A Take on BA's issues
I was talking to a City Analyst about British Airways last month, and here are some points. Please note cannot mention names as views expressed are personal and are expressed here for debating purposes.
Simplistically BA has been on the rack since the late 90s over 2 distinct issues, one imposed by the Labour Government, and second by making themselves slaves to an internal goal. There are others such as outdated working practices, and arguably passing over the opportunities presented by KLM and Swissair.
Despite the above BA has proven very adaptable and quite profitable over the period, with some exceptionable managers.
Firstly, Gordon Brown’s Great Pension Theft caused a long term funding problem which directly hit BA’s ability to develop the business as money that would have been re-invested had to be sunk into the pension pit to make up for the money Labour stole. The damage Brown’s Grab caused to British industry has been amazing. I believe an actuarial report a couple years ago showed that Brown’s Grab actually depressed the tax revenue received by the Inland Revenue over the period.
Secondly, the 10% Margin Rule. This was applied across the board, perhaps it would have been better to just apply this to Heathrow services and set a different standard for LGW and the regions. By keeping profitable routes outside LHR despite not hitting the 10% targets would have been cash flow positive to the business as a whole, retained potentially a significant and probably frequent flyer client base, although inevitably there would be losses to the locos.
BA now has virtually all its eggs in one basket, Heathrow, and while a strength as the World’s Premier airport, it is a weakness as BA’s does not seem to have anything else as a fallback, not even Iberia as far as anyone seems aware at this point. Perhaps a closer relationship with FLybe, though at arms length could provide a new start back at least in the UK and Europe, and avoid the cludge that de-evolved into Bacon.