Category: Business News

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AFP

British Airways pilots have voted to accept a deal that will temporarily cut pay by 20% and eliminate 270 jobs, says the pilots’ union Balpa.

The deal prevents a controversial “fire-and-rehire” scheme where staff would have been handed new contracts “on worse conditions”.

The 20% pay cuts will reduce to 8% over two years and to zero in the long term.

The ballot result saw 85% of members accept the deal on an 87% turnout.

“Our members have made a pragmatic decision in the circumstances, but the fact that we were unable to persuade BA to avoid all compulsory redundancies is bitterly disappointing,” said Balpa general secretary Brian Strutton in a statement.

BA said it was facing an “enormous challenge” and that it did not expect to return to 2019 levels of business “until at least 2023”.

The airline had proposed to make 12,000 staff redundant, as it struggles with the impact of the coronavirus pandemic, with 1,255 pilot jobs at stake.

Balpa said there would still be some compulsory redundancies, estimated at 270 jobs, although that number is “likely to fall” as BA will be working with the union to mitigate the impact of the changes.

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On 28 July, trade union Unite threatened industrial action against the airline “with immediate effect” over plans to hand staff their notice and then rehire them on new contracts with unfavourable terms.

Talks with other BA staff, such as cabin crew, engineers and office staff, are still continuing.

Many airlines are struggling to survive as the pandemic severely disrupts global travel.

The plunge in travel will drive airline losses of more than $84bn (£66bn) this year, the International Air Transport Association has warned. It said last month that 2020 revenues would drop to $419bn, down 50% from 2019.

BA has insisted that it is doing its best to save jobs. On Thursday, Willie Walsh, the boss of BA owner IAG, told the BBC that the coronavirus crisis was the worst the company has faced in its history.

IAG reported a loss of €4.2bn (£3.8bn) for the first half of the year, and Mr Walsh said it would take until at least 2023 for passenger levels to recover.

However, there is anger from staff over the way BA has approached job cuts, according to the BBC’s business correspondent Theo Leggett.

For cabin crew, there is not only the threat of redundancy, but also the possibility of big pay cuts for long-serving staff.

Many of those affected believe the company is using the current crisis to force through changes it has wanted to make for years.

Longer-serving crew at BA have contracts which are, by modern standards, relatively generous. They date back to an era when the airline industry was less ferociously competitive, before the emergence of budget carriers such as Ryanair and Easyjet forced older airlines to cut costs and change their business models.

In a statement, BA said: “This is an incredibly difficult time for everyone at British Airways and we are grateful to Balpa and our flight operations team for the work they have done to reach this agreement and save hundreds of jobs.

“The financial results show the enormous challenge British Airways faces as it contends with the impact of the global pandemic and government travel bans, reducing demand for travel very significantly.

“We do not expect our company to return to 2019 levels of business until at least 2023 and therefore we need to act now to reshape our company for a very different future.”

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Jet2 has announced it will refund customers on holiday in Spain who have been asked to fly back to the UK early.

On Thursday, the airline cancelled flights back to the UK for hundreds of passengers.

The carrier told the BBC it is operating empty flights to pick up passengers from Spanish destinations up to and including 3 August.

Jet2holidays will also refund unused nights for customers affected by the flight cancellations.

The airline added that it would refund the difference if customers had to book new flights to return to the UK.

The move follows criticism from some passengers who told the BBC on Thursday they were being charged more money to fly back on rescheduled flights.

Other customers said they were anxious and upset about having their holidays cut short and their flights cancelled.

Jet2 told the BBC it was “responding to a very fast-moving situation with updates coming from the government with little or no notice, and we have had to make decisions about our programme accordingly”.

“We can assure these customers that we will be in touch with them to resolve any issues that they may have,” the firm added.

The airline has suspended flights and holidays to Tenerife, Gran Canaria, Fuerteventura, Lanzarote, Majorca, Menorca and Ibiza up to and including 9 August have been suspended.

It follows a decision to suspend all holidays and flights to destinations in mainland Spain – Costa de Almeria, Alicante, Malaga and Murcia – up to and including 16 August.

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The airline said customers had been contacted and advised of their options regarding flying back to the UK.

“For flight-only customers who were due to travel after this date, we have cancelled and refunded the cost of their original inbound flights, and customers can book another flight should they wish,” a Jet2 spokeswoman told the BBC.

“There is availability on these inbound flights and our pricing reflects this. On the occasion where there is an increased cost, customers can get in touch with us with their booking information and we can assure them that any difference in cost between the original and new fares will be refunded.

“We appreciate that some customers were due to stay on holiday for longer than this, and we apologise for any inconvenience caused by these unprecedented circumstances. Nobody wants customers to be on holiday enjoying themselves more than we do.

“We can assure Jet2holidays customers that if they have not been able to stay the number of nights on holiday that they had originally booked, they will be refunded for those nights.”

It will take up to 28 days for customers to receive refunds from Jet2.

“Since May, the Civil Aviation Authority has been reviewing the refund practices of 18 carriers – both UK airlines and international airlines – looking at how refunds for flight-only bookings have been handled during the coronavirus pandemic,” said a Jet2 spokesman.

“The CAA found that we are the only UK airline to have been consistently processing cash refunds quickly and having only a small backlog of refund requests.”

With university degrees, years in employment and youth on their side, Nick and Emily McKerrell are examples of just how difficult the jobs market has become.

Not only are they struggling to find work, few employers even bother to reply to their job applications. To say they are frustrated is an understatement.

Emily, 28, is on furlough from her recruitment job at a law firm in Manchester. She is receiving 80% of her wage, but is looking for work to supplement her income – and there’s also the uncertainty of when and if she will return.

“So far I’ve applied for 30 roles. I got rejections from three, and never heard back from anyone else. I’ve applied for everything – sales jobs, cashiers, shop work, restaurants, everything.

“I applied for one role and within 15 minutes got a rejection. How can they even read my application in that time?”

It’s a similar experience for husband Nick, also 28, who has a degree in horticultural science. He’s been applying for roles since March and says he is willing to work in any sector at any level, as bringing in some money is the most important thing.

“It’s kind of frustrating to not hear back at all. It’s just like silence,” he said. “Do they want good workers or not? Even if I’m over-qualified for some positions, I would be a really good employee, so hire me. Hire me!”

‘Toughest market in a generation’

If the finances don’t improve soon, they may have to move back into Emily’s parents’ home.

The couple are proof of what economists have been saying for some time: conditions for job hunters over the past few months have arguably been the worse for decades.

Even well qualified candidates are finding that they are applying for a shrinking number of roles, often many pay grades below what they are used to.

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Employment recruiters report seeing up to ten times the normal number of applicants for positions compared with before the pandemic and fewer jobs are being advertised.

In the worse hit areas of the UK, 40-plus unemployed people are chasing every job. The Institute of Employment Studies (IES) says the number of live job vacancies in July stood at 361,000 – less than half the number advertised in February before lockdown.

IES director Tony Wilson describes it as the “toughest jobs market in a generation”.

For example, analysis of hundreds of thousands of CVs at online jobs site Indeed, suggests managers in the hard-hit UK hospitality and sales sectors are increasingly applying for low paid, entry level jobs in different industries, such is the dearth of positions.

The following graphs, based on Indeed data, illustrate online job searches by managers in the hospitality sector and what sectors they are looking at. It covers the increase from Jan-July 2019 to Jan-July 2020.

Indeed, which has more than 14 million CVs on its books, found a 73% increase in bar managers looking at labourer jobs in construction between January-July year-on-year.

There was a 70% rise in restaurant managers looking at customer assistant jobs over the same period, and a 36% increase in sales managers looking at driving jobs.

Indeed economist Jack Kennedy said: ‘Fewer job vacancies and rising unemployment has caused a squeeze for jobs with many experienced candidates in sectors hardest hit by the down turn clicking on jobs outside of their occupation.”

15,000 applicants

The situation for graduate jobs is particularly difficult. In 2020, graduate jobs have dried up three times faster than normal leading to increased competition for roles.

The experience of some employers highlights just how fierce the competition for jobs is. Warwickshire-based engineering firm Lontra is opening a new production line in Tyseley, Birmingham and received an astonishing 15,000 applicants for 10 jobs advertised last week.

Chief Executive Steve Lindsey said he expected the engineering roles to attract a couple of hundred candidates and was “surprised” to see the huge volume of applications.

“It’s a reflection of the challenges out there, but also that manufacturing is an exciting sector to work in,” he said.

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Steve Lindsey

The majority of applicants were well skilled and from the Midlands region, where there has been a swathe of redundancies in the aerospace, motor, and transport sectors in recent months, including some 3,000 at Derby-based Rolls-Royce.

Mr Lindsey said there is a pool of people with transferable skills in the manufacturing sector.

“People are looking to us as a growth company which is expanding and I think that’s important in these troubled times,” he said.

For 28-year-old Rebecca Priestley, from Bradford, becoming unemployed for the first time in her life was a huge shock.

For the last decade, she’s done a nine-to-five job in communications at a High Street bank. Just before lockdown she was made redundant and has been searching for similar roles in West Yorkshire ever since.

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Rebecca Priestley

“It’s the not knowing when your next salary is going to be that is really daunting,” she said. “I have no problem going for a role in a cafe, or stacking shelves in the supermarket, but it would be great to keep developing the skill set I have rather than being forced into doing something completely different.”

After months of filling in applications, Rebecca says the rejections are taking their toll. She’s even applying for unpaid internships to broaden her skills.

“Your mental heath does take a battering and it is really hard sending the applications out and not hearing anything back. With every application that goes out the door it chips away at your confidence,” she said.

Her fear is that the job hunting is set to become even more competitive when the furlough scheme winds down in the autumn.

“There are going to be even more redundancies. It’s already dog-eat-dog and it is only going to get worse,” she said.

Kate McCarthy-Booth’s Warrington-based employment agency, McCarthy Recruitment, specialises in placing people in retail and hospitality jobs across the UK.

“Instead of 50 applications per role, you are now hitting 500 to 600,” she says. “The demand is huge and you see some people who are applying for every role.”

She says some companies are worried about taking on someone who is over-skilled because “maybe they won’t be as hands on, or it could be a concern about will they stay long term or is it just a stop gap?”

She said it’s takes a lot of money to train people, “and employers are thinking: will they just leave us at the end of the year, when Covid is over?’

It could, of course, be really positive for an employer, as there is some great talent on the market at the moment, she says.

For job-seekers, however, the future points to their hunt for work becoming even demoralising.

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More than half of the people furloughed during the pandemic are now back at work, a think tank has suggested.

The Resolution Foundation said fewer than 4.5 million workers were currently furloughed, as employers begin contributions toward the scheme.

It comes as some businesses face putting workers back on furlough after lockdown easing was halted in England.

The government said millions of jobs had been saved because of the furlough scheme.

Latest furlough figures showed 9.5 million workers as being on the scheme, at a cost of £31.7bn to the Treasury.

But the Resolution Foundation said that, although more than nine million workers – a third of the private sector work force – have been furloughed at some point since March, the current number is now less than half that.

The think tank warned winding the scheme down “carries the real risk of increased redundancies”, echoing concerns raised earlier this week that it could push unemployment to 10% this year.

Firms will now have to pay towards the cost of furloughed staff, by paying their employer National Insurance and pension contributions until the scheme ends on 31 October.

The average cost will be £70 a month – or 5% of the employees’ pre-furloughed pay – according to the think tank.

But many businesses in England expecting to reopen this weekend heard during a Downing Street press conference on Friday they would have to wait at least another fortnight because of a rising number of coronavirus cases.

Casinos, bowling alleys, skating rinks and close-contact beauty treatments are among those to be affected by the latest changes.

The number of furloughed workers at any one time peaked at nearly eight million in late April, the foundation said, based on analysis of three separate Office for National Statistics surveys.

Dan Tomlinson, senior economist at the Resolution Foundation, said: “The Job Retention Scheme has supported around a third of the private sector workforce at some point since lockdown began, protecting family incomes and preventing catastrophic levels of unemployment.”

But he said that millions of employees are currently without work, particularly in sectors such as hospitality and leisure, and called for the government to phase out support for these “hardest hit” sectors more slowly, due to a “heightened” risk of unemployment.

A Treasury spokesman said: “We said at the start of the crisis that we couldn’t save every job – but it’s clear that the furlough scheme has saved millions of them – and now many people who’ve been furloughed are able to return to work.

“That’s good for the economy but more importantly it’s good for individuals, their families and communities.”

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Graham Wasey

The retirement of BA’s 747 fleet has led to a bout of nostalgia from staff and plane fanatics keen for souvenirs. 

Earlier this month, BA announced it was permanently grounding its fleet of 31 747s amid the coronavirus-led slump in travel demand. 

Some of these iconic planes will end up at a salvage firm at Cotswold Airport. 

Air Salvage International’s owner Mark Gregory says he is getting a stream of inquiries from people keen to grab a piece of aviation history. 

This week, Boeing said it would stop making the 747 planes as airlines opt for newer and more fuel-efficient planes. 

Mr Gregory has already taken delivery of three BA 747-400s and another three will be delivered in the coming months. He expects the remainder to be sold to other airlines and operators.

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Graham Wasey

The 747 is credited as making long-distance air travel more affordable and has a history stretching back five decades. As it slowly disappears, a market is developing for souvenirs, ranging from seats to side panels.

“I get a daily stream of emails from BA staff and 747 fanatics who want to buy a piece of a plane. A cut-out side section is popular which can be hung on the wall. These usually go for about £200 each,” said Mr Gregory. 

“They are good aircraft and have done a lot of hours. They have definitely earned their keep.”

His salvage and trading company has been operating for more than 20 years out of Cotswold Airport, a private airfield near Kemble which was once owned by the Ministry of Defence. 

But it’s not just BA that is offloading its 747s. Other major airlines are also waving goodbye to their planes. 

Last week, Australian national carrier Qantas said farewell to the last of its Boeing 747s. The final flight of a Qantas 747 drew a massive kangaroo shape in the sky as it left Sydney Airport. 

Since the coronavirus outbreak, Air Salvage International has seen a ten-fold increase in inquiries from a number of airlines looking for storage facilities.

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Graham Wasey

“We have 11 747s parked up currently. Some are being dismantled while others are up for sale including the BA 747s,” added Mr Gregory. Cotswold Airport has capacity for more than 100 aircraft.

Breaking up

A division of his business looks after the dismantling and selling on of aircraft parts. Engines make up around 80% of the value of a retired plane.

While some engines can easily sell for $3m (£2.3m) each, the Rolls-Royce ones on the BA 747-400s are likely to sell for less.

Other potentially valuable parts include the wheels and the brakes. But there’s a saturated market for 747 spare parts as more are taken out of service and dismantled. 

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Most retired planes are either dismantled, sold to other airlines or left in storage, often in deserts. Some are also kept by airlines who use the cockpits to train pilots.

On rare occasions, entrepreneurs buy planes to convert them into a restaurant, hotel or restore for a private collection.

“Most of these other requests are generally visionaries with little or no budget,” added Mr Gregory. 

Movie props

Some of the retired aircraft have even made their way into the movies and scrap parts have been featured in many of the Star Wars films, including Rogue One.   

“The engines and parts are worth more if you take them off than if you try to sell the aircraft as a flying machine.”  

The process to dismantle a plane can take around eight weeks for a narrow-bodied passenger jet such as a Boeing 737 or an Airbus A320, while for giants such as a Boeing 747 or 777 it can take 10 to 15 weeks. 

Severe downturn

The aviation industry is facing a significant challenge of how to deal with its ageing aircraft, along with a sharp fall in passenger numbers.

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Of more than 27,000 commercial aircraft in service globally, over 20% are older than 20 years and likely to be decommissioned in the coming decade, according to the International Civil Aviation Organization.

It estimated last year that more than 20,000 commercial aircraft will be retired over the next 20 years, but that was before the virus pandemic devastated the airline industry.

Best seller

The 747-400, which is the model BA is phasing out, first began flying in 1988.

Boeing sold almost 700 of the 747-400s, making them the best-selling version of the long-range airliner. Now that most are more than 20 years old, they are gradually being retired. 

But the very first 747s date back to 1969, with Boeing celebrating their 50th anniversary last year.

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James Murdoch, the younger son of media mogul Rupert Murdoch, has resigned from the board of News Corporation citing “disagreements over editorial content”.

In a filing to US regulators, he said he also disagreed with some “strategic decisions” made by the company.

The exact nature of the disagreements was not detailed.

But Mr Murdoch has previously criticised News Corp outlets, which include the Wall Street Journal, for climate change coverage.

Rupert Murdoch, News Corp’s executive chairman, and his other son Lachlan, co-chairman, wished James well in a joint statement.

“We’re grateful to James for his many years of service to the company,” the statement said. “We wish him the very best in his future endeavours.”

Representatives of Mr Murdoch and his wife Kathryn have acknowledged the couple’s “frustration” with coverage of the subject by some of most influential Murdoch-owned news brands, including Fox News.

They have also spoken of particular disappointment about climate change denial in Murdoch-owned Australian outlets.

News Corp also owns The Times, The Sun and The Sunday Times in the UK, as well as a stable of Australian newspapers, including The Australian, The Daily Telegraph and The Herald Sun.

What do we know about past disagreements?

Earlier this year, amid devastating wildfires in Australia, Mr Murdoch and his wife Kathryn expressed their frustration with climate change coverage by News Corp and Fox.

Their spokesperson told The Daily Beast they were “particularly disappointed with the ongoing denial among the news outlets in Australia given obvious evidence to the contrary.”

Rupert Murdoch has described himself as a climate change “sceptic” and denies employing climate deniers.

But critics of News Corp pointed to its comment articles and reporting of the alleged role of arson in the wildfires as minimising the impact of a changing climate.

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A teenager in Florida has been arrested over a major Twitter hack in July, according to the Hillsborough State Attorney’s Office.

On 15 July, Twitter accounts of multiple high-profile US figures were hijacked in an apparent Bitcoin scam.

Hillsborough State Attorney Andrew Warren has filed 30 felony charges against the teenager for “scamming people across America”.

The charges include organised fraud and fraudulent use of personal information.

The attack saw high-profile accounts such as Elon Musk, Microsoft founder Bill Gates, Amazon boss Jeff Bezos, Democratic presidential hopeful Joe Biden, former US President Barack Obama and reality star Kim Kardashian West falsely tweet out requests for Bitcoin donations.

“As a cryptocurrency, Bitcoin is difficult to track and recover if stolen in a scam,” Mr Warren said in a statement.

“These crimes were perpetrated using the names of famous people and celebrities, but they’re not the primary victims here. This ‘Bit-Con’ was designed to steal money from regular Americans from all over the country, including here in Florida.

“This massive fraud was orchestrated right here in our backyard, and we will not stand for that.”

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The charges against the teenager include 17 counts of communication fraud, 10 counts of fraudulent use of personal information, one count of fraudulent use of personal information with over $100,000 (£76,340) or 30 or more victims, one count of organised fraud and one count of access to computers or electronic devices without authority.

Mr Warren said the investigation to “discover the perpetrator” was a collaboration between the Florida Department of Law enforcement, the US Attorney’s Office for the Northern District of California, the FBI, the IRS, and the Secret Service.

The teenager lives in Tampa, Florida and so will be prosecuted by Hillsborough State authorities.

Twitter said in a statement: “We appreciate the swift actions of law enforcement in this investigation and will continue to cooperate as the case progresses.

“For our part, we are focused on being transparent and providing updates regularly.”

After the hack, Twitter said the hackers had targeted its employees “with access to internal systems and tools”.

It added that “significant steps” had been taken to limit access to such internal systems and tools while the company’s investigation continues.

According to BBC cyber-security reporter Joe Tidy, the consensus in the information security community is that Twitter’s employees were likely duped by a spear-phishing attack via a phone call.

This involves using friendly persuasion and trickery to get victims to hand over crucial information that enables hackers to infiltrate a company’s systems.

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TOLGA AKMEN

Restaurant chain Byron Burger is closing permanently more than half its 51 outlets and cutting 650 jobs.

It is part of a deal that will see the remaining 20 sites and 551 staff transfer to a new owner, Calverton UK.

Many of the restaurants were already closed, victims of the economic impact on the hospitality sector of coronavirus.

Will Wright, an administrator at KPMG who sold the chain, said the pandemic’s impact “on Byron has been profound”.

He added: “After exploring a number of options to safeguard the future of the business and following a competitive sales process, this transaction ensures Byron will continue to have a presence on our high streets.”

It was believed that KPMG was in talks with three potential buyers, which were were looking at taking over the whole firm or parts of it.

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Founded in 2007, Byron has been struggling for a number of years. In 2018 it agreed a rescue plan and restructuring which was handled by KPMG.

As part of that deal, investment house Three Hills Capital Partners became the biggest shareholder.

‘Great opportunity’

Under the deal, Byron Burger’s existing investors will take a minority stake in the business, KPMG said. No financial details were disclosed.

Sandeep Vyas, of Calveton said: “Byron is a pioneering brand much loved by customers across the UK. We are backing Byron because we believe it has great opportunity ahead of it, and it is well placed to adapt to the new consumer environment and dining trends.”

He said the new investors would look to boost the chain’s digital on-demand platforms.

Restaurant chains, which were already under pressure before the coronavirus crisis, have been hit hard by the pandemic.

The owner of Cafe Rouge, Casual Dining Group, and Bella Italia-owner Azzurri, are among several chains to fall into administration during lockdown.

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The decision to delay a further easing of coronavirus restrictions in England is “a hammer blow” to companies and consumers, says one business group.

The delay means that places such as casinos and bowling alleys, which had been due to open on 1 August, will have to wait at least two weeks more.

Many beauty treatments will also continue to be outlawed.

The move has come when many firms were “starting to get back on their feet”, said the British Chambers of Commerce.

BCC co-executive director Claire Walker said: “While tackling the public health emergency must be the priority, these announcements – made at short notice – will be a hammer blow to business and consumer confidence at a time when many firms were just starting to get back on their feet.

“Business communities need as much clarity as possible from government if they are to plan ahead and rebuild their operations in the coming months.”

The National Hair and Beauty Federation also reacted with dismay.

Treatments on the face, which were excluded when beauty salons were allowed to reopen in England on 13 July, were due to be given the go-ahead from Saturday, but this has now been postponed.

“We are extremely disappointed that this last-minute decision has been made,” the federation said. “We will continue to push for financial support following this further setback.”

‘Safety first’

The CBI said the news would be “a real disappointment for some businesses”. “But firms know that public safety comes first.” added the CBI’s chief UK policy director, Matthew Fell.

Both the BCC and the CBI called for extended support and targeted measures to help businesses affected.

“Businesses will continue to do what is necessary to avoid an infection spike,” said the CBI’s Mr Fell.

“Delayed reopening will unfortunately lead to even more financial pressure for some companies. So there may yet be a need for more direct support to shore up cash flow, including extended business rates relief.”

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UK Hospitality said the delay was “devastating news” for hospitality businesses and leisure venues that had hoped to be back in business this weekend.

“They have spent a lot of time and money, which they can ill afford to lose at the minute, getting ready to reopen. For those people who work in those sectors, the security of their jobs remains uncertain,” said its chief executive, Kate Nicholls.

“We now need clear communication to ensure that consumer confidence is not damaged further. We are also going to need further support for those businesses that cannot reopen.”

The news came in a briefing from Prime Minister Boris Johnson, who said planned reopening for 1 August would be delayed for at least a fortnight.

That means venues such as casinos, bowling alleys, and skating rinks must remain closed until 15 August.

Indoor performances will also not resume and pilots of larger gatherings in sports venues and conference centres will not take place, while wedding receptions of up to 30 people will not be permitted.

Separately, face coverings will be compulsory in more indoor settings where people are likely to come into contact with people they do not know, such as museums and places of worship, from next weekend. They are already required in shops and indoor transport hubs.

The prime minister said the rules for face coverings would become enforceable in law from 8 August.