Heathrow has told its 4,700 frontline staff they must take a pay cut of 15-20% or face job losses, with the aviation sector’s hopes of a quick summer recovery from the pandemic dashed.
On Wednesday the airport issued formal section 188 notices, allowing it to potentially fire and rehire employees, after months of negotiations with unions representing its directly employed ground staff failed to produce an agreement.
Although Heathrow insisted it was not looking to cut jobs, the chief executive, John Holland-Kaye, had previously suggested that up to one in four of its jobs could go, and up to 25,000 across the airport, including those employed by other companies – not least British Airways.
Heathrow has already laid off one in three managers and imposed 20% pay cuts on office staff.
The section 188 notices allow Heathrow to bypass negotiations after a 45-day period has elapsed, and then offer employees new contracts. All will be told they are to be employed at a market rate – meaning long-serving staff could face pay cuts of up to £10,000 if they choose to stay on.
Heathrow said it would soften the blow by offering lump sums to cover the initial losses, as well as enhanced voluntary redundancy to those who preferred to leave.
A Heathrow spokeswoman said: “Covid-19 has decimated the aviation industry, which has led to an unprecedented drop in passenger numbers at Heathrow, costing the airport over £1bn since the start of March. Provisional traffic figures for August show passenger numbers remain 82% down on last year and we must urgently adapt to this new reality.”
She said the offer still guaranteed a job at the airport for anyone who wished to stay.
The Unite union said it was “deeply concerned” and urged the airport to continue talks, adding that Heathrow was “an incredibly wealthy company … at the start of the pandemic it boasted of a £3.2bn war chest. These attacks on pay are not about survival but introducing measures to boost future profits.”
Heathrow closed one runway and two terminals when most flights were grounded in March, and many staff were furloughed under the government’s job retention scheme. It still lost more than £150m a month, with high costs in maintaining and securing its infrastructure despite most international air traffic drying up. Hopes of a recovery stalled with the imposition of quarantine and the further cancellation of many flights during the peak summer season.
Holland-Kaye had earlier hit out at the government for not doing more to support aviation and save jobs, warning that UK aviation was “in a battle for survival”.
He told an Aviation Club audience: “The reality is that hard-working people face losing their livelihoods, their sense of self-worth, perhaps even their homes, families and mental health. We owe them better than that, and should fight for every job.”
The Heathrow boss said they were “facing further hard choices, between cutting frontline roles or permanently cutting pay”.
He accused the UK government of failing to grasp questions of “strategic national interest”, contrasting its lack of support for aviation with the actions of the US, France and Germany.
“Most countries get this … But once again it seems that our government has taken the opposite approach to the rest of the world. There has been no support for the aviation sector beyond the job retention scheme. While Tesco and Sainsbury’s have had their business rates waived for a year, airports have had no relief.”
Holland-Kaye added: “I find it increasingly difficult to explain to investors from Singapore how the UK government plans to become Global Britain if it is left without a global hub airport and airline. Or how it will chart a course that is independent of the EU if it is increasingly dependent on Air France and Lufthansa to access global markets.”