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What did Willie Walsh say to the House of Commons Transport Committee yesterday?

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Willie Walsh, Chairman and Chief Executive of International Airlines Group (IAG), the parent company of British Airways, appeared before the House of Commons Transport Committee yesterday.

If you were hoping for any revelations regarding the proposed British Airways restructuring you will be disappointed.  Walsh’s favourite line throughout the entire 110 minute ordeal was:

“we will engage in good faith consultations with the elected representatives”

Despite the MPs’ best intentions Walsh did not deviate from this argument. To be fair to Walsh, there is little else he could have said.  Commenting on the ongoing consultation would have been inappropriate and angered the unions even further.  IAG is also a quoted company which means that he needed to be careful not to give any information which could move the share price.

Nonetheless, the line enabled him to deflect questions from MPs who have received emails, letters and documents from British Airways staff regarding the restructuring efforts.  Huw Merriman, the chairman of the committee, estimated that he had received around 1,000 emails from concerned staff, and many of the other MPs also referred to inboxes full of emails from employees.

Despite this, there was little to say about the proposed redundancies or pay cuts at British Airways since this depends entirely on the current ‘consultation’.

Throughout the committee, Walsh re-iterated IAG’s position that it the aviation industry was facing its most significant crisis ever, and that British Airways was ensuring not just its short term survival but also long-term ability to compete in the global aviation sector.

Walsh again said that IAG does not believe that air traffic to return to 2019 levels until 2023 at the earliest, and called this the “most optimistic” scenario.  2024 was mentioned more than once.

He said that he is keen that British Airways WILL return to Gatwick Airport.  Given that Heathrow will remain at capacity (airlines will do whatever they can not to lose their ultra-valuable landing slots) this should not be a surprise.  Unless BA permanently shrinks to a size 20% smaller than it was in January, it will need Gatwick.  It will also need its leisure-focused customer base if business travel is slow to return.

One interesting figure to come from the committee is the effect of the Government’s Job Retention Scheme.  According to Walsh, the scheme has only reduced BA’s cash-burn to an extent that it could survive an additional 10 days.  Given that IAG is losing €200 million per week at the moment, this is not surprising.

How will a 14 day arrival quarantine affect British Airways?

Walsh was not particularly impressed by the announcement of a 14 day quarantine for air arrivals into the UK.  He was disappointed by the vagueness of Boris Johnson’s Sunday address, stating that

“the announcements of a 14 day quarantine period […] is definitely going to make it worse, there was nothing positive in anything I heard the prime minister say.”

Walsh had stated last week that IAG hoped to reinstate approximately 50% of capacity in July.  He said yesterday that the announcement of a quarantine period would require the airlines to review their plans and that passengers flights from the UK would be ‘minimal’ if it went ahead.

Walsh was also disappointed that the quarantine would apparently not apply to Eurostar or ferries.  That said, the official Government guidelines published yesterday afternoon – after Walsh had spoken – make no reference to special treatment for non-air traffic.

As we reported last week, British Airways is running a key number of routes that are cash positive on a cargo basis alone.  In April, BA operated 422 dedicated cargo flights using passenger aircraft.  Walsh expects this number to increase this month and next.

When it comes to how flying will look in the future, Walsh pointed to his hopes that a forthcoming document on in-flight standards and safety to be published jointly by the European Aviation Safety Agency.

Could the RAF offer support to pilots?

One issue that was raised was discussions to allow ex-RAF pilots to return to active duty for a limited period.  This is a plan put forward by BALPA, the British Airline Pilots’ Association.  It was not clear in what capacity, if any, discussions had taken place with the RAF.

Such a scheme would allow British Airways to release pilots to the RAF and thus reduce its cost base by a fraction. In effect, the UK Government and the Ministry of Defence would be offering financial support to British Airways in the form of financially-backed secondments.

Whether or not the RAF actually needs additional pilots, and what exactly they would do with them, is another matter.  At this stage it appears the unions are pursuing all avenues.  I would not necessarily expect this to come to fruition.

Is British Airways withholding refunds?

One topic that has been extensively covered on Head for Points as well as mainstream media is the difficulty in getting cancelled flights refunded.

When challenged why British Airways had removed the option for online refunds, Walsh claimed that

“the online system was not set up to deal with the volume of correspondence we were receiving”

and that

“most of these have to be manually processed at one level or another to ensure that the refund is correct”

Asked directly whether the removal of online refunds was taken to put people off refunds, Walsh stated that it was “most definitely not” the case.  He said that IAG has paid out over €1 billion in flight refunds since March.

I suspect that Walsh will need to be a lot more persuasive if he is to convince anyone that this is truly the case. Whilst nobody will dispute that there are higher volumes than usual, the lack of transparency when it comes to refund rights and options, as well as the rush to close refund loopholes such as the javascript workaround that we wrote about appear to suggest a different story.

That said ….. who is doing a better job than British Airways?  easyJet, Ryanair and Virgin Atlantic have not been covering themselves with glory either.  Virgin Atlantic is currently insisting that passengers wait 90-100 days for their money, whilst British Airways is processing refunds quickly once you manage to get through to the call centre.

Did Walsh get away with it?

In general, Walsh will feel that he got off lightly.  He never had to give a straight answer as to why redundancy notices have been issued to virtually all British Airways staff or why Eurofleet and Worldwide cabin crew at Heathrow will have to accept pay cuts of 50% or more. 

Whilst some of the committee members were well briefed, others took the debate off into obscure corners (such as the RAF secondment scheme, or the acquisition of Air Europa) which gave him breathing space.


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Comments (54)

  • AJA says:

    I’m impressed these MPs are acknowledging any emails from their constituents let alone actually doing something about them. My MP is useless, she doesn’t even acknowledge receipt let alone does anything. Unfortunately it’s a safe seat so she was re-elected last December despite not a single attempt to do any canvassing, so I have no idea what she planned to do for her constituency for the next 4.5 years.

  • AJA says:

    As for the restructuring and redundancies it’s not as if BA is the only airline that’s announced this. Virgin Atlantic, Ryanair, Easyjet and even Qatar Airways have announced redundancies. If travel really is subdued then it’s inevitable.

    What’s not great, in BA’s case, is the fact that crew on legacy contracts are looking at significant pay cuts at the same time as their contracts being renegotiated onto the cheapest Mixed Fleet one . But from BA’s perspective it is the logical thing to do even if it is morally dubious.

    Out of interest is either Michael O’Leary or Richard Branson going to be grilled by the same select committee about their plans?

    • J says:

      As far as I’m aware Virgin does not have such a distinction between old/new contracts so could not be accused of discriminating older staff in the redundancies they’re proposing. As for Ryanair, it’s an Irish company.

      • AJA says:

        And last time I looked Wizz Air is actually Hungarian even though through its UK Operators Licence it was able to access the government funding. Likewise Qatar Airways is clearly not a UK company and yet it too is making staff redundant. My point was that BA is not the only airline making staff redundant or accessing UK government funds. I do also acknowledge that it is morally dubious to make staff sign an inferior contract regardless of their seniority. But the alternative could instead be 15,000 or even more redundancies. Not sure which is worse that or the current plans.

        As for Ryanair being Irish I don’t think that stops Michael O’Leary from appearing before the UK parliament. In fact he has done so before although he has also declined to appear too. Ryanair operates in the UK and has UK based employees, who have been forced to take a 50% paycut for April and May. In fairness O’Leary has also taken the same 50% paycut.

    • Lady London says:

      As Rob pretty much said they should only be sending redundancy notices only to the number of staff they actually are making redundant.

      The reason they’re sending to all employees in the category is to cloak that they have illegally selected the staff who happen to have the longest service, and are oldest (as that follows) to get rid of. There’s no doubt that the selection is illegal as will be proven by the results…. miraculously, those whose contracts end up being terminated by British Airways, apparently only due to redundancy, will disproportionately turn out to be older (which is illegal) and even more mysteriously, those who go will disproportionately be those whose long service means they have a better paying legacy contract. BA and their lawyers know their selection will be successfully challenged.But they’ve made sure, by sending redundancy notices to 4times the number of employees than will be made redundant in this round, that there will possibly only be proof of this unfair=illegal section, once the deed is done.

      If BA was doing this in an honest way I would find it more acceptable.

      • AJA says:

        It is quite common and acceptable to make people reapply for their own roles. This is done to assist the employer in deciding who to select. If they don’t reapply or if they’re unsuccessful in their application, they’ll still have a job until BA makes them redundant.

        The other thing to note is that even though BA may have sent consultation notices to every single member of staff these will not be the actual redundancy letters. Those who are actually selected for redundancy will only start getting them after the 45 days consultation period is over.

        I am not a BA insider so I don’t know what criteria they are using to select people for redundancy but I am pretty sure that whatever they do will comply with the law. I wouldn’t be so sure the longest serving or those on the legacy contracts will be the only ones that get the chop, though I do think there well may be more of them. The thing to remember is that it is not only the legacy cabin crew that are potentially being made redundant, there will likely be other BA staff including Mixed Fleet and the beleagured call centre staff who will lose their jobs.

        I am not in favour of anyone being made redundant and I feel terribly sorry for the thousands who will be but I do understand why BA is doing this.

  • David S says:

    Got the cash part of my refund pretty quickly but waiting almost a month more already for the Avios and my Companion voucher. Have already lost my ability to use it when I wanted in 2021 to replace my 2020 trip. Only economy seats left

    • Sean says:

      contact BArefundhelper on flyertalk – will sort within a day normally

      • Rob says:

        Your chance of being helped if you don’t have a large FT post count is now low, although in this scenario you may be OK. It is now restricted to ‘refunds which have gone wrong’.

  • Scottydogg says:

    I had an Avios booking that got cancelled a few weeks ago so i phoned up and managed to get through and asked for a refund of Avios points and the taxes . I was told that this was fine and that i would see the Avios come back in first and the cash would take a few days longer .
    I got the Avios but still no sign on the cash being returned , have tried to call a few times but you cant get through to speak to anyone, they have turned off the executive club phone line and when you phone the main the phone line you just get an automated message and then they just hang up.
    They have dealt with this badly

    • Sandra B says:

      +1

    • Lady London says:

      I sincerely hope Willie Walsh and British Airways are procecuted for lying to the Committee.The actions they took in their systems to block refunds are clearly provable.

      If there were issues with needing manual approvals for refunds then those changes were still not necessary…and what’s more they made those changes not just one time but also a second time, after customers due refunds found a way to work round the first set of changes.

      BA needs to be prosecuted for this if the CAA has any teeth at all – and I’d add whatever punishment can be added at an individual level as well as a corporate level for lying about it.

      This takes nothing away from the fact that I think Willie Walsh has done an excellent job for BA during this crisis and BA is lucky to have had him to take the task on.

  • marcw says:

    It was a (pointless) “tick the box” exercise for MPs. That was all. MP did not prepare beforehand, had no idea how IAG is structured and more importantly, have no idea of the global impact of COVID-10 on the aviation industry.

  • Daniel B says:

    The Air Europa question was not as far off, as suggested in your article. It actually revealed that Walsh’s story cannot be true. Whilst claiming that Iberia will go through job cuts, he also explained that Air Europa will be taken over by Iberia, meaning a growth of Iberia, whilst stating they would also shrink. You can’t do both at the same time. And actually Walsh was wanted to give clearer answers, but even on drilling for a definitive answer, he kept coming up with not being legally allowed to provide one and this would be up to BA and the unions. That fed up the MPs quite a lot, if you saw the full meeting. This whole fortunetelling way of claiming a definitive outcome to a at the same time kind of crisis that was never seen before will cost us passengers in the end. Overcapacity hasn’t started with the crisis, it was mentioned for years and with all the cuts, prices will go up with lower cost at the same time. But probably I’m just not understanding the permanent change of the industry, which unfortunately was never explained…

    • marcw says:

      BA is a private company and they can do with their money whatever they wish / lilke. They could throw it down the toilet, if they want to.
      It’s a private company, and as long as they do everything according to the law, they can do with their money whatever they like.

      • EwanG says:

        Try again. British Airways is a subsidiary of IAG, a PLC, and spend will need to be justified ultimately to the board and its shareholders, I doubt flushing it down the toilet would be something their audit committee would approve of.

        • AJA says:

          EwanG I think the money spent by BA when they did the rebranding with all the ethnic tailfins in the late 1990s could be described as throwing money down the toilet. And the board of directors is actually responsible for its actions. They collectively have a fiduciary duty to take the best course of action in the interests of all stakeholders including employees, suppliers, customers, regulators and shareholders.

  • Anna says:

    I am no IT expert, but I fail to see how a computer system can’t process a high volume of cash refunds, when it CAN process the same number of vouchers to the equivalent value? I really hope they don’t let this drop, it has been BA’s lowest trick to date.

    • AJA says:

      Of course the IT change to force an e-voucher refund was deliberate. It was done to try and reduce the volume of refunds in order to protect BA’s cashflow. That said BA technically still complied with the law as you can still get a cash refund by calling them, as painful as that is. Lufthansa and several other airlines are worse than BA in that respect.

      However the actual cash refund was outsourced to India and when that was forced to shut because of the Indian government’s lockdown order that slowed everything down. The application to refund cash may have previously been an online process from the customer perspective but it is still manually handled in the background exactly as it is with the e-voucher process. There will be a human doing checks and balances in the background before the physical refund happens.

      I am not excusing BA for anything it has done and I agree it is a pretty low trick but it’s not as simple as you’ve suggested.

      • Anna says:

        I didn’t suggest it was simple, I was asking if the two processes could be done with equal ease or difficulty.
        BA probably hasn’t done anything illegal here as it is technically still possible to get a cash refund but Walsh was either lying to the committee or has a worrying slight grasp of his company’s IT systems.

      • Lady London says:

        I don’t think the deliberate removal of the ability to enter a refund request online to British Airways-which had previously been functioning perfectly -will stand up to legal scrutiny. Coupled with the fact that they knew perfectly well their phone lines were overloaded and it was almost impossible to get through to them before they did this -that is only going to supplement the certainty as to the intent of the actions BA took which was to obstruct refunds. Every company running the type of massive phone systems BA will be running has dynamic and reporting access to clear statistics on how many calls get through etc. BA cannot deny this.,

        I want to see them prosecuted for this and there is clear evidence.

    • jc says:

      You’re assuming the entire cash refund process is performed solely by the computer, without human intervention. You’d be amazed how many simple “automated” processes inside large companies are performed manually. By a chain of specific people. Emailing spreadsheets around. Etc.

  • Mark says:

    I would strongly disagree with the comment in the article stating that British Airways is processing refunds quickly…
    I was notified on the 20th April that our flight to San Francisco departing late May was cancelled. I contacted BA on the 21st April and was told that It would take between 4-6 weeks before I would see the refund credited to my credit card. That means BA had hold of my £1400 for all that time, I assume earning them interest and I cannot do a thing about it.

    • Lady London says:

      Actually I believe that technically you could do something about it.
      IIRC statutory interest of 8%p.a. or pro rata for the days outstanding, is payable in the UK on any overdue debt.

      As EC261/2004 gives you a statutory right to a full cash refund within 7 days then you could theoretically, demand 8% interest pro rata up to the date payment is received into your account.
      The right to statutory interest and EC261 are both statutes which mean they override any contract conditions.

      I’m just not sure what date the 7 days is calculated from – the date of the flight that was cancelled or the date on which British Airways actually cancelled the flight.

      If people started charging certain customer-exploiting airlines this additional statutory charge, I can see so-called manual payment delays suddenly evaporating as the airlines would have to pay huge amounts.

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