British Airways chief executive Alex Cruz is to step down, the airline’s parent company IAG has revealed.
He will be replaced by Aer Lingus chief executive Sean Doyle but will stay on as non-executive chairman for a transition period before his successor takes on the role.
Mystery surrounds the sudden departure of Mr Cruz, who only assumed his role in 2016 and less than a month ago faced MPs to defend the airline’s actions during the pandemic.
The reasons behind his departure are not yet known and it is unclear if he resigned or was fired from the role.
However, it is thought that the change, one of several management tweaks announced today, is a sign that the new chief executive of IAG, Luis Gallego, is flexing his muscles after taking over last month.
Mr Gallego is hoping to spearhead a recovery for the airline, with the pandemic causing carnage in the aviation industry.
In April, BA announced plans to cut up to 10,000 jobs, 30 per cent of its global workforce.
The airline was accused of threatening a ‘fire and rehire’ scheme which saw some employees facing pay cuts of up to 50%.
Trade union Unite claimed it has only carried out a ‘partial U-turn’ on the issue, with ‘still too many BA workers facing threats to their wages and working life’.
In June, the Commons’ Transport Select Committee described the airline’s treatment of its workers as ‘a national disgrace’.
Mr Cruz defended the job cuts last month and said the pandemic has left the national carrier ‘fighting for survival’.
However, he refused to comment on a £833,000 bonus paid to the outgoing boss of BA’s parent company, Willie Walsh, who left IAG in September.
British Airways chief executive Alex Cruz (left) is to leave his role, the airline’s parent company has confirmed. He will be replaced by Aer Lingus chief executive Sean Doyle (right)
Luis Gallego, the new chief executive of IAG, is thought to be behind the major shakeup
He stressed that ‘people need to get flying again’ if the company is to emerge through the winter and weather the ‘worst crisis in its 100 years of history’.
But he told MPs that many would-be customers are still cautious about travelling for fear their holiday destination will suddenly be brought on to the government’s quarantine list.
Passenger numbers have nosedived and in the first week of September the airline only flew 187,000 passengers, compared with almost a million the same week last year.
The slump in flights – roughly a quarter are operating – is causing BA to burn through £20million a day and has led to a jobs bloodbath.
The pandemic has led to a collapse in demand for air travel, with passenger numbers not expected to return to 2019 levels until 2024.
New CEO Mr Doyle first joined British Airways in 1998 and carried out various financial, strategy and commercial roles, culminating in his appointment as director of network, fleet and alliances in 2016.
Originally from Cork, Ireland, he became Aer Lingus chief executive in January 2019.
Mr Cruz will remain at British Airways as non-executive chairman for a transition period until Mr Doyle also takes on that role.
Fernando Candela, chief executive of IAG’s low-cost airline Level, is joining IAG’s management committee in a new role of chief transformation officer.
Donal Moriarty, currently chief corporate affairs officer at Aer Lingus, will become interim chief executive at the Irish airline.
IAG chief executive Mr Gallego said: ‘We’re navigating the worst crisis faced in our industry and I’m confident these internal promotions will ensure IAG is well placed to emerge in a strong position.
‘I want to thank Alex for all that he has done at British Airways. He worked tirelessly to modernise the airline in the years leading up to the celebration of its 100th anniversary.
‘Since then, he has led the airline through a particularly demanding period and has secured restructuring agreements with the vast majority of employees.’
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown said: ‘Shares in airline group IAG were hit by early turbulence today as investors digested the major changes at the top of British Airways.
‘BA had already severely cut its flight schedule, culled thousands of jobs and now chief executive Alex Cruz is the latest to go as the company tries to cope with crisis caused by the pandemic.
‘Mr Cruz, who had been in position since 2016, will be moved to the role of non-executive chairman, while the boss of Aer Lingus, Sean Doyle, will jump into pilot seat and attempt to steer the company back to health.
‘This is a sign that the new chief executive of IAG, Luis Gallego, is flexing his muscles and trying to demonstrate he’ll make the changes necessary to lead a sustained recovery for the airline group.
‘Sean Doyle will have his work cut out to make immediate progress given that British Airways is facing the toughest challenge in its history as demand for international travel has plummeted and quarantine restrictions continue to constrain bookings.’
Mr Cruz’s removal from his position comes as it was revealed that Heathrow’s passenger numbers were down 81% in September.
Just 1.3 million people travelled through the west London airport last month, compared with 6.8 million in September 2019.
More than half of the passengers who used Heathrow last month were flying to or from the European Union.
Heathrow said long-haul business travel continues to be restricted by international border closures and ‘a lack of testing’ for Covid-19.
Last week, the Government unveiled a taskforce to develop a coronavirus testing system as a potential way of easing quarantine restrictions for arriving passengers.
Heathrow chief executive John Holland-Kaye said: ‘The Government’s Global Travel Taskforce is a great step forward, but needs to act quickly to save the millions of UK jobs that rely on aviation.
The boss of British Airways has defended his decision to cut up to 10,000 jobs and said the pandemic has left the national carrier ‘fighting for survival’
‘Implementing ‘test and release’ after five days of quarantine would kickstart the economy.
‘But the Government could show real leadership by working with the US to develop a common international standard for pre-departure testing that would mean that only Covid-free passengers are allowed to travel from high-risk countries.’
Mr Cruz previously said: ‘Fewer passengers means fewer flights, and fewer flights means fewer people required to actually service them.’
In April, British Airways announced plans to axe up to 10,000 jobs, representing nearly 30 per cent of its workforce.
On September 16, Mr Cruz revealed that 7,200 employees have already left the company, and said the final amount out of redundancies would likely be around 10,000, although this could be greater.
Appearing before the Commons’ Transport Select Committee, he said: ‘As CEO of British Airways, I have to take responsibility. I cannot ignore the situation. I had to act incredibly fast.
‘I deeply, deeply regret that way too many loyal and hardworking colleagues of mine are having to leave our business, and I understand why MPs are concerned.’
Mr Cruz said he had ‘very difficult and yet very constructive’ meetings with pilots’ union Balpa, which resulted in a package being agreed on job and pay cuts aimed at avoiding a larger number of redundancies.
But he added: ‘This is an impossible situation. We’re having to make incredibly difficult decisions as a consequence of this pandemic and it is really only because of Covid-19 that we have had to go through such deep restructuring.
‘I have to make these difficult decisions at this time but I am completely dedicated and focused on protecting those nearly 30,000 jobs of those British Airways colleagues that will remain within the business.’
The chief executive, whose fleet was mostly grounded during the pandemic, said his mission objective was the survival of Britain’s flagship airline.
Not mincing his about the precariousness of BA’s future, he said: ‘The main focus at the moment is to survive.
‘We must make it through, then we must be able to compete effectively and make it through the recovery cycle… people need to get flying again.’
Laying bare the uphill struggle to revive BA’s dire financial fortunes, he said: ‘We ended up last year, British Airways, with £2.6billion in cash.
‘At the end of June we had £2.1billion in cash. We’ve been burning approximately an average of £20million of cash per day.’
Mr Cruz also told the MPs that BA had processed 2.1million refunds and 1.6million vouchers for customers whose flights had been cancelled.
Mr Cruz revealed that he had taken a 33.3 per cent pay cut, and his top team a 25 per cent cut.
Last year, the boss made £805,000 in salary, benefits and pensions, he said.
But Mr Cruz’s efforts could be thwarted by a nervous public who he claimed are avoiding trips abroad for fear of having to quarantine.
He said: ‘People are still afraid of travelling. Of course, we are having weekly changes, as you know, to the quarantine list.
‘We don’t have a testing solution yet. And still our customers are paying APD (air passenger duty) even just to fly on domestic regional flights.
‘So the overall situation is quite challenging, and this is why we are taking every measure possible to make sure that we can actually make it through this winter.’