Only a showdown can save BA from ruin

Published: 7:33AM GMT twenty-four February 2010

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British Airways

I love holidays; and I suffer formulation them rounded off as majority as receiving them. Its a provide to pore over maps and trawl the internet for flights, generally in the inlet of winter. And last month, when I was engagement an Easter outing to Africa, I had an experience that contingency be sincerely typical.

I found that a series of airlines charity flights at rounded off identical prices. I had been warned off Ethiopian Airlines and, given one of the planes crashed in Beirut a couple of weeks later, Im utterly blissful I took the advice. It afterwards came down to a preference in in between Kenya Airways, "the Pride of Africa", and British Airways. I didnt wish to have to be concerned about probable industrial action, so Kenya Airways it was. Sure enough, this week BA cabin organisation voted to strike, presumably at Easter.

Gloomy British Airways slips to initial Q1 loss in twenty-two years BA considers automobile down payment to progress shift piece BA workers from Unite advise set upon is appearing BA workers contend set upon is appearing BA compensate row with workers doubtful to be resolved this week

Its bizarre Ive never had a bad experience on a BA flight, but Ive beheld that majority of us right afar blubber about BA in the same approach that we regularly have about the weather, or that Londoners have about the Tube: the a common hardship.

Willie Walsh, BAs boss, likes to point out that there hasnt been a day lost to set upon movement given he took over five years ago. That competence be true, but for me, and for majority others, it is not the point: the the stress that there competence be. I outlayed multiform weeks last summer wondering either there would be industrial movement in August, when my daughter was due to fly to the US to revisit her cousins; and for multiform days in Dec I listened to a co-worker be concerned about either his Yuletide plans would be scuppered by an additional in jeopardy strike, that in the finish was shut off by the courts.

For the consumer, this kind of thing is stressful, it is a rubbish of time, and it booty one of the majority appropriate things about a holiday: the expectation. So whatever the outcome of the diversion of duck being played in in between government and the unions, distressing repairs is being finished to BAs reputation.

The complaint is that the tough to see a approach out of this mess. BA needs to cut costs. Despite new signs of recovery, the airline is still creation losses. It pays the staff some-more than majority rivals, is rarely unionised and industrial family are poor. The design is identical at alternative inhabitant carriers: in Germany, Lufthansas pilots have usually dangling a strike, but some-more movement is likely.

Yet BAs problems are additionally structural. Its long-haul routes are profitable, interjection to the commercial operation customers, so an viewable resolution would be to sale the short-haul European business, that has lost out to low-cost carriers. But it cant do that, since those unprofitable flights feed the remunerative long-haul routes, around transfers at Heathrow.

The expansion of easyJet and the similar to is a pointer of the fast shift in the airline industry, to that BA has been incompetent to conform fast enough. There are a couple of spots of great news: BAs fondness with American Airlines has been provisionally authorized by the US Department of Transport, and it is posterior plans to combine with Iberia, the Spanish carrier. But the common cost assets that outcome from such converging together with pursuit waste wouldnt come with the BA-Iberia understanding since in sequence to keep their slots at Heathrow and alternative airports, their operations will go on to be run separately.

This competence be a waste in conditions of slicing costs, but BAs Heathrow heart is additionally the strongest defence. Yes, BA is losing money, and companies cant go on you do that indefinitely, quite when they have inspired grant supports to feed. But there is additionally a certain side. According to Citigroup research: "BA has between the highest-quality gain streams and one of the strongest shift sheets for a European airline… driven by the clever place at undiluted Heathrow and rounded off five years of cost and shift piece restructuring."

This absolved on all sides at Heathrow gives BA substantial poke in the long-haul business, and enough marketplace energy that even the majority discontented passengers competence go on to book with it. On a small routes London to Seattle, for e.g. it is the usually airline that offers approach flights. I reckon that is since those who blubber about it mostly receptive to recommendation as quiescent to their predestine as when they plead the continue since so majority have common the experience.

The big subject is either government and unions can navigate by the stream difficulties or either the company, and the passengers, face years of bullheaded work disputes. BA is still negotiating with a fractured organisation of unions and there is small pointer that the dual sides have learnt to work together. The impulse competence have come for a last confrontation, if government feels it can face down the unions. As we inform in todays Business section, this is what Michael OLeary of Ryanair thinks that BA should do, but wouldnt (though if Mr OLeary is charity free recommendation to a competitor, I think Mr Walsh, a associate Irishman, will take it with a splash of salt).

A long, hostile set upon would positively be devastating; but the stream settlement of visit threats of intrusion equates to that patron faithfulness is solemnly removal away. Experience at alternative struggling companies with bullheaded work problems, such as General Motors, suggests an all-or-nothing showdown can be preferable to a slow, unpleasant death.