Could British Airways really go bust or not?
A Runyonesque Character
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Short memories
fmgc: I have always hated the Stellios, O'Leary & Branson approach to competing. They don't just want to compete with a fair share of the market, they want to see the destruction of other airlines
Plumbum Pendular
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Well that BA were the cause of the demise of Laker is contentious, it was in a very different, regulated, environment (BA were government owned then), and it still doesn't make it right.
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Hmmm. Let's see now.
Take the example of a national carrier with a huge network of established routes and a 'gotcha' hold on movements in and out of the nation's main airport.
It (said airline) decides to go with a business model that utilises 'one-class Standard' A330's and B777's providing unparalleled comfort to the majority of it's customers (see my previous post #33) and a few 'one-class Premium' A318's for those whose employers are prepared to foot the bill and which can be routed to suit demand.
Each aircraft, in whatever format, is its OWN INDIVIDUAL COST CENTRE meaning that customers pay what it actually costs to operate said aircraft.
Wow!! Radical! Well, maybe but common sense - yes.
Get rid of the company 'bean counters' and other sundry science fiction experts and employ some good, old-fashioned, experienced bookkeepers and you could have an airline that is an absolute winner even in today's 'difficult' times.
And to the guy who called me a 'socialist' earlier - please read carefully and assimilate.
Take the example of a national carrier with a huge network of established routes and a 'gotcha' hold on movements in and out of the nation's main airport.
It (said airline) decides to go with a business model that utilises 'one-class Standard' A330's and B777's providing unparalleled comfort to the majority of it's customers (see my previous post #33) and a few 'one-class Premium' A318's for those whose employers are prepared to foot the bill and which can be routed to suit demand.
Each aircraft, in whatever format, is its OWN INDIVIDUAL COST CENTRE meaning that customers pay what it actually costs to operate said aircraft.
Wow!! Radical! Well, maybe but common sense - yes.
Get rid of the company 'bean counters' and other sundry science fiction experts and employ some good, old-fashioned, experienced bookkeepers and you could have an airline that is an absolute winner even in today's 'difficult' times.
And to the guy who called me a 'socialist' earlier - please read carefully and assimilate.
Last edited by Xeque; 23rd Jun 2009 at 11:47.
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So here is the thing - BA was created out of a nationalised industry, given every, at times unfair, opportunity to succeed. British Caledonian was dragged kicking and screaming into the BA fold. Some people did quite well out of it - flightdeck especially, but at least 2,500 people were given a P45. Dan-Air; well there is no need to open that old wound, but it certainly was not all fairness on that deal. British Airways do not deserve yet another government bail out, purely on moral grounds alone; King and Marshall did for quite a few redundancies, Ayling and his internal security ubermensch and then Eddington selling off virtually eveything that wasn't bolted down have left a company with very little fat to trim.
If BA get a bail out, then any start up that appears in the next 2 years deserves equal treatment - after all the entrepreneurs are creating jobs for the ordinary people to be able to feed their families and pay their mortgages. Or am I missing something here?
If BA get a bail out, then any start up that appears in the next 2 years deserves equal treatment - after all the entrepreneurs are creating jobs for the ordinary people to be able to feed their families and pay their mortgages. Or am I missing something here?
.
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As i say, doesn't make it right!
If they're all at it then it becomes the norm . . . . however BA's track record is their certainly more conniving / scheming when it comes to trashing other airlines. Just because they don't paint it on the side of their aircraft, or bad mouth in the press, doesn't make them out to be saints. Their just as bad as everyone else . . . if not worse!
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I agree BA killed Laker Airways, and yet that was in Winter of 1981, some 28 years ago. They also ( as BOAC ) forced SAS out of Prestwick in the 1960s and my Dad still rants about this.
There are not a hold lot of people responsible for Laker's demise still running BA anymore, even Sir Freddie himself is now gone.
Don't visit the sins of the Father upon the children. Ba has had it's fair share of howlers of late, but there's a whole load of good people in there who deserve a good outcome I think.
There are not a hold lot of people responsible for Laker's demise still running BA anymore, even Sir Freddie himself is now gone.
Don't visit the sins of the Father upon the children. Ba has had it's fair share of howlers of late, but there's a whole load of good people in there who deserve a good outcome I think.
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Don't kid yourselves
BA could go bust and the government won't be able to save them. In their present form at least.
And as for VS stepping in, forget it. VS only compete on the routes where they can cream off something. There is no such thing as offering a network. hell, VS can't even commit to one of the alliances, they just want the ability to play other airlines off against each other. Thing is they only profit from that approach because of their relatively small size.
I thing VS is at much more of a risk than many realise. I think that's borne out by beardy's recent misleading financial statements.
Back on BA, I think they have decent staff and deliver a decent service to all their passengers. Maybe its just me but I don't need tarted up flight attendants to make my flights enjoyable. BMI have played this card too in the past and it is just obnoxious. Admittedly some people are taken in by it, but obnoxious just the same.
Sir Michael has just got his comeuppance in the amount of money that he expected to screw out of LH and Beardy's time of reckoning could be coming soon.
BA management and staff have made plenty of mistakes in the past adversely affecting both the companies health and sorely testing passenger loyalty.
I think we can all agree on just one thing. There is no room for any further mistakes.
And as for VS stepping in, forget it. VS only compete on the routes where they can cream off something. There is no such thing as offering a network. hell, VS can't even commit to one of the alliances, they just want the ability to play other airlines off against each other. Thing is they only profit from that approach because of their relatively small size.
I thing VS is at much more of a risk than many realise. I think that's borne out by beardy's recent misleading financial statements.
Back on BA, I think they have decent staff and deliver a decent service to all their passengers. Maybe its just me but I don't need tarted up flight attendants to make my flights enjoyable. BMI have played this card too in the past and it is just obnoxious. Admittedly some people are taken in by it, but obnoxious just the same.
Sir Michael has just got his comeuppance in the amount of money that he expected to screw out of LH and Beardy's time of reckoning could be coming soon.
BA management and staff have made plenty of mistakes in the past adversely affecting both the companies health and sorely testing passenger loyalty.
I think we can all agree on just one thing. There is no room for any further mistakes.
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Virgin facts
49% owned by state controlled, Singapore Airlines.
Highly linked to Star alliance codesharing with Air China, bmi, Continental, Singapore, SAA, US Airways & ANA. FFP with Air New Zealand & SAS.
Lost major part of $73m in 4th Quarter. Pay freeze, 600 jobs under threat, dropped Mumbai due competition. Bought daily LHR slots off Air Jamaica for $10m but has never operated them - leasing them to Blue1 of the Star Alliance.
On launch of Virgin Nigeria, Branson said “Virgin Nigeria will be a new airline for Nigeria in many ways. We aim to create the best airline – not just in Nigeria but in the world – based in Africa.” Virgin invested $24.5m for 49% of Virgin Nigeria. Virgin Nigeria lost $82m in 2006/7. Virgin described by Singapore CEO as " underperforming" & is up for sale.
Highly linked to Star alliance codesharing with Air China, bmi, Continental, Singapore, SAA, US Airways & ANA. FFP with Air New Zealand & SAS.
Lost major part of $73m in 4th Quarter. Pay freeze, 600 jobs under threat, dropped Mumbai due competition. Bought daily LHR slots off Air Jamaica for $10m but has never operated them - leasing them to Blue1 of the Star Alliance.
On launch of Virgin Nigeria, Branson said “Virgin Nigeria will be a new airline for Nigeria in many ways. We aim to create the best airline – not just in Nigeria but in the world – based in Africa.” Virgin invested $24.5m for 49% of Virgin Nigeria. Virgin Nigeria lost $82m in 2006/7. Virgin described by Singapore CEO as " underperforming" & is up for sale.
Yes BA can go bankrupt. It all depends on the burn rate of its cash.
All BA problems are self inflicted.
The present problem for BA is the death of First and Business class, the company having invested heavily in these. In a downturn people and companies make cuts and luxuries are first to go.
By concentrating most operations in London, they have left a large gap in other parts of country.
This have been filled by Ryanair and Easyjet who have approx 400 aircraft between them. The sale of GO can be seen as a disaster as it would have been money making even in a downturn. Both easy and ryan are making profits. Ryan only made a loss due to its holding in Aer Lingus.
Vs is not making money at present according to Singapore airlines.
Making a profit is the only way a company can continue in business, Alitalia excepted.
All BA problems are self inflicted.
The present problem for BA is the death of First and Business class, the company having invested heavily in these. In a downturn people and companies make cuts and luxuries are first to go.
By concentrating most operations in London, they have left a large gap in other parts of country.
This have been filled by Ryanair and Easyjet who have approx 400 aircraft between them. The sale of GO can be seen as a disaster as it would have been money making even in a downturn. Both easy and ryan are making profits. Ryan only made a loss due to its holding in Aer Lingus.
Vs is not making money at present according to Singapore airlines.
Making a profit is the only way a company can continue in business, Alitalia excepted.
Ecce Homo! Loquitur...
Torygraph: .......Mr O'Leary said he had abandoned any thoughts of retiring. "This is so much fun. I love recessions. You get the chance to kick the ---- out of everybody," he said. "It's boom times that are boring."
The Ryanair boss also pilloried Virgin founder Sir Richard Branson, who claimed over the weekend that British Airways could "go bust".
"It's like a little chihuahua barking at a dying labrador. Nobody cares," said Mr O'Leary.
The Ryanair boss also pilloried Virgin founder Sir Richard Branson, who claimed over the weekend that British Airways could "go bust".
"It's like a little chihuahua barking at a dying labrador. Nobody cares," said Mr O'Leary.
Making a profit and generating positive cashflow is the only way a company can continue in business,
IF a company used all its cash to invest in new assets BUT it was a year or two before those assets would generate any cash then it could easily go bust. Especially if the banks decided not to let it borrow anything to fund short term cash flow situation.
Its also possible to continue to show losses for a couple of years BUT generate positive cash flow and stay in business.
Cash is King where as profit or loss can be manipulated.
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BA needs to look where it can increase its revenue flow from. That’s what BD is doing they are looking at the daily operation and seeing where they can increase their revenue flows. Thus increasing company cash flow.
This is where FR has done very well by increasing their other sources of revenue into the company. Such as your internet check-in and checked luggage.
BA can’t do that by they could look at ways to improve the positive flow of cash. It’s all very Willie in water world saying cut cost. But that has to be balanced out by increasing revenue too. And selling Club seats at a fraction of the price might increase customer footfall for BA, but will they pay for duty free on the flight have XS luggage or want to upgrade to first.
Plus what is the yield of some these cheap tickets next to nothing, so you are hoping for those customers to spend somewhere else in the company.
It’s a tricky one to call.
This is where FR has done very well by increasing their other sources of revenue into the company. Such as your internet check-in and checked luggage.
BA can’t do that by they could look at ways to improve the positive flow of cash. It’s all very Willie in water world saying cut cost. But that has to be balanced out by increasing revenue too. And selling Club seats at a fraction of the price might increase customer footfall for BA, but will they pay for duty free on the flight have XS luggage or want to upgrade to first.
Plus what is the yield of some these cheap tickets next to nothing, so you are hoping for those customers to spend somewhere else in the company.
It’s a tricky one to call.
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CaptJ and fgmc more or less exactly reflect my views, and I will only add that I am beginning to find Branson's behaviour repugnant. The more he speaks the more he seems like a complete baby. I am overseas at the moment and have seen Branson every half an hour on US financial programmes stating that BA is worthless, whilst only a few days earlier I was told that VS's position is getting desperate, with heavy losses each month at the moment. The impression I got was that VS were the ones likely to go bust and certainly not BA.
Yes, BA could go bust, but it is a good airline with many bilateral routes, and many ex-bilateral routes that have matured very nicely and are still decent earners for the airline. The flight crew are, as a group, excellent. Cabin service is good, and there are a lot of extras thrown in free with BA. Frankly BA's modus operandi is very good and I hope they don't mess about with it.
The problem with BA lies in its management and management culture, and this (partially) drummed-up (by WW) crisis may help improve that situation.
I think buying shares in BA might be a good bet, because you should always buy when the news is at its worst and everyone is talking negatively. If I had shares in VS, though, I'd bale out of them.
Branson shows a real inferiority complex, l and i bet his senior managers are cringing.
RB
Yes, BA could go bust, but it is a good airline with many bilateral routes, and many ex-bilateral routes that have matured very nicely and are still decent earners for the airline. The flight crew are, as a group, excellent. Cabin service is good, and there are a lot of extras thrown in free with BA. Frankly BA's modus operandi is very good and I hope they don't mess about with it.
The problem with BA lies in its management and management culture, and this (partially) drummed-up (by WW) crisis may help improve that situation.
I think buying shares in BA might be a good bet, because you should always buy when the news is at its worst and everyone is talking negatively. If I had shares in VS, though, I'd bale out of them.
Branson shows a real inferiority complex, l and i bet his senior managers are cringing.
RB
This month has brought voluntary pay cuts from pilots and engineers (pilots still have to vote on the plan)
Engineering has made no pay cuts at all. Cut staff, yes but not pay.
