British Airways confronts pay cut decision

Yesterday was the deadline set for BA staff to volunteer to work for free in July, after the company asked staff to consider its request last week. Chief executive Willie Walsh has already said he will forego his salary for the month and has emphasised just how important the gesture would be to the cash-strapped airline, which recorded an annual loss of £401m last year.

In an email Walsh wrote: "There is no immediate threat to our business if we act with speed. However, the drop in revenue we witnessed in the fourth quarter of last year goes well beyond anything that we can save from our costs."

However many observers do fear for the company's survival, with shares in the company plummeting eight per cent earlier this week on speculation that it might require state aid. It denied the rumours, but worries also persist over the size of its £3bn pension fund deficit and investors are running scared.

There was confusion over the number of workers who have signed up to BA's salary-cut scheme. Initially it was thought that as many as 1,000 had put their names forward, but recent reports suggest that only 200 are willing to work for free. The airline is also working towards a June 30th deadline on voluntary redundancies, where it is hoping for a reduction in staff of 2,000 from 14,000 cabin crew. However its desperate job reduction plans have brought it into direct confrontation with its unions and summer strike action is a distinct possibility.

WHAT TEHY ARE SAYING:

Alex Brummer, in the Daily Mail: "The ominous drop in British Airways shares illustrates the scale of the flag carrier's difficulties. Less than a year ago it was hopeful of becoming the world's first genuine global carrier with deals lined up at American Airlines, Qantas and Iberia. Now expansion is on the back burner and the group's feisty chief executive Willie Walsh is in a fight for survival. It is difficult to know whether Walsh's rhetoric, designed to persuade BA's workforce to make sacrifices, has been counterproductive."

Mick Rix, national officer for aviation at union GMB, in the Herald: "Our members would take this proposal much more seriously if BA was proposing a permanent, radical change to the pay structure of its senior executives."