London Daily

Focus on the big picture.
Monday, Jun 22, 2026

BA warns of serious cost problems when furlough ends

BA warns of serious cost problems when furlough ends

British Airways has warned it is facing a "serious" problem over wage costs which will "steeply increase" when the furlough scheme ends in September.

In a memo to staff, the airline said its flight schedule and staff costs will not line up in their current form.

BA said it believed this would be a temporary problem, but it was a "serious one which we need to manage".

The warning comes alongside plans to set up a lower cost subsidiary airline at its Gatwick base.

BA halted its short-haul flights from the airport at the start of the coronavirus pandemic. It said the new subsidiary would run alongside its long-haul Gatwick routes.

'Guessing game'


In its email to staff, the airline said the furlough scheme, which ends on 30 September, had been a "huge help".

However, it added that when it ends, "our pay costs will steeply increase, and any increase in costs is bad news".

"We know that our schedule and our operating costs for the rest of this year will not line up."

The email also said that the carrier had found itself in a "constant guessing game" when it came to changes in international travel regulations.

It expressed frustration at the chopping and changing of travel rules: "We hoped that our industry would be back on its feet this year, and that the journey to pre-pandemic levels of flying would be well under way.

"But the cautious approach of governments to the easing of global travel restrictions has undermined customer confidence, and recovery remains far behind where we need it to be."

In June, it emerged that BA had to place thousands of its workers back on furlough because of delays to the restart of international travel.


The airline had brought staff back ahead of restrictions easing on 17 May, but only a few countries were added to the UK's so-called green list which do not require travellers to quarantine on their return.

Commenting on the end of furlough and continued disruption to flight schedules caused by the pandemic, BA said: "This means we're going to have to be as flexible as possible when it comes to the way we work, to help mitigate the situation over the coming months.

"We are in discussions with your trade union representatives, who are as keen as we are to find a way through the winter season and into growth next year."


In April 2020, British Airways announced it would cut up to 12,000 jobs in response to the Covid crisis.

The government has previously said in response to industry concern over the end of furlough that it recognises the challenges faced by the aviation sector as a result of the pandemic.

It says it is supporting the industry, and that it will have benefited from £7bn in government support since the start of the pandemic to when furlough ends in September.

BA's owner, IAG, has been rebuilding flight schedules as restrictions ease, and has said it will operate at about 45% of passenger capacity between July and September compared with pre-Covid levels, possibly rising to 75% by the end of 2021.

The company, which also owns Aer Lingus and Iberia, revealed a loss of more than €2bn (£1.7bn) in the six months to the end of June.

Plans for Gatwick


In its email to staff, BA said short-haul flights from Gatwick had previously been "a highly competitive market, but for us to run a sustainable airline in the current environment, we need a competitive operating model".

"Because of that, we are proposing a new operating subsidiary to run alongside our existing long-haul Gatwick operation, to serve short-haul routes to/from Gatwick from summer 2022.

Go, launched by Barbara Cassini, was BA's response to the upstart low-cost rivals
Analysis

By Rebecca Marston, business reporter

Aviation nerds will recall BA has done this trip before.

Back in the late 1990s in the infancy of low-cost, no-frills air travel, BA launched Go, based at Stansted and its rival to upstarts Easyjet and Ryanair.

Although its elegant style proved popular with passengers, it didn't last long under BA, partly because of fears it was cannibalising too much of its established business. It ended up being bought by Easyjet, which was growing fast from its own base at Luton Airport.

The low-cost model, where passengers had to print their own ticket and check in themselves, without even a hot meal on board to reward them, took some getting used to but is now the standard way to fly.

BA ditched its own hot meals along with a range of changes as it was forced to chase down its own costs to keep up with those rivals. Its forceful attempts to do so were generally met by fierce opposition from its unionised workforce.

This time, as the whole industry faces the most challenging period since its inception, it looks to have the pilots union, for one, on board. As it cuts its workforce by around a quarter in response to the pandemic, its other unions may also feel impelled to follow the new route.

"This will help us to be both agile and competitive, allowing us to build a sustainable short-haul presence at Gatwick over time."

The British Airline Pilots Association said it was "cautiously" in favour of the plan.

It told the BBC on Thursday it was in the "final stages of negotiations" with BA over pay and conditions.

Acting general secretary Martin Chalk said the move would "create a number of much needed new pilot jobs".

Newsletter

Related Articles

0:00
0:00
Close
UK Expands Alcohol Ban Enforcement Using Tagging Technology Ahead of World Cup
UK Invests £50 Million in Critical Minerals Supply Chain Security
UK Appoints Special Envoy on Preventing Sexual Violence in Conflict
UK Introduces Fines for Landlords of Unsafe Rental Properties
Reform UK Leads Opinion Polls as Immigration Debate Reshapes UK Politics
Police Investigate Edinburgh Attacks as Potential Hate Crimes
King Charles to Publish Personal Tax and Royal Household Financial Records
Nottingham University Hospitals Maternity Inquiry Report Set for Publication
Heat-Health Alerts Issued Across London and Southern England Amid Rising Temperatures
UK Economy Shows Pressure From Middle East Conflict Despite Modest Growth
Brexit Anniversary Reignites Debate Over UK Economic and Political Direction
UK Parliament Continues Legislative Work Amid Leadership Transition
Financial Markets Hold Steady After UK Leadership Shake-Up
Andy Burnham Enters Labour Leadership Race With Strong Parliamentary Backing
Keir Starmer Resigns as UK Prime Minister After Two Years in Office
Reform UK MP Lee Anderson to Raise Pension Concerns Over British Coal Staff Superannuation Scheme
UK Parliament to Debate Newborn Screening for Spinal Muscular Atrophy Following Public Petition
Met Office Warns of Water Safety Risks During Heatwave as Temperatures Peak in England
Treasury Increases Mileage Allowance Payments for 2026–27 Tax Year to 55 Pence Per Mile
UK Government Raises Electricity Generator Levy to 55 Percent in New Revenue Measure
House of Lords Moves Financial Services and Markets Bill to Committee Stage Amid Regulatory Scrutiny
Westminster Hall to Debate Petition on Pro-Israel Influence in UK Politics
UK Parliament Prepares for Estimates Days Debates as Backbench Business Schedule Approved
Armed Forces Bill Nears Final Stages in UK House of Commons With Military Justice Reforms
Donald Trump Comments on UK Political Situation, Citing Immigration and Energy Policy Concerns
Andy Burnham By-Election Victory Fuels Speculation Over Potential Labour Leadership Contest
UK Economy Shows Resilience but Faces Headwinds from Middle East Tensions, UK Finance Says
UK Parliament Opens Week of Debates on Net Zero, Security and Armed Forces Reform
Met Office Issues Amber Extreme Heat Warning as Temperatures Expected to Reach 35C Across England and Wales
Prime Minister Keir Starmer Faces Mounting Leadership Pressure After Makerfield By-Election Defeat
London Hotel Wins World’s Best Afternoon Tea Award at International Hospitality Guide La Liste
Court of Appeal Rules in Favour of Competition and Markets Authority in Phenytoin Drug Case
Chichester Waste Site Suspended After Environment Agency Finds Serious Fire and Pollution Risks
UK Appoints Chris Elmore as Special Envoy on Preventing Sexual Violence in Conflict
Environment Agency Fines Yorkshire Firms Nearly £470,000 for Environmental Permit Breaches
British Chambers of Commerce Says Post-Brexit Trade Deals Have Limited Economic Impact
Resident Doctors to Vote on Government Pay Offer in Ongoing NHS Dispute
UK Public Borrowing Reaches £46.3 Billion in Early Fiscal Year, Driven by Debt Interest Costs
UK Government Unveils £100 Million Package to Strengthen Fire and Rescue Response Capacity
Bank of England Holds Interest Rates at 3.75 Percent Despite Easing Inflation
Met Office Extends Amber Heat Warning as Temperatures Forecast to Reach 38C Across Southern England
Prime Minister Keir Starmer Expected to Resign Amid Mounting Labour Party Pressure
UK Government Tightens Procurement Rules to Prioritise National Security and Supply Chain Resilience
National Drought Group Reviews Water Supply Risks After Dry Spring and Ongoing Heatwave
Andy Burnham Faces Leadership Speculation After Weak Local Election Results for Labour
Charity Commission Appoints Interim Managers to Barnabas Aid Amid Financial Investigation
Government Awards £27 Million Leonardo UK Contract to Maintain Military Aircraft Fleet
Environment Agency Suspends Chichester Waste Site Permit Over Fire and Pollution Risks
Border Force Seizes Record Cannabis Shipment in Major UK Criminal Network Disruption
Lloyds Banking Group to Hire 300 Artificial Intelligence Specialists in Digital Expansion Push
×