantial part” of both its long-haul and short-haul schedule.

SAS Reaches Deal

SAS Group reached a deal on cabin-crew cost cuts that remove a hurdle to a $700 million rights offer, Bloomberg News reported Friday.

The agreement with crew and pilot unions will trim 500 million Swedish kronor, or $71 million, from annual costs. Sweden, Norway and Denmark, which own half of the company, had made a union accord a condition for backing a 5 billion-krona stock sale.

The carrier had a 2.95 billion-kronor loss in 2009 as sales fell 15 percent to 44.9 billion kronor.

“The negotiations were very intensive,” SAS’s chief executive, Mats Jansson, said in a statement. The share sale will be submitted for shareholder approval at the annual meeting on April 7.

Julia Werdigier contributed reporting from London.