BA left itself open to buffeting

Jul 16 2009 by Peter Jackson, The Journal

BEFORE I went away on my summer holidays last month, I had an inkling all was not well with British Airways.

Maybe it’s my finely tuned economic antennae, but I always suspect that all is not well with a company when it has to ask its staff to take a pay cut.

In fact, the airline posted a record £401m annual loss in May, has cut 2,500 posts since last summer, plans a further 3,700 job losses by March next year and predicts the company’s pension deficit will exceed the £1.74bn predicted last year.

This week pilots voted to accept a 2.6% pay cut in return for BA shares and last week cabin crew offered to take a 2.6% pay cut and forgo any rise until February 2011.

It has come a long way since it was the world’s favourite airline.

The carrier has been heavily hit by the downturn and, at this week’s agm, chief executive Willie Walsh warned that the recession will be protracted and that high oil prices will be here to stay, that there will be fewer business travellers choosing premium cabins and those who do will pay less.

All of which is probably true and BA does perhaps deserve sympathy for problems not of its own making.

It is also likely that one of the biggest falls in airline revenues has come as a direct result of the severe depression hitting London and other international financial markets. Before the credit crunch, there were thousands of high-flying, high-rolling banking, broking and other financial services executives jetting around the world, weaving their own particular brand of magic. Those days are, as Mr Walsh observes, gone and are unlikely to return in a hurry.

How unfortunate then that BA should have had a strategy of centring its operations on London, particularly Heathrow, discontinuing all direct overseas and internal flights from UK airports other than Heathrow and Gatwick.

It must have calculated that a grateful public would travel to London to continue to fly with BA out of Heathrow – the world’s least favourite airport.

We who live in the regions have not done so and, while we have to feel for BA’s employees, we can be allowed a certain satisfaction at seeing the company pay for neglecting us.

Peter Jackson is a writer and ex-business editor of The Journal – p.jackson77@btinternet.com