City analysts say union leaders ‘delusional’ if they believe British Airways does not need to make deep cuts to survive
Union leaders are ‘delusional’ if they believe British Airways does not need to make deep cuts to survive, City analysts have said.
The criticism follows a highly unusual call held by union Unite with 37 City analysts.
It wanted to explain why it believes BA is being too drastic in cutting up to 12,000 staff and slashing the pay of many other workers.
Opinion: The views of City analysts are important to firms such as BA because they hold huge sway over share prices
The views of City analysts are important to firms such as BA because they hold huge sway over share prices. But several analysts on the Unite call criticised the union’s approach, which has included calling for the Government to strip BA of its lucrative Heathrow landing slots.
One analyst told The Mail on Sunday: ‘There was an element of delusion by Unite. If this campaign is successful, the unions will destroy British Airways.
‘The unions have taken the nuclear option… this strategy will blow back in their face. Everyone is playing a very dangerous game here.’ Another claimed some of Unite’s arguments ‘contradicted what they are trying to achieve’, and that they ‘failed to take into account the view of investors’.
‘There was no long-term proposal for making BA a sustainable business,’ the source added.
Unite hit back last night, saying the briefing was ‘factually accurate and indemnified’. It said its report to City analysts on BA’s finances was compiled by Adam Leaver, a professor of accounting at Sheffield University.
Sharon Graham, Unite’s executive officer, said: ‘Unite is fully aware of BA’s financial position. BA is facing a short-term liquidity crisis. There is no need for such extreme permanent cuts to be made.’
She said there must be ‘consequences to BA’s behaviour’. Earlier this month, the airline was called a ‘national disgrace’ by MPs on the Commons transport select committee. ‘Maybe they [BA] should listen more carefully,’ Graham added.
The move by Unite to brief analysts comes amid mounting speculation that BA’s parent company IAG will need to tap investors for up to £1.5billion of extra funding. IAG is burning through roughly €1billion of cash a month, meaning it has ten months until it exhausts its €10billion cash reserves.
Mark Manduca, an aviation analyst at investment banking giant Citi, said: ‘If this crisis goes on longer than expected, with a second [Covid-19] wave in the autumn, it is almost inevitable IAG will have to raise fresh funds.’
One analyst on the Unite call warned that investors would not be willing to stump up money without major restructuring at BA.