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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.” 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. http://www.mysmiley.net/imgs/smile/f...ghting0040.gif guess which one is darth vader? :p |
move on
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. |
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 |
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. |
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”. 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. |
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. |
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. 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. |
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. |
The pension deficit is another millstone.
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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. |
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. |
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 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 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? 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! :* |
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. |
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. |
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. |
Can BA go banko?
Absolutely....look across the pond at how many airlines have gone out of business due to de-regulation alone. Why should the British/European airlines be any different. The question is who folds their tent first? Add in the huge downturn in passenger traffic and hi-value fares, the increase in fuel prices coming again and the stage is set. Looking at the BA wages....ya'll think back to Eastern Airlines and think why they went bust! |
The chances of BA reaching the point where Chapter 11 is the only option are pretty low though. BA Is not under the jurisdiction of United Sates Code it would be subject to administration under UK Law. As such, the chances of a UK company gaining bankruptcy protection under United States Code is a very low possibility. Any airline can go bankrupt, BA is not immune, the only airlines that continue to be going concerns when economically unviable, without private funding sources, are those that receive government subsidy. 76% of the UK GDP is generated by "service industry"; The City of London generates 20% of the UK GDP; 30% of the UK GDP is generated in London. Banking and Finance accounts for a large portion of the GDP of the UK. Unfortunately, the UK has an administration that has no fiscal confidence from much less it's own population but also Europe and wider. (ref: Markel & Sarkosy et al on UK Economic Policy) Until there is a seismic shift in economic policy of the UK administration, and let's face it there is little trust in the fiscal policies of New Labour, banking and finance will remain unstable in the UK as such the repercussions to the aviation industry are that we will see yet more instability and possible diversion of the industry to other European cities. (ref: New Labour's increase of ADP while other European states are reducing or removing APD) |
Who would have thought Swissair could ever go bust? The question I would ask is, if the airline has turned in record profits for the last few years then where has all the money gone?
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Strangely enough they were tipped as buy in the Business section of the Telegraph yesterday.
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Forget upgrades, downgrades are here to stay -Times Online
. Open skies and LCY-NYC operations, can't be long before we see a press item on these two Lemons !!! . However, it will save some cash. |
It will be more difficult than that to survive
For BA to survive, it needs to convince the UK's CAA that it is, and can remain, a viable entity. Well before the banks/shareholders get to pull the plug, the UK's CAA can and will pull the plug. I don't know the specific legal words behind the CAA powers, (where's our flying lawyer?) but they decide first.
Interesting times. |
I don't think it is fair to blame the labour costs because of a shortfall in the fuel betting.
And it is idiotic to say that if profits go down then so should costs. Costs should always be focused at being as low as possible in good and bad years. Front line staff being attacked again to hide management mistakes, when will it ever change? |
Time to Say Goodbye
. The above link was sent from an AZ employee to a BA employee mate of mine, like the old saying, he who laughs last !!! |
BA can be a profitable company. Revenue is very weak but will slowly recover. If it can restructure its costs in a way that has never being achieved before, and get relief on its pension responsibilities (i fear a closure of NAPS to future accrual). Then it will be able to borrow/rights issue to provide sufficient cash for the downturn.
It will find it hard to borrow if these costs are not restructured, and then the future is less certain. Should BA emerge from a recession leaner more efficient it has the potential to be stronger than ever, I hope this occurs and today voted for my share of the pain! |
BA go under? Do me a favour!
Just look at the historical pedigree - Imperial Airways, BEA, BOAC, onwards and upwards to British Airways. For BA to go under is to finally accept that Britain is just another minor member of the European (French and German lead) federation. BA should come out of this a leaner, meaner and (hopefully) a more passenger focused operation. One good thing that is immediately obvious is the realisation that the flawed business model that supposes that First and Business Class is the profit provider has been shown to be so wrong - so very wrong - so stupid and is finally out of the window for good and all. It's time to realise that giving your all to a dozen or so pampered pax up front and subsidising that cr@p at the expense of 200 or more crammed cattle-like in the back is no longer acceptable to anyone. The real money is to be made in one-class travel; with the majority of passengers being given a measure of comfort that hitherto has been denied them by 'bean counters' whose fault all this is. Here's your chance to take the world by storm BA. 38 inch seat pitch, re-designed reclining seats that to do NOT take away space from the pax sitting immediately behind, 2-4-2 configuration throughout the aircraft and (whilst you're at it) retire those out-dated 744's. Set a standard fare that covers real costs and DO NOT DEVIATE FROM IT!! That's the fare - these are the costs that the fare covers for your sector(s) - take it or leave it. The cream on the top will come from in-flight value added services not least the sale of booze, enhanced IFE and enhanced catering (menus) It's not rocket science. Your forebears - the passenger shipping companies providing line services across the world - discovered this 50 years ago. Why is it taking you so long to catch up? Multi-class aircraft are dead. Long live one-class. And don't forget. BA's proposed LCY to JFK business service using A318's is still a 'one-class' service. |
Those who are slagging how BA treat their economy pax - who are you comparing them to?
BMI - you can't even get a drink of water without buying it from the flying tuckshop. Easyjet - all que up according to who paid the premium for 'early' boarding. Refreshments - see BMI. Flybe - see BMI. Ryanair - never ever ever again. Have you really reviewed the pricing properly? BA are often the cheapest on many routes! And pax care? I'd fly in and out of T5 and with BA any day. Believe me, I have expereienced travelling on all sorts of routes with many airlines and there's a reason why I chose BA as often as possible. Price is a big factor but the service is another. Good luck to all at BA.:ok: |
APD - Not so bad via Europe
These amounts:
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 will also apply when the punter buys a separate ticket to Amsterdam, Paris, Frankfurt or where ever and another ticket on to America or Down Under. A family of four to OZ will pay £340 in tax in the back for a flight to Sydney. Why wouldn't they go via Europe? Now has the chancellor shot BA in the foot? |
I am becoming quite amused by the latest rant from Virgin. Its one thing to come up with a suggestion of BA's demise (which I hope that BA stay afloat and kick VS where it hurts) but let's see some transparency with Virgin's profits and turnover. Let's be able to compare like with like rather than having Virgin hide behind the veneer of this privately owned company.
If VS have got nothing to hide then why don't they show us the true financial picture of the airline to justify the claim? Mind you I suppose that Virgin are becoming very experienced with demise of airlines. Just look at Virgin Nigeria and Virgin Express. Ooops have they forgotten about those already? I am still using BA on Long haul flying and will not fly with anyone else. |
The APD tax rises are truly eye watering for long haul travellers. I don't think think this Govt gives a stuff for the airline industry. Trouble is, Cameron is so ensconced with the environmental lobby, I don't think it will get any easier with a change of Govt. Time for all the UK airlines to come together and quit the bickering. A UK only massive increase in taxes, whilst leaving EU airlines untouched is frankly, ridiculous. We shouldn't be squabbling amongst ourselves, we should be lobbying hard, damn hard, as a united body with common purpose.
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BA Attitude to economy class
What good common sense is expressed by Xeque. I travel regularly longhaul economy class but avoid BA whenever possible. American Airlines is my carrier of choice for economy travel. the seats are wider, legroom is generally greater and there is a good chance of your hold luggage arriving at the same time and destination as yourself. If BA improved their economy product I would happily fly the flag even if it was more expensive than their competitors. I however am not prepared to paythe high premium that BA currently impose to travel in a comfortable manner.
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BA Can go bust.... as can any company that works for profit.
However the figures just do not add up! I studied economics for a long time and so much of what we are being told within BA is just daft! Yes BA are hurting at the moment but not to the point of impending doom and this "Fight For Survival" that BA is harking on about is no more about survival as it is about greed! Our management are still going to receive bonuses, our CEO is still totally over payed, we are still planning on introducing brand new longhaul aircraft, we are still going to spend a fortune refitting all the First Class cabins, we are spending a fortune at present replacing a faulty inflight retail machine which we spent a fortune on a few years ago, money is still being pumped into OpenSkies which is clearly failing in its promises, BA is still intend on launching its A318 LCY-JFK service despite the market totally drying up etc etc etc! If we do go bust it will be because of the greed our management....asking staff to give so much will not be the saving grace of this airline!!!! It needs to concentrate on being an airline and not a bank for senior managers! |
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APD - Not so bad via Europe -------------------------------------------------------------------------------- These amounts: 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 will also apply when the punter buys a separate ticket to Amsterdam, Paris, Frankfurt or where ever and another ticket on to America or Down Under. A family of four to OZ will pay £340 in tax in the back for a flight to Sydney. Why wouldn't they go via Europe? Now has the chancellor shot BA in the foot? ............................................................ .................. ............................................................ .................. I think the only way to avoid it will be no hold baggage or reclaim hold baggage at euro airport and continue travel plans, and think ticket will need to be LHR-FRA then FRA-SYD for example, the UK gov needs all the tax it can get, just look at the rate of increase in these charges over the next 18 months, the APD will just increase more as time goes by. |
Whilst many European countries are reducing or in some cases removing APD, the British Government is increasing it significantly.
The recent survey results of mid-long haul passengers at major UK airports showed that a significant majority of passengers would have preference in using alternative European hubs as an alternative to the increase in APD. |
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. Perhaps the bearded one should get his own house in order first? The 'creative' accounting of Virgin with its 10 month 'profit' was a classic Sir Dickie move. Oddly enough the Singapore Airlines figures didn't quite show the same profit or valuation? Wonder why? Also VA seem to be in the midst of a rather drastic flight crew and cabin crew cull themselves which, proportional to the size of the company, is somewhat more drastic even that BA's proposed cuts. All classic bearded woolly pulley wearing ones spin. The best was the 'we were considering buying BA when the share price dropped below 100', that stands with the 'give Concorde to us, we'll fly it if BA won't!' and that was after Airbus had pulled their engineering support for it! There was no way it was ever going to fly again without an engineering sponsor and Branson knew it. Public weren't to know that though and bought it hook, line and sinker. Branson is deeply in the poo and his creditors have recently given him a stay of execution. He needs to pull a rabbit out of a hat and it seems he is trying his best here. Interesting few months ahead I feel. BA have, rumoured, the financial backing to take them over this period. The caveat, however, is that they sort out the militant Cabin Crew to prevent the customer service mess that was the winter snow diversions from ever happening again. This time I think the company is playing very, very hard ball. |
... will BA really go bust... Blah blah blah...
Does anyone really care (except employees of BA...) and the die-hard BA fanatic, of which that number is dwindling if we are to beleive the hype about premium travellers deserting BA. Times change, businesses must do to, and if youre caught napping thats your tough luck. If youre not fast, youre last and BA has been caught with its pants down (well, wee willie anyway) For the last 3 or 4 years, BA hasnt 'stood out' in the crowd, and has just blended into the community. The sparkle has gone, and its just another airline... Sorry but thats how it seems, not just to me but to quite a few BA employees and passengers alike. As Alexander would say, ''Simples'' |
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