Shares in International Consolidated Airlines Group (LON:IAG) fell on Wednesday after revealing it lost more than €1.8bn in the first quarter and that 12,000 British Airways staff may be made redundant.
Sneaking out a statement well after markets closed the day before, the Anglo-Spanish group said it expected to take several years to recover from the effects of the coronavirus pandemic.
As a result, the company, which had total available liquidity of €9.5bn at the end of March, including €6.95bn of cash and equivalents, is bringing forward plans for restructuring and redundancies, with BA formally notifying its trade unions overnight.
“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,” IAG said.
This represents more than a quarter of BA’s workforce, about half of whom, 22,626, are furloughed under the government’s scheme.
This was after announcing an underlying loss of €535m, its biggest since the 1980s, and taking an exceptional charge of €1.3bn resulting from the ineffectiveness of its fuel and foreign currency hedges for the rest of 2020.
Revenues dropped 13% to €4.6bn in the first quarter, with all the decline relating to March.
With passenger capacity down 94% in April and May, operating losses in the second quarter are expected to be significantly worse.
Trade union Unite said that it was a “heartless decision”.
“With the majority of BA's workers on furlough, we would have expected him to work with both us and the government to honour the spirit of the government’s job retention scheme.
“Governments across Europe, in Spain, Germany and France are working with trade unions and airlines to rebuild back better, keeping people in work while the sector recovers. We simply cannot understand as to why Alex Cruz is not doing the same, unless he has sought an opportunity to see other airlines fail, so that BA can profit.”
IAG shares fell more than 7% to almost 200p in early trading on Wednesday.