• Pilots agree to take salary cut and work longer hours
• Chief executive expected to be barracked at AGM

Willie Walsh, the embattled chief executive of British Airways, faces a mauling from shareholders and his own staff at the airline’s annual meeting, tomorrow despite securing a crucial pay deal with the fleet’s pilots, which will see them accept a pay cut and longer hours as management tries to slash costs.

Unions representing baggage handlers, cabin staff and ground crew will mount a protest outside the AGM in London over management plans to lay off thousands of workers. Shareholders are also expected to barrack Walsh during the meeting over the dramatic downturn in the flag carrier’s fortunes, which has already seen the company stop paying dividends and looks set to result in an emergency cash call.

Walsh, who has agreed to forgo his £61,000 wage for the month of July to show he means it when he says BA is battling for its survival, is looking to stem the airline’s losses, which are running at nearly £3m a day. In May, BA revealed that the recession has turned record profits of £992m two years ago into a record pretax loss of £401m last year.

A deal with BA’s 3,200 pilots is a small victory for Walsh, but his battle to reduce the company’s overheads as it suffers a plunge in lucrative business travel is by no means over. Management is still locked in talks at the conciliation service Acas after a self-imposed deadline of 30 June passed without any deal with cabin staff and ground crews.

BA’s bosses want unions to agree to a deal that would freeze pay for two years and result in the loss of 3,700 jobs – or almost 10% of the workforce – including 2,000 voluntary redundancies from its 14,000 flight attendants. They also want staff to agree to wide-ranging changes to their terms and conditions.

Management this year asked staff to consider working for free or taking unpaid leave, and nearly 7,000 employees applied for voluntary pay cuts, including 800 who said they would work for nothing for up to a month. The move, which will save the carrier up to £10m, was attacked by some union leaders who feared staff were being bullied into signing up.

Unions will hand out letters to shareholders outside today’s meeting pointing out that staff are proud to work for BA and it is bosses who are out of step, making doom-laden pronouncements about its future just a year after it produced record-breaking profits.

“All BA employees are ready and willing to pull together to secure a vibrant future for the company, but they desperately need to see that BA senior management want to work with them towards this objective, not blame them for a situation which is not of their making,” the letter reads. “The staff are willing to listen and respond, but feel under pressure to agree to measures – like working for free – that they simply can’t afford. There is also no merit whatsoever in management adopting unrealistic and intransigent positions during discussions with staff representatives.”

Protesters will have a dozen live lemmings with them outside the meeting and placards bearing slogans including “British Airways deserves better than to be led by lemmings” and “Willie, time to head to the departure gate?”.

Walsh, however, is likely to take heart from his success in persuading BA’s pilots to accept a pay cut. The British Airline Pilots Association (Balpa) said that 94% of its members who voted were in favour of accepting a 2.6% salary cut to help the cash-strapped airline save £26m. As part of the deal, BA’s pilots have agreed to an increase in annual duty hours, a cut in turn-around times on short-haul flights and reductions in the flight-crew arrangements on certain long-haul routes. There will also be 78 redundancies. In return, pilots will be able to pick up BA shares in two years’ time worth about £13m.

Balpa’s general secretary, Jim McAuslan, admitted that it was “an unaccustomed position” for a union to be calling on members to support a drop in pay but said: “We are satisfied that this step is necessary to help BA recover its position as one of the world’s most successful airlines.”