British Airways May Exit Gatwick in Push to Resize Business

(Bloomberg) --

British Airways may close its London Gatwick hub to cut costs and adjust to a sustained drop in demand in the wake of the coronavirus pandemic, the BBC reported, citing a letter to pilots from management.

The memo from the head of the carrier's Gatwick operations says there's no certainty that flights shuttered at the start of April will ever resume, according to the broadcaster.

British Airways currently operates a dual hub system, with leisure-oriented flights from Gatwick complementing a business-focused operation at its larger Heathrow base. Losing BA would come as a blow to London's second-busiest airport, especially since two more of its biggest users, Virgin Atlantic Airways Ltd. and Norwegian Air Shuttle ASA, are struggling to obtain state bailouts.

British Airways declined to comment on the BBC report.

The carrier has already announced plans to slash as many as 12,000 jobs, or 30% of the workforce in order to resize for a downturn it reckons could last for years. The move met with hostility from U.K. politicians and labor groups, since the company has so far declined to seek state-backed loans intended to help keep companies afloat.

Willie Walsh, chief executive officer of British Airways owner IAG SA, has instead focused on pruning costs and bolstering liquidity with credit from private lenders, though BA has tapped into Britain's furlough program to help pay staff with almost all of its planes grounded by the pandemic.

With its long-haul links under threat, Gatwick, controlled by French builder Vinci SA, risks being reduced to low-cost hub with EasyJet Plc as its dominant operator.

In a separate letter from British Airways to U.K. pilot union Balpa, seen by Bloomberg News, the carrier says there's no certainty as to when Gatwick and London City airport operations will return and warns that remaining flights at Heathrow could also be suspended.

The communication adds that the carrier will aim to cut 955 pilot jobs to reflect reduced demand and a smaller fleet, and a further 175 to boost efficiency, for a total of 1,130, about one-quarter of the total.

Balpa said in an email that with BA declining state support and stating that it's financially secure, “it is hard to see how these cuts can be justified.” The union said it's had no indication that the airline plans to pull out of Gatwick.