Not Yet Out of the Woods
There is a debate on ‘the other thread’ about how close, if at all, BA came to going to the wall, and whether now that it has ‘survived’, it’s all right for BASSA et al to pursue their original aims of crew numbers, etc.
The Company has survived; but no-one can imagine that the future suddenly has become rosy. Others have mentioned the need for strong business performance to invest in new products, and pay for the significant new aircraft deliveries that the Company has ordered. Add to that the ever rising operating costs, particularly of fuel, and an effortless ride to the future cannot be guaranteed.
Supporting all these expenditures requires cash. The cash will be generated by operations, yes, but to tide the Company over periods of high expenditure, some will have to be borrowed. I have mentioned already that the time that Companies get into difficulties often is as they come out of recession, as they are having to spend money to invest in increased capacity, etc., to meet anticipated future demand, but they are not yet in receipt of the revenues that future demand will generate.
So there is one other factor in the Company’s continued hard line that I suspect also is at play. My view is that the City has supported the robust management of this on-going dispute because the City sees the need to get, and keep, costs under control. If the City sees the Management weakening on this fundamental tenet of running any business, it will lose confidence in the future direction of the Company. The reaction will be that borrowing money to support the cash requirements will at best become rather more expensive, or at worst, impossible. No-one can deny that the Company needs, and will continue to need, a lot of cash to support its future. No cash, no future.