Ministers are drawing up plans to part-nationalise British Airways and other flagging airlines whose demand has nosedived because of coronavirus flight freezes, it has been claimed.
The government is understood to be preparing to inject billions into the crippled companies as part of a mammoth bailout to save them from total collapse.
Easyjet and Virgin Airlines have also been pounded by global travel bans, and BA is reportedly burning £200million each week as 75 per cent of its fleet is grounded.
But while semi-nationalisation forms part of Whitehall’s rescue blueprint, a source told the Sunday Times it is the worst-case scenario.
Before the government swoops in to take control of the airlines, insiders say it would first seek demands on security of assets such as landing slots, which are worth up to £2billion.
And some railway networks could also be poised to come under government control.
FirstGroup and Go-Ahead, companies which won deals to operate the Great Western and Southeastern franchises, respectively, have seen profits tank since the pandemic, the Telegraph reported.
If ministers cannot extend their contracts, which are up for renewal on March 31, insiders say the Department of Transport will be left with no choice but to take control.
Ministers are drawing up plans to part-nationalise British Airways and other flagging airlines whose demand has nosedived because of coronavirus flight freezes (parked planes at Glasgow Airport yesterday)
Some railway networks could also be poised to come under government control
In a sign of the dire situation of the UK’s travel industry, BA staff pilots have already agreed to take a 50 per cent pay cut in April and May in a desperate attempt to keep the ailing airline afloat.
It came after chairman Alex Cruz told his 45,000 staff that the viral outbreak is threatening the company’s survival.
Mr Cruz warned that the escalating crisis is ‘of global proportions like no other we have known’ – including the 2008 Financial Crisis and 9/11.
Under the new deal, it is indicated that a consultation on potential job losses is going to be put on hold.
Though indications suggest airlines may layoff personnel before the government measures kick in.
The prospect of re-nationalising Britain’s flag carrier airline, which was privatised in 1987, was first reported yesterday as the global pandemic claimed more lives.
One unnamed source told the FT that ‘at some point the Government will need to think about all the industries and businesses that might be severely impaired’.
Chancellor Rishi Sunak’s eye-watering £350billion emergency loan package was not deemed
BA has negotiated a deal with the pilots’ union BALPA to avoid widespread lay-offs
According to Sky News, British Airways has sent a letter to staff telling them the plan had been agreed with the pilots’ union BALPA to fight ‘the immediate threat to the business in the face of COVID-19 and the unprecedented impact this is having on the airline’.
The letter also states: ‘We are committed to finding solutions and will focus any future discussions on exploring and exhausting all voluntary measures.
‘We acknowledge that this situation is hugely challenging for individuals and their families. BA and BALPA are committed to working together to find solutions during this unprecedented period and support the future of our airline.’
The announcement comes as the global airline industry fights for its survival. EasyJet has said it would ask employees to take pay cuts and unpaid leave.
Norwegian announced it would lay off half of its 11,000 with a view to re-employing them when the crisis was over.
Qantas Airways has told most of its 30,000 staff to take leave and Lufthansa warned the industry may not survive without a state bailout if the pandemic continues for a long time.
The Airline industry is fighting for its life as ticket sales have flat-lined due to the pandemic
But the pilot’s trade union has warned that airline companies could begin ‘winding down’ and laying off staff next week unless promised Government support for the industry is delivered quickly.
The British Airline Pilots Association (Balpa) said the UK’s aviation industry is at risk of ‘collapse’ while it waits for assistance from the Government to alleviate the impact of the coronavirus pandemic.
Transport Secretary Grant Shapps said on Wednesday the Government was committed to helping the sector.
Balpa general secretary Brian Strutton said the aviation sector had been ‘hit first and hardest’ by the Covid-19 outbreak, which has led to a downturn in air travel.
Balpa General Secretary Brian Strutton said jobs could be lost before support came to help
He said in a statement: ‘It’s disgraceful that the Government keeps promising to help but is still sitting on its hands while airlines are shutting down.
‘Airlines can’t survive with no revenue coming in and are already cutting wages and jobs.
‘Unfortunately the rescue packages put together yesterday are not ready yet but airlines are in crisis now and need help immediately.’
Transport Secretary Grant Shapps has promised that the government will support the airlines
Mr Strutton said state investment in UK airlines is ‘essential as a matter of urgency before it’s too late’.
The union claimed that airline companies will be ‘winding down next week’ before the Government support scheme is ready.
Speaking on Wednesday, Mr Shapps said: ‘Coronavirus is having a crippling impact on the aviation industry and we cannot allow it to force world-leading, well-run, profitable firms out of business.
‘We are extremely grateful to airport and airline teams who are continuing to help passengers get home safely. We stand firmly behind the sector and expect to announce a series of support measures shortly.’
On Tuesday, Chancellor Rishi Sunak announced that a package of measures would be agreed to support the aviation sector.
A Department for Transport spokesperson said: ‘A number of measures to support the sector have already been announced, including Time to Pay, financial support for employees and the Bank of England’s Covid Corporate Financing Facility.
‘The Government is working urgently to develop further measures, as necessary.’