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British Airways Faces Pay-Hike Campaign From Three Unions

Benjamin Katz and Ellen Milligan
British Airways Faces Pay-Hike Campaign From Three Unions

(Bloomberg) -- British Airways faces a coordinated campaign for bigger salary increases from pilots, cabin crew and ground staff in a challenge to its efforts to beat down costs.

The British Airline Pilots Association, Unite and GMB unions are seeking BA’s first-ever joint pay deal, they said in a statement Friday. The three-year plan would feature settlements above inflation, bonuses that better track profit, and a share-incentive program, people familiar with the matter told Bloomberg.

British Airways said in an email it was working with unions “to find a positive approach” to pay talks.

Chief Executive Officer Alex Cruz has been lowering BA’s cost base to fend off discounters including EasyJet Plc in Europe and Norwegian Air Shuttle ASA on long-haul routes. Cruz, who joined in 2016 from low-cost sister brand Vueling, inherited a previous three-year pay deal that expires at the end of this year.

The unions say salaries haven’t reflected profit gains that came with the drop in oil prices in 2014, lifting profits to 1.8 billion pounds ($2.3 billion) in 2017 from an operating loss of 230 million pounds in 2009. They also claim morale has been hurt by steps including cuts to back-office jobs, an initially poorly received move to paid-for food on shorter flights, and higher-density seating.

“Staff made an essential contribution to this success by delivering change and increasing productivity,” the unions said in the statement. “However, British Airways has allowed a culture to develop in which employees are disconnected from the airline’s success.”

BA says it’s investing 6.5 billion pounds over five years in its people and improvements for passengers, including new aircraft, new seats, re-furbished interiors, new lounges and more routes.

Shares of parent IAG SA traded little changed at 628 pence as of 2:33 p.m. in London and are priced 3.6 percent lower for the year.

(Updates with statement from unions from first paragraph.)

To contact the reporters on this story: Benjamin Katz in London at bkatz38@bloomberg.net;Ellen Milligan in London at emilligan11@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Christopher Jasper, Andrew Noël

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