British Airways pays staff $500 sweetener as bonuses shrink

Bloomberg

British Airways will hand staff 400 pounds ($496) and a free return flight to help make up for missed bonus payments.
The payout, detailed in a letter to workers seen by Bloomberg and confirmed by BA, will be made to all UK employees. Staff were due to receive only a fraction of their standard bonus because earnings fell short of a 1.5 billion-pound threshold and the carrier missed customer service and punctuality goals.
“The 2016 all-colleague bonus scheme has triggered at a much lower level than in previous years,” the London-based unit of IAG SA said in the staff letter. “However, the British Airways board has decided that all eligible colleagues in the U.K. will receive a bonus with their March pay.”
Alex Cruz, who took over as head of British Airways last April, needs the support of staff after embarking on a four-year program to boost margins. Measures include cutting almost 700 back-office jobs, as well as some maintenance posts, switching to paid-for food on short-haul flights and adding extra seats across the fleet to bring seat density into line with rivals. Employees will still receive a small part of their usual bonus for meeting on-time performance targets in one quarter.
For much of the year the carrier struggled to integrate a new check-in system, delaying flights and weighing on customer ratings, while air traffic control strikes also disrupted schedules.

Brexit Factor
No profit-related bonus will be paid after BA’s earnings were held back by a slowdown in business travel ahead of the June 23 referendum on Britain’s membership of the European Union, together with an over-supply of short-haul seats as a string of terrorist attacks crimped demand. Confirming the one-time payments and additional free flights, British Airways said in an email that it was “proud of how hard our colleagues work to support our customers.” The airline wasn’t immediately able to provide the previous year’s bonus figure. Managers are separately eligible for an award based on individual performance. The terms of the 2017 bonus plan will be detailed later this year.
IAG CEO Willie Walsh’s annual bonus fell to 567,000 pounds from 1.36 million pounds, with his long-term incentive payment dropping to 808,000 pounds from 4 million pounds, reflecting missed earnings and shareholder-return targets. His base salary remains at 850,000 pounds, the company said in its annual report last month.
BA’s debt was last week lifted to investment grade by Fitch Ratings, which cited Cruz’s cost controls as “the driver” of the airline’s profitability, offsetting the impact of economic and political turbulence including the Brexit vote and the possibility of
further terrorist attacks in Europe.