Aer Lingus parent is fighting for its life – Willie Walsh

IAG CEO’s comments come as Aer Lingus prepares to meet with its trade unions to discuss redundancies due to the impact of Covid-19 on air travel

Aer Lingus is understood to be planning to cut 20 per cent of its workforce.

Aer Lingus is understood to be planning to cut 20 per cent of its workforce.

 

Willie Walsh, the chief executive of Aer Lingus’s parent company IAG, has said the group is currently receiving no revenue, that it will take at least three years for demand to return to 2019 levels, and that government restrictions are only making matters worse.

His comments came as Aer Lingus prepared to hold talks with trade unions on Tuesday on the airline’s plans to cut what some speculate could be around 900 jobs.

The airline postponed a conference call with representatives of unions Fórsa, Siptu, Connect and Unite last week to give further details on plans to reduce its 4,500-strong workforce as its business shrinks in the face of Covid-19.

The company has told unions that it expects its business next year to be 20 per cent smaller than in 2019, and wants to cut job numbers in line with this.

Appearing before the House of Commons transport select committee on Monday, Mr Walsh, who is chief executive of International Consolidated Airlines Group, outlined a bleak picture for the aviation industry and said the company was fighting for its life.

“It’s a very severe and very significant crisis,” he told MPs. “Quite honestly, the likelihood of any improvement in the short term is zero.”

Mr Walsh said the announcement by prime minister Boris Johnson on Sunday of a 14-day quarantine for people entering the UK was “definitely going to make it worse” and that the company would now review plans to resume flights in July.

“There’s nothing positive in anything that I heard the prime minister say yesterday,” he said. “We had been planning to resume on a pretty significant basis our flying in July. I think we’d have to review that based on what the prime minister said yesterday.

“Despite the fact that there had been some rumours about this quarantine period, I don’t think anybody believed that the UK government would actually implement it if they were serious about getting the economy moving again.

“At this stage, I would imagine our capacity into and out of the UK would be pretty minimal in that event.”

Mr Walsh was questioned by several MPs in relation to job losses at the group. British Airways recently announced plans to sack 1,130 pilots, while Aer Lingus is understood to be planning to cut 20 per cent of its workforce.

Mr Walsh insisted that any job losses would take place in consultation with unions and “elected representatives”, and that the restructuring the group is faced with is entirely down to the new economic environment.

“It’s group-wide restructuring in the face of the greatest crisis that the airline industry and the airlines within IAG have faced,” he said.

“We’re not doing anything that we don’t think is absolutely necessary to secure the survival of British Airways, and we’re doing exactly the same with the other airlines in the group, complying with the law as it is in the countries in which we operate.

Deepest downturn

“Our restructuring is solely driven by the fact that we are now in the deepest downturn that the aviation industry has ever seen.

“I don’t think I need to hide the scale of it, because it’s obvious to everybody. We’re not flying our aircraft to transport passengers because that demand does not exist and if it did we would not be able to because of government restrictions.

“It will probably be 2023 or 2024 before we get back to the levels of demand that we witnesses in 2019. So, we’re likely to lose two or three years of growth. It’s going to be a slow recovery.

“Whatever way we look at it, it is our most optimistic scenario that it will be about 2023 before we get back to 2019 levels. There are some people predicting that it won’t be until 2026.”

Mr Walsh said the group has “exhausted every avenue” to shore up its liquidity. “The cash has been reducing significantly,” he said. “We’re not taking in any revenue. I don’t think people appreciate the scale of this.”

Mr Walsh denied the group was refusing to reimburse customers or making it more difficult for them to secure refunds. “Since the beginning of March, IAG has refunded over £1.1 billion,” he said.

He added that he supports measures at airports and on board aircraft to combat the spread of the virus, including the wearing of facemasks and temperature checks.

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