BA still "Too Expensive to Run"5000 jobs to go ???
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I'm a little too young to remember the Braniff demise details, I'm afraid, 411A, (in the UK RAF back then), but I suspect from what I've heard you are absolutely correct. Tom Braniff died in '54, right? So he wasn't around to see the shambles...
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411A
I'm afraid it appears that your small head took over from the large one some time ago. Perhaps you should obtain a copy of Gordon Bethune's "From Worst to First". It will confirm all of what 412A correctly pointed out. Oh, and it's SABENA with an A.
And let's not forget that cabin crew are one of the biggest tangibles in an industry full of intangibles. BA have a great reputation in the US not only for the product at BA, but also for the service, courtesy of those same cabin crew. My 16 year purser wife does not make anything like the top end of cabin crew pay in the US, but works her can off, even though she has no control over her life. Let's not be too quick to take aim at any group of employees who actually do something when we all know that it's management that got BA in this mess in the first place.
I'm afraid it appears that your small head took over from the large one some time ago. Perhaps you should obtain a copy of Gordon Bethune's "From Worst to First". It will confirm all of what 412A correctly pointed out. Oh, and it's SABENA with an A.
And let's not forget that cabin crew are one of the biggest tangibles in an industry full of intangibles. BA have a great reputation in the US not only for the product at BA, but also for the service, courtesy of those same cabin crew. My 16 year purser wife does not make anything like the top end of cabin crew pay in the US, but works her can off, even though she has no control over her life. Let's not be too quick to take aim at any group of employees who actually do something when we all know that it's management that got BA in this mess in the first place.
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I am not an accountant, I am just a professional pilot who has had some management experience quite some time ago.
Having been through several iterations of the "too expensive" game, I have yet to find anyone who puts facts and figures that define the parameters of what is not "too expensive", in other words a target to measure progress against.
When asked as to what the targets for crew costs or productivity are, they are "lower" and "more". When asked why, the answer is invariably "otherwise the airline will not survive".
Why employee costs, especially flight crew? Presumably because they are easy to get at, and the "high" pay is an emotive button with the public.
Scarce or absent is any analysis showing that ratios of management/worker costs should be in a particular range, or that equipment costs, finance costs, or mtce costs, for example, should fit certain norms, only the mantra that "employee costs are too high".
I have a problem with these conveniently trotted out slogans, as it would appear that in many cases they are used to obscure the fact that insufficient research has been done, and the real problems have not been isolated.
Should employees be made to sacrifice to carry other areas of inefficiency, and should they be given a say in the recovery process they are paying for?
Would some of the gurus care to comment on this?
Perhaps 411A could give us some insight to the missing numbers, he seems to know a lot on employee compensation and airline management.
Having been through several iterations of the "too expensive" game, I have yet to find anyone who puts facts and figures that define the parameters of what is not "too expensive", in other words a target to measure progress against.
When asked as to what the targets for crew costs or productivity are, they are "lower" and "more". When asked why, the answer is invariably "otherwise the airline will not survive".
Why employee costs, especially flight crew? Presumably because they are easy to get at, and the "high" pay is an emotive button with the public.
Scarce or absent is any analysis showing that ratios of management/worker costs should be in a particular range, or that equipment costs, finance costs, or mtce costs, for example, should fit certain norms, only the mantra that "employee costs are too high".
I have a problem with these conveniently trotted out slogans, as it would appear that in many cases they are used to obscure the fact that insufficient research has been done, and the real problems have not been isolated.
Should employees be made to sacrifice to carry other areas of inefficiency, and should they be given a say in the recovery process they are paying for?
Would some of the gurus care to comment on this?
Perhaps 411A could give us some insight to the missing numbers, he seems to know a lot on employee compensation and airline management.
Last edited by ZQA297/30; 24th Dec 2003 at 09:06.
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ZQA297/30
Fuel cost....18%
Crew cost....16%
Crew training...8%
Debt service...6%
Admin......8%
Aircraft, maintenance, insurance, landing/overflight/parking etc.... 22%
Return on equity...13%
Other......9%
Our numbers only.
And yes, the officers in the company earn top dollar, because we are responsible to the investors.
Also available 24/7 to handle any problems.
It's called TCB...take care 'o business.
Would BA match these...hardly, but then we are in a niche business.
With us....the buck stops here, because otherwise there ain't no one else.
Fuel cost....18%
Crew cost....16%
Crew training...8%
Debt service...6%
Admin......8%
Aircraft, maintenance, insurance, landing/overflight/parking etc.... 22%
Return on equity...13%
Other......9%
Our numbers only.
And yes, the officers in the company earn top dollar, because we are responsible to the investors.
Also available 24/7 to handle any problems.
It's called TCB...take care 'o business.
Would BA match these...hardly, but then we are in a niche business.
With us....the buck stops here, because otherwise there ain't no one else.
Last edited by 411A; 24th Dec 2003 at 08:39.
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Remember this:
Ansett was an institution in OZ.
It had a huge debt.
It had a workforce who were years in the job.
It had the wrong fleet mix.
It had competition.
It had your boss for a while.
It went bust.
Ansett was an institution in OZ.
It had a huge debt.
It had a workforce who were years in the job.
It had the wrong fleet mix.
It had competition.
It had your boss for a while.
It went bust.
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Well EXPAT 100, your point is?
I reckon Ed Roddington is very motivated to make BA survive precisely because of his anteceedents. The debts he inherited weren't of his making, one has to add.
If we go under it'll be A@ling's legacy to BA that did it.
411a - I give in: I cant find your airline on the web, unless its the mysterious Pittsburg- based "Project Roam", so what's it called, where its base, how many Tristars,(or whatever), have you got, when do ops start, etc etc?
Happy Christmas to all.
I reckon Ed Roddington is very motivated to make BA survive precisely because of his anteceedents. The debts he inherited weren't of his making, one has to add.
If we go under it'll be A@ling's legacy to BA that did it.
411a - I give in: I cant find your airline on the web, unless its the mysterious Pittsburg- based "Project Roam", so what's it called, where its base, how many Tristars,(or whatever), have you got, when do ops start, etc etc?
Happy Christmas to all.
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I'm sure Roddy is well motivated;
But he sold GO to 3i who in turn sold it on for vast profit, ruined his opportunity with BACX and allowed City Flyer to amalgamate with BA thus ruining his low cost base in LGW
But he sold GO to 3i who in turn sold it on for vast profit, ruined his opportunity with BACX and allowed City Flyer to amalgamate with BA thus ruining his low cost base in LGW
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He sold GO at a vast profit for BA at a time when nobody was queing up to buy it. The fact 3i later sold it to Easyjet for even more profit is immaterial. At the time of the first sale there was no guarantee of any other future buyer. Seems like an opportune business decision to me.
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loaded1,
Already started as reported here on PPRuNe, and located not in PIT....was there once, didn't like the place at all. Ugh!
Try half way 'round the world.
Keep looking...and a very Happy Christmas to all!
Already started as reported here on PPRuNe, and located not in PIT....was there once, didn't like the place at all. Ugh!
Try half way 'round the world.
Keep looking...and a very Happy Christmas to all!
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411A. What is your company's name? Where (exactly) is it located. Who is the CEO,CFO? What ownership stake do you hold? Who is on it's board? What routes does it fly? What jurisdiction is it certified through? Where are the public records available to view? When are you going to stop taking those pills?
Last edited by Hawk; 2nd Jan 2004 at 22:33.
But whatever you do, for your collegues sake, don't enter BA management.... 
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An interresting thread. Its a shame so many people knock 411A all the time. He certainly talks *** a lot of the time, but he also seams to be some what more enlightened than most on the hard facts of business.
If a business needs to reduce cost, where do you cut? Most costs are fixed and are out of the managements control eg fuel, interrest payments etc. If you can flog the company silver you can reduce interrest payment by reducing debt, but that's all.
When management want to reduce costs they look to 'controllable' costs. The biggest controllable in any organisation is staff. You may not like this but it is true.
So how do you reduce contollable cost in an organisation that is dependant on lots of staff? The answer is easy, raise productivity, reduce numbers to the bear bones, reduce pay and perks etc. ie sweat the assets, that is why personnell is now called 'human resources' in most companies because the staff are just another assett to sweat and then throw away when they are exhasted/ worn out/ broke. Not nice but true. Do not forget that a directors primary obligation is to make maximum money for the share holders. Therefore the the directors are obliged (by the companies act?) to drive their staff as hard as possible in the same way that they do their planes, cars etc.
The directors are kept in check by employment laws, unions, local agreements etc. AND the need to retain staff. Now when staff are in short supply you can not treat them too badly because they leave. When there are potential well trained staff queuing up to join the directors can push the staff harder as the losses can easily be replaced. Until staff turnover has a marked impact on the companies ability to operate the directors can keep turning the screws.
A while back someone asked 'how do you measure productivity' and what level of productivity do you need to achieve. The answer is easy, all the time there is scope to turn the screws the senior management are obliged to seek higher productivity.
Now consider BA. The new competition are lean and mean. There's plenty of thread about how squeezy is pushing their staff to exhustion, but they still have no shortage of would be staff. As the low cost carriers and BA have the same fixed costs (BA however has higher debt to service) they need to have similar controllable cists in order to be able to compete. The problem is BAs controllable costs (staff) are considerably higher than the low cost carriers. Higher here means cost per route mile flown, not just £'s per year. Again the low cost tend to get more flights per day out of their staff and pay them less.
So is BA doomed? Not necessairly. There is one way that BA can survive with lower productivity/ higher wages and that is, in the words of James Dyson (vaccuum cleaner man), 'to work smarter' ie to add somthing the low cost carriers can not. It is my belief that BA do this in terms of quality of the product on offer. This can be in terms of qulaity of food, cleanliness, looking after he punters when things go wrong etc. These extras have a tangible value and do justify BA charging higher fares than say Ryanair. The Big question is 'what are the extras worth to joe public'? BA will never compete with the punter who wants cheap as chips as long as I get there sometime, but there is a market that is preparred to pay a bit more for the improved quality.
However, once BA staff accept they do not have an automatic right to their better terms and conditions and accept that they need to work to protect them, the better for everyone. There is nothing more frustrating than to market a product on quality and then watch it all be binned because one member of staff insists on following a local agreement (that many would love to have) to the letter and results in flights being delayed or cancelled and all the problems that causes.
My experinces of BA flights is that they can be the best or the worst. In order to survive they need to become consistantly the best and so justify their costs. However, do not expect the BA management to ever say 'that's it guys, we've achieved the cost savings/ productuvity we need. Now we can relax and enjoy the job'. It will not happen, the goal posts will always be moving. It's a fact of life, accept it, evolve and survive or slowly slip away and die.
I will now done my hard hat and await the flack.
If a business needs to reduce cost, where do you cut? Most costs are fixed and are out of the managements control eg fuel, interrest payments etc. If you can flog the company silver you can reduce interrest payment by reducing debt, but that's all.
When management want to reduce costs they look to 'controllable' costs. The biggest controllable in any organisation is staff. You may not like this but it is true.
So how do you reduce contollable cost in an organisation that is dependant on lots of staff? The answer is easy, raise productivity, reduce numbers to the bear bones, reduce pay and perks etc. ie sweat the assets, that is why personnell is now called 'human resources' in most companies because the staff are just another assett to sweat and then throw away when they are exhasted/ worn out/ broke. Not nice but true. Do not forget that a directors primary obligation is to make maximum money for the share holders. Therefore the the directors are obliged (by the companies act?) to drive their staff as hard as possible in the same way that they do their planes, cars etc.
The directors are kept in check by employment laws, unions, local agreements etc. AND the need to retain staff. Now when staff are in short supply you can not treat them too badly because they leave. When there are potential well trained staff queuing up to join the directors can push the staff harder as the losses can easily be replaced. Until staff turnover has a marked impact on the companies ability to operate the directors can keep turning the screws.
A while back someone asked 'how do you measure productivity' and what level of productivity do you need to achieve. The answer is easy, all the time there is scope to turn the screws the senior management are obliged to seek higher productivity.
Now consider BA. The new competition are lean and mean. There's plenty of thread about how squeezy is pushing their staff to exhustion, but they still have no shortage of would be staff. As the low cost carriers and BA have the same fixed costs (BA however has higher debt to service) they need to have similar controllable cists in order to be able to compete. The problem is BAs controllable costs (staff) are considerably higher than the low cost carriers. Higher here means cost per route mile flown, not just £'s per year. Again the low cost tend to get more flights per day out of their staff and pay them less.
So is BA doomed? Not necessairly. There is one way that BA can survive with lower productivity/ higher wages and that is, in the words of James Dyson (vaccuum cleaner man), 'to work smarter' ie to add somthing the low cost carriers can not. It is my belief that BA do this in terms of quality of the product on offer. This can be in terms of qulaity of food, cleanliness, looking after he punters when things go wrong etc. These extras have a tangible value and do justify BA charging higher fares than say Ryanair. The Big question is 'what are the extras worth to joe public'? BA will never compete with the punter who wants cheap as chips as long as I get there sometime, but there is a market that is preparred to pay a bit more for the improved quality.
However, once BA staff accept they do not have an automatic right to their better terms and conditions and accept that they need to work to protect them, the better for everyone. There is nothing more frustrating than to market a product on quality and then watch it all be binned because one member of staff insists on following a local agreement (that many would love to have) to the letter and results in flights being delayed or cancelled and all the problems that causes.
My experinces of BA flights is that they can be the best or the worst. In order to survive they need to become consistantly the best and so justify their costs. However, do not expect the BA management to ever say 'that's it guys, we've achieved the cost savings/ productuvity we need. Now we can relax and enjoy the job'. It will not happen, the goal posts will always be moving. It's a fact of life, accept it, evolve and survive or slowly slip away and die.
I will now done my hard hat and await the flack.
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Mgc, I don't think you'll get much flak for that - deep down I think many of us realize you simply posted some harsh realities. I particularly agree with the comment about one person wrecking the best efforts of a whole team to bring about customer satisfaction, I've seen it happen in the US many times. I always ask the employee rsponsible "what was that all about? Why target the passenger?" Frequently the misguided reply is the hope that the pax will relay the employee frustration to management....never seen that work in 4 airlines - all you end up doing is losing another source of revenue and getting one more of your colleagues laid-off. And infuriating those of us trying to make the best of these unpleasant times for the airline and its patrons.... 
There is a phrase for the current economic environment that the airline industry is battling through: WAL-MARTing
Great for the price conscious, cr@p for the employees.
Having worked for Roddo in the past, good luck to all at BA. He's an unusual chap - good to have a social drink with, never forgets a name or face, Mr Hyde as a CEO. Much like Mr Arpey at AA, Roddo is going to have to tackle monstrous errors made by predecessors; he'll probably have the full weight of the financial lenders and politicians behind him - heaven help any union that tries to de-rail plans (and no public support - remember, we're dealing with the WalMart effect here).
There is a phrase for the current economic environment that the airline industry is battling through: WAL-MARTing
Great for the price conscious, cr@p for the employees.
Having worked for Roddo in the past, good luck to all at BA. He's an unusual chap - good to have a social drink with, never forgets a name or face, Mr Hyde as a CEO. Much like Mr Arpey at AA, Roddo is going to have to tackle monstrous errors made by predecessors; he'll probably have the full weight of the financial lenders and politicians behind him - heaven help any union that tries to de-rail plans (and no public support - remember, we're dealing with the WalMart effect here).
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Well put MGC
However staff costs are not the only problem, and I remember the Pan Am staff taking cut after cut and they still went down.
Competing against the LCC's is very difficult on cost.
I wonder what the difference in cost is for Ryan Air's landing and handling fees against BA.
Also they picked up their equipment for a lot less and are always hunting around for cheap GSE etc. etc.
Are BA using their muscle to get the fees down and what do they pay BAA every year. Are BAA listening and do they believe that the golden goose can die?
You say they BA have to be different and offer a different product, what happened to Concorde then?
If you are carrying the mass market in the back of a tube, and its the same tube that the LCC's are using, how can you make it much different?
However staff costs are not the only problem, and I remember the Pan Am staff taking cut after cut and they still went down.
Competing against the LCC's is very difficult on cost.
I wonder what the difference in cost is for Ryan Air's landing and handling fees against BA.
Also they picked up their equipment for a lot less and are always hunting around for cheap GSE etc. etc.
Are BA using their muscle to get the fees down and what do they pay BAA every year. Are BAA listening and do they believe that the golden goose can die?
You say they BA have to be different and offer a different product, what happened to Concorde then?
If you are carrying the mass market in the back of a tube, and its the same tube that the LCC's are using, how can you make it much different?
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I am amazed that BA continues to draw so much attention from you closet financiers, that make every solution sound so easy. I hardly thing Mr Dyson has much to show us as his products are no better than those costing a third of the price, apart from the choice of colours. Interesting you mention Dyson as that is where Mr Bob Ayling now resides as CEO.
During his reign at BA the media spent much of their time bemoaning his tactics and lack of ideas. At least he was more visible than Rod our current Lord Lucan.
I think you may find that BA is well aware of its problems and costs but unlike our American cousins we do not enjoy so many financial perks (Nor BMI or Virgin accepted) and sweetners. In January we will dump a further tranch of staff but sadly I fear the regions will take the brunt of the cuts (least resitance).
As for the future as one mentioned it may be that like PA and TWA, BA may have nearly run its course and there may not be room for it in the foreseeable future.
During his reign at BA the media spent much of their time bemoaning his tactics and lack of ideas. At least he was more visible than Rod our current Lord Lucan.
I think you may find that BA is well aware of its problems and costs but unlike our American cousins we do not enjoy so many financial perks (Nor BMI or Virgin accepted) and sweetners. In January we will dump a further tranch of staff but sadly I fear the regions will take the brunt of the cuts (least resitance).
As for the future as one mentioned it may be that like PA and TWA, BA may have nearly run its course and there may not be room for it in the foreseeable future.
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Well Happy New Year, 412A,
Mentioned the companies name on PPRuNe before, do a search, and don't expect others to do the work for you.
Be resourceful.
Give you a hint, altho privately owned, is organized in a state where Howard Hughes once owned a large chunk of... real estate.
Having said this, Howard owned a lot of businesses, in many states, including a premier medical institute in Florida.
Mentioned the companies name on PPRuNe before, do a search, and don't expect others to do the work for you.
Be resourceful.
Give you a hint, altho privately owned, is organized in a state where Howard Hughes once owned a large chunk of... real estate.
Having said this, Howard owned a lot of businesses, in many states, including a premier medical institute in Florida.
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Is it something to do with the fact that BA employ round about 200 staff per aircraft they operate and EZ a little under 50. I've just retired from one and about to join the other so guess I might find out
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Stop the bloody sniping!!
Christ, will you PLEASE stop the point scoring! 
This thread has some worthy opinions, including those from 411A, I don't see why his opinions should be rubbished just because you don't agree with them.
For your part 411A, if your attitude to your staff is like your attitude on the Pprune, then even if you are respected
I doubt if you have many friends.
Good luck to all in BA, and more so to those of us in BACX - we fear we are in the front of the front line when it comes to next year's cuts - not that there's much left to cut...........
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mgc - a bit sad to see ypu posting at such a dramatic time of the year; however, fear not said he etc...that was a gud un. The point about a single person wrecking the good work of an otherwise sound effective was particularly visionary.
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Maximuss,
'Tis an old PPRuNe stratagy, don't like what's said, attack the messanger. Note 412A's response above, quite typical of the type.
To be ignored, of course.
BA is like several large companies in the USA (not necessarily airlines either), they have grown top-heavy with middle/senior management. This needs to be reduced drastically, otherwise the newer carriers will eat BA for lunch.
Of course, full service airlines, flying to many overseas destinations will have more employees per aircraft than the low cost carriers...unless many of those functions are outsourced, a time proven way to reduce costs.
PanAmerican didn't outsource to any great degree, EAL likewise, and suspect SN didn't either. All gone now.
Of course, one can carry outsourcing too far, HP for example with their maintenance. The FAA was not pleased either.
Flight crew...kept in house.
Cabin crew, in house as well, but on fixed term contracts, renewable at the discretion of management.
Aircraft engineering, in house...except at outstations as required.
Flight ops support (dispatching etc), kept in house.
Nearly every other function could be outsourced, and in many cases, at significant cost savings.
Drastic action....yes, but may well be required for the survival of BA.
'Tis an old PPRuNe stratagy, don't like what's said, attack the messanger. Note 412A's response above, quite typical of the type.
To be ignored, of course.
BA is like several large companies in the USA (not necessarily airlines either), they have grown top-heavy with middle/senior management. This needs to be reduced drastically, otherwise the newer carriers will eat BA for lunch.
Of course, full service airlines, flying to many overseas destinations will have more employees per aircraft than the low cost carriers...unless many of those functions are outsourced, a time proven way to reduce costs.
PanAmerican didn't outsource to any great degree, EAL likewise, and suspect SN didn't either. All gone now.
Of course, one can carry outsourcing too far, HP for example with their maintenance. The FAA was not pleased either.
Flight crew...kept in house.
Cabin crew, in house as well, but on fixed term contracts, renewable at the discretion of management.
Aircraft engineering, in house...except at outstations as required.
Flight ops support (dispatching etc), kept in house.
Nearly every other function could be outsourced, and in many cases, at significant cost savings.
Drastic action....yes, but may well be required for the survival of BA.