Could British Airways really go bust or not?
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Could British Airways really go bust or not?
It was close to midnight when Willie Walsh finally emerged from Waterside, British Airways’ sprawling Heathrow headquarters. The airline’s chief executive blinked in the lights of the waiting television crews, cleared his throat, and started to speak, his voice trembling.
“I am sorry to say that despite our efforts today we have been unable to secure further funding from our banks. The cash drain we sustained as a result of the rolling programme of industrial action by cabin crew and ground staff means we can no longer continue as a going concern. British Airways has this evening been put into administration.”
“I am sorry to say that despite our efforts today we have been unable to secure further funding from our banks. The cash drain we sustained as a result of the rolling programme of industrial action by cabin crew and ground staff means we can no longer continue as a going concern. British Airways has this evening been put into administration.”
Branson to ministers: let BA go bust
Sir Richard Branson has rubbed salt in British Airways’ wounds by declaring BA practically worthless, and urging the government to resist any attempts to bail it out.
Branson’s comments will incense BA management, which this week will hold vital talks with cabin crew and ground staff over pay cuts, lay-offs and changes to working conditions aimed at saving £100m a year.
Branson’s comments will incense BA management, which this week will hold vital talks with cabin crew and ground staff over pay cuts, lay-offs and changes to working conditions aimed at saving £100m a year.
guess which one is darth vader?
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I have also passed by this same invulnerability feeling that my flag carrier could NEVER EVER be left adrift by any government, it is way too important to my country, I thought then.
But it was an EXACT copy of this BA CEO statement made in 2000 and 9/11 2001 gave the final push to the cliff.
Look for another airline NOW and get there before others flood in and you end up loosing more time and seniority.
A good CV, request of official flight ours may take time.
HEAR FROM THE ONES THAT KNOW THE MOST IMPORTANT THING IS DOING A SCREENING WHILE YOU ARE EMPLOYED.
But it was an EXACT copy of this BA CEO statement made in 2000 and 9/11 2001 gave the final push to the cliff.
Look for another airline NOW and get there before others flood in and you end up loosing more time and seniority.
A good CV, request of official flight ours may take time.
HEAR FROM THE ONES THAT KNOW THE MOST IMPORTANT THING IS DOING A SCREENING WHILE YOU ARE EMPLOYED.
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Every company in the world can go bust, the question remains what happens thereafter. I'm pretty sure that noone would ever let such a brand disappear. In the unlikely case of a bankruptcy, it would be liquidated and a new company would emerge, similar to General Motors in the USA or like RBS over here.
Dani
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I don't want to sound like a profit of doom but these are the facts.
Of course BA could or may go under.Sabena thought they would never go under but they, with the help of their stupid pilots, did.
Some big UK airline will go to the wall after the summer.The recession has not bottomed out yet, so the knock on effects are far from over.
Of course whiskers wants BA to go because if they don't he....... Well I will let you work that out for yourselves.
Of course BA could or may go under.Sabena thought they would never go under but they, with the help of their stupid pilots, did.
Some big UK airline will go to the wall after the summer.The recession has not bottomed out yet, so the knock on effects are far from over.
Of course whiskers wants BA to go because if they don't he....... Well I will let you work that out for yourselves.
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Dani
It could also go the way of the Mini. Neither British Leyland nor Austin Rover ever understood the value of the brand. It needed a full-scale bankruptcy and the Mini brand being acquired by a different company before becoming the cash generator it is today for BMW.
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This may seem a far-fetched scenario, but not according to Walsh’s own doom-laden forecasts. BA is in trouble, with recession and the banking crisis – banks accounted for nearly 40% of BA’s business-class traffic – pushing it to its worst-ever loss in the financial year that ended in March.
In recent weeks Walsh has issued dire warnings to staff, saying that almost all the business is unprofitable, the current awful trading situation will only get worse and that the company faces “a fight for survival”.
In recent weeks Walsh has issued dire warnings to staff, saying that almost all the business is unprofitable, the current awful trading situation will only get worse and that the company faces “a fight for survival”.
Does he think that BA is the first airline to experience a large loss? He should look at his Amrican partner AA. They have experienced such huge losses over the years that make his look insignificant in comparison. Instead of crying about it though, they went on with their job and tweeked/changed their model around in hopes of getting out of it.
BA, on the other hand, seems to have chosen to cry that their highly milked business-class traffic has dried up. Grow up Willie, if your exorbitanly high yield Business traffic is down, change your yield management to reduce it's impact. Maybe even start trying to show some respect to your Y customers that up to now have only managed to show contempt for.
They need to do something proactive to improve their profitability. Crying about it in the media and asking employees to "work for free" only makes them look silly.
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Instead of crying about it though, they went on with their job and tweeked/changed their model around in hopes of getting out of it.
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The chances of BA reaching the point where Chapter 11 is the only option are pretty low though.
This snipet from the article is probably a bigger minefield for Willie. I would say he has a greater chance of alienating the unions than gaining concessions.
This snipet from the article is probably a bigger minefield for Willie. I would say he has a greater chance of alienating the unions than gaining concessions.
Seasoned airline watchers say not, accusing Walsh of having an ulterior motive. His apocalyptic missives, they say, are designed to soften up BA’s unions during crucial talks about cost-cutting.
Walsh wants big concessions – and an air of crisis will help. This month has brought voluntary pay cuts from pilots and engineers (pilots still have to vote on the plan), but the battle continues with ground staff and cabin crew. Walsh wants it sorted out by June 30. Industrial action this summer cannot be ruled out.
Walsh wants big concessions – and an air of crisis will help. This month has brought voluntary pay cuts from pilots and engineers (pilots still have to vote on the plan), but the battle continues with ground staff and cabin crew. Walsh wants it sorted out by June 30. Industrial action this summer cannot be ruled out.
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Maybe even start trying to show some respect to your Y customers that up to now have only managed to show contempt for. They need to do something proactive to improve their profitability. Crying about it in the media and asking employees to "work for free" only makes them look silly.
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@brakedwell sums it up.
Of course BA is basically profitable (and long may it stay so)...
Unfortunately the elephant in the room is the pension black hole. Any potential long term investors are going to look at those numbers and run for cover. Some form of restructuring of BA is inevitable and when it comes it will cause a lot of pain.
Of course BA is basically profitable (and long may it stay so)...
Unfortunately the elephant in the room is the pension black hole. Any potential long term investors are going to look at those numbers and run for cover. Some form of restructuring of BA is inevitable and when it comes it will cause a lot of pain.
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Although I work for the big orange and love seeing are pax load factor increase whilst BA's plummet, it still makes me very nervous as to what the impact would be on all our terms and conditions if they go bust!
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Don't get me wrong, I'm sure BA are struggling as are most carriers just now but Willie's not stupid.
I can't help thinking that he's painting a crappier picture so as to get concessions from staff on terms and conditions? In his position it's a sensible move that will make the company stronger in the future and in a better position to deal with the likes of an enlarged LH and AF/KLM however his staff will again suffer.
It's a delicate line to tread but I don't see BA going anywhere soon. There are other airlines out there that will suffer long before BA ever does and with each of their demise (should that happen) it will make BA stronger in the long run. However, I entirely agree that it needs to sort out it's pension situation which is only getting worse with every day.
I can't help thinking that he's painting a crappier picture so as to get concessions from staff on terms and conditions? In his position it's a sensible move that will make the company stronger in the future and in a better position to deal with the likes of an enlarged LH and AF/KLM however his staff will again suffer.
It's a delicate line to tread but I don't see BA going anywhere soon. There are other airlines out there that will suffer long before BA ever does and with each of their demise (should that happen) it will make BA stronger in the long run. However, I entirely agree that it needs to sort out it's pension situation which is only getting worse with every day.
If the current trend holds, Lufthansa will just buy them, along with any other European airline
And don't forget how close to bankruptcy LH was itself in the 1990s.
I was working late on the night that Weber horse-dealt his way to get cash from the banks (who were quite happy to let the company go under after Ruhnau - Jürgen Weber's politically appointed predecessor - had run the company against the wall) to pay the monthly salary bill due the next day. My boss - Director Cargo - came into the office ashen-faced and said "You have no idea how close that was".
Forget not - this was a time when liquidity in the financial sector was alive and well.....
The following all cut & paste from Times on Line:
The sky is not the limit for Virgin Atlantic - Times Online
Reader comments:
From Basil: Let's remember,
VS cherry-picked the most profitable routes. They were never interested in the unprofitable destinations served by BA.
They started up using the skill and route knowledge of retired BA captains.
Dodgy dealing? Pot! Kettle! Black!
The sky is not the limit for Virgin Atlantic - Times Online
As a privately owned company, Virgin Atlantic does not have to provide much information to the outside world. But it seems that profits from ongoing operations, excluding exceptional items, fell from £44.4million to £25.9million, and the latter figure was boosted by currency gains totalling £68million.
Singapore Airlines, which holds a 49 per cent stake in Virgin Atlantic, also tells a different story. Its annual figures, produced under the widely adopted international financial reporting standards (IFRS), suggest that Virgin Atlantic barely broke even last year, and suffered heavily in the fourth quarter.
Chan Hon Chew, senior vice president for Singapore Airlines, attributed the group’s £45.9million loss in the fourth quarter to its stake in Virgin Atlantic, adding that, over the full year, its stake generated just £172,000 in profits
Singapore Airlines, which holds a 49 per cent stake in Virgin Atlantic, also tells a different story. Its annual figures, produced under the widely adopted international financial reporting standards (IFRS), suggest that Virgin Atlantic barely broke even last year, and suffered heavily in the fourth quarter.
Chan Hon Chew, senior vice president for Singapore Airlines, attributed the group’s £45.9million loss in the fourth quarter to its stake in Virgin Atlantic, adding that, over the full year, its stake generated just £172,000 in profits
Branson would not have a strong airline if BA had not created the market. He needs to understand that competition is good. Instead, let us be proud that we have two very good international airlines. Also, I suspect that he will threaten to withdraw funding of labour of he does not get his way.
Richard Branson has a personnal vandeta against BA, that's all. I personally used Virgin services for a while (broadband, airline, etc) because I had no choice ..., and I must say that each time Virgin was very good at marketing ... but not delivering what I actually paid for ...
Service is not one of Bransons strong points in any of his businesses. Most of them are still works in progress. I do hope the goverment dont listen to him or else we will have another crap service from whats left of BA. And BA isnt that bad, i have many good experiences of flying with them.
Irresponsible comments from a greedy man. He's hoping that scaremongering will cause people not to fly with BA and dump shares etc.
Around the world, people see BA as a quality British icon. He's always been envious of BA's image and reputation and wants a slice of it.
Here we go...Branson to the rescue..NOT..have you flown Virgin lately...they have gone down the pan...rude cabin crew who are not paid enough to care...poor ground service and gimmicky brands...there is not much difference between BA and Virgin..Bring back British Caldeonian..thats was an airline!
If that is the case Mr Branson can we have the billions in subsidies to Virgin Rail back?
Richard Branson has a personnal vandeta against BA, that's all. I personally used Virgin services for a while (broadband, airline, etc) because I had no choice ..., and I must say that each time Virgin was very good at marketing ... but not delivering what I actually paid for ...
Service is not one of Bransons strong points in any of his businesses. Most of them are still works in progress. I do hope the goverment dont listen to him or else we will have another crap service from whats left of BA. And BA isnt that bad, i have many good experiences of flying with them.
Irresponsible comments from a greedy man. He's hoping that scaremongering will cause people not to fly with BA and dump shares etc.
Around the world, people see BA as a quality British icon. He's always been envious of BA's image and reputation and wants a slice of it.
Here we go...Branson to the rescue..NOT..have you flown Virgin lately...they have gone down the pan...rude cabin crew who are not paid enough to care...poor ground service and gimmicky brands...there is not much difference between BA and Virgin..Bring back British Caldeonian..thats was an airline!
If that is the case Mr Branson can we have the billions in subsidies to Virgin Rail back?
VS cherry-picked the most profitable routes. They were never interested in the unprofitable destinations served by BA.
They started up using the skill and route knowledge of retired BA captains.
Dodgy dealing? Pot! Kettle! Black!
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Did BA really hedge fuel for two years and pay 2 years worth of leases on its leased aircraft? And then Willie wants everyone to do a month for free? Sounds like it's BAs own doing
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There are a lot of random theories on here that BA can't go bust. It can.
It's revenue was down over 21% Jan-Mar, because business people aren't travelling and those that do are in general down trading to lower cabins or less flexible (cheaper) fares. Premium cabins are generally loaded with upgrades.
Fuel is the highest cost and it is around $70 a barrel at the moment, historically this was in the $20-30 arena with a recent spike last year to $150.
If your income goes down, then costs need to otherwise you go under. You can't in reality beat the market with fuel costs so the next biggest cost is manpower (number of people, how much you pay them and their pensions)
Don't forget the UK government is also about to raise APD taxes which will make connecting options travelling via UK less attractive than other places in Europe.
Go figure.
It's revenue was down over 21% Jan-Mar, because business people aren't travelling and those that do are in general down trading to lower cabins or less flexible (cheaper) fares. Premium cabins are generally loaded with upgrades.
Fuel is the highest cost and it is around $70 a barrel at the moment, historically this was in the $20-30 arena with a recent spike last year to $150.
If your income goes down, then costs need to otherwise you go under. You can't in reality beat the market with fuel costs so the next biggest cost is manpower (number of people, how much you pay them and their pensions)
Don't forget the UK government is also about to raise APD taxes which will make connecting options travelling via UK less attractive than other places in Europe.
Go figure.
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A risky ruse to unsettle the unions (well whatever) but more importantly to try to wake up our useless, thieving excuse for a Government with their APD tax which will cause more damage to the UK airline industry than the recession ever did....... IMO of course.
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Any airline (except Alitalia it appears) can go bust.
Virgin are rumoured to be losing £10M a month operating just 37 aircraft
-now that is a problem !.
Its a case of matching your outgoings to your income (which Walsh is doing).BA just have to get a move on.
Its the APD and endless UK taxes which will really hurt airlines in the long term.
Virgin are rumoured to be losing £10M a month operating just 37 aircraft
-now that is a problem !.
Its a case of matching your outgoings to your income (which Walsh is doing).BA just have to get a move on.
Its the APD and endless UK taxes which will really hurt airlines in the long term.
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APD Charges.
Band A (0 - 2000 miles from London)
Includes: Europe, Algeria, Greenland, Libya, Morocco, Tunisia
Currently
Economy cabins £10 Premium cabins £20
November 2009
Economy cabins £11 Premium cabins £22
November 2010
Economy cabins £12 Premium cabins £24
Band B (2001-4000 miles)
Includes: Bermuda, Canada, Egypt Red sea Cairo Luxor, Gambia, Jordan, Oman, Russia (east of Urals), Syria, UAE, US
Economy cabins Premium cabins
Currently
Economy cabins £40 Premium cabins £80
November 2009
Economy cabins £45 Premium cabins £90
November 2010
Economy cabins £60 Premium cabins £120
Band C (4001-6000 miles)
Includes: Botswana, Brazil, Caribbean, China, India, Japan, Kenya, Maldives, Mauritius, Mexico, Seychelles, South Africa, Sri Lanka, Thailand
Economy cabins Premium cabins
Currently
Economy cabins £40 Premium cabins £80
November 2009
Economy cabins £50 Premium cabins £100
November 2010
Economy cabins £75 Premium cabins £150
Band D (more than 6000 miles) Includes: Argentina, Australia, Chile, Fiji, Indonesia, Malaysia, Peru, Singapore
Economy cabins Premium cabins
Currently
Economy cabins £40 Premium cabins £80
November 2009
Economy cabins £55 Premium cabins £110
November 2010
Economy cabins £85 Premium cabins £170
............................................................ ..................
Note, Economy means just that, Premium Economy/WTP gets the Premium rate.
Premium rate is increasing 38% in 2009 and 64% in 2010 !!!!!!!!!!! (6001 miles plus)
The UK gov has called this a green tax, the gov needs lots of tax in the coming years, I don't see these figures being reduced or removed, more chance of them increasing, with the price of fuel staying high and the chance of some form of extra tax on this fuel in the future, tough times ahead.
Band A (0 - 2000 miles from London)
Includes: Europe, Algeria, Greenland, Libya, Morocco, Tunisia
Currently
Economy cabins £10 Premium cabins £20
November 2009
Economy cabins £11 Premium cabins £22
November 2010
Economy cabins £12 Premium cabins £24
Band B (2001-4000 miles)
Includes: Bermuda, Canada, Egypt Red sea Cairo Luxor, Gambia, Jordan, Oman, Russia (east of Urals), Syria, UAE, US
Economy cabins Premium cabins
Currently
Economy cabins £40 Premium cabins £80
November 2009
Economy cabins £45 Premium cabins £90
November 2010
Economy cabins £60 Premium cabins £120
Band C (4001-6000 miles)
Includes: Botswana, Brazil, Caribbean, China, India, Japan, Kenya, Maldives, Mauritius, Mexico, Seychelles, South Africa, Sri Lanka, Thailand
Economy cabins Premium cabins
Currently
Economy cabins £40 Premium cabins £80
November 2009
Economy cabins £50 Premium cabins £100
November 2010
Economy cabins £75 Premium cabins £150
Band D (more than 6000 miles) Includes: Argentina, Australia, Chile, Fiji, Indonesia, Malaysia, Peru, Singapore
Economy cabins Premium cabins
Currently
Economy cabins £40 Premium cabins £80
November 2009
Economy cabins £55 Premium cabins £110
November 2010
Economy cabins £85 Premium cabins £170
............................................................ ..................
Note, Economy means just that, Premium Economy/WTP gets the Premium rate.
Premium rate is increasing 38% in 2009 and 64% in 2010 !!!!!!!!!!! (6001 miles plus)
The UK gov has called this a green tax, the gov needs lots of tax in the coming years, I don't see these figures being reduced or removed, more chance of them increasing, with the price of fuel staying high and the chance of some form of extra tax on this fuel in the future, tough times ahead.