BA warns of serious cost problems as furlough ends

British Airways has warned that the end of the government's furlough scheme in September will be "bad news" for its pay costs.

The airline sent a memo to staff saying its flight schedule and staff costs will not line up in their current form.

BA said it believed this would be a temporary problem, but it was a "serious one which we need to manage".

The warning comes alongside plans to set up a lower cost subsidiary airline at its Gatwick base.

BA halted its short-haul flights from the airport at the start of the coronavirus pandemic. It said the new subsidiary would run alongside its long-haul Gatwick routes.

In its email to staff, BA short-haul flights from Gatwick had previously been "a highly competitive market, but for us to run a sustainable airline in the current environment, we need a competitive operating model".

"Because of that, we are proposing a new operating subsidiary to run alongside our existing long-haul Gatwick operation, to serve short-haul routes to/from Gatwick from summer 2022.

"This will help us to be both agile and competitive, allowing us to build a sustainable short-haul presence at Gatwick over time."