Could British Airways really go bust or not?

[quant]

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.”


Could British Airways really go bust or not? - Times Online (http://business.timesonline.co.uk/tol/business/industry_sectors/transport/article6543863.ece)

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 to ministers: let BA go bust - Times Online (http://business.timesonline.co.uk/tol/business/industry_sectors/transport/article6544321.ece)

http://www.mysmiley.net/imgs/smile/fighting/fighting0040.gif

guess which one is darth vader? :p

[4krew]

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.

[Dani]

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

[joehunt]

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.

[Dysag]

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.

[Desert Diner]

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”.


I'm begining to think that Willie is a bit of a Drama Queen with this "sky is Falling" routine.

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.

[Human Factor]

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.

Fair point and if it all goes horribly wrong, they still have Chapter 11 to fall back on. No such equivalent in Europe unfortunately.

[Desert Diner]

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.

[overstress]

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.

Now that makes a lot of sense. Let's hope we can change the 'yield management' asap :sad:

[brakedwell]

The pension deficit is another millstone.

[Michael Birbeck]

@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.

[ROSCO328]

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!:{

[JobsaGoodun]

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.

[RevMan2]

If the current trend holds, Lufthansa will just buy them, along with any other European airline

Mayrhuber's planning has ALWAYS included merger cash and it's budgeted in the same way that any other CapEx is budgeted.

And don't forget how close to bankruptcy (http://www.independent.co.uk/news/business/lufthansa-facing-bankruptcy-consultants-say-1474890.html) 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.....

[Basil]

The following all cut & paste from Times on Line:

The sky is not the limit for Virgin Atlantic - Times Online (http://business.timesonline.co.uk/tol/business/industry_sectors/need_to_know/article6381384.ece)
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

Reader comments: (http://business.timesonline.co.uk/tol/business/industry_sectors/transport/article6544321.ece)
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?

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! :*

[Panman]

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

[Currock Base]

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.

[dougydog]

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.

[stormin norman]

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.

[Joetom]

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.

[SASless]

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!

[Bruce Wayne]

The chances of BA reaching the point where Chapter 11 is the only option are pretty low though.


Yes pretty low indeed as Chapter 11 is applicable to reorganization or rehabilitation of companies incorporated under the federal jurisdiction of the United States Code.

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)

[parabellum]

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?

[sky9]

Strangely enough they were tipped as buy in the Business section of the Telegraph yesterday.

[Joetom]

Forget upgrades, downgrades are here to stay -Times Online (http://www.timesonline.co.uk/tol/travel/business/article6523139.ece)
.
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.

[Ancient Observer]

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.

[ItsAjob]

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?

[Joetom]

Time to Say Goodbye (http://www.funstufftosee.com/goodbye.html)
.
The above link was sent from an AZ employee to a BA employee mate of mine, like the old saying, he who laughs last !!!

[TheKabaka]

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!

[Xeque]

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.

[George Zipper]

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:

[ExXB]

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?

[Dan Air 87]

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.

[nigegilb]

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.

[Heathhurn]

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.

[apaddyinuk]

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!

[Joetom]

Quote

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.

[Bruce Wayne]

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.

[wobble2plank]

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.

Made me chuckle, also makes me wonder how long it will be before Mandelson makes Sir Dickie master of the Governments spin machine!

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.

[silverstreak]

... 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''

[Lou Scannon]

In my working life the companies I worked for went bust on three occasions. I wouldn't wish it on anyone!

Suddenly, the offices that had been full of activity were empty and the aircraft were all close parked on every bit of tarmac. After a few months out of work many of us were prepared to work for the equivalent of our social security payments just to get back into the job.


Do not think that this cannot happen to BA.

A financial point will come, if the cabin staff and groundstaff do not accept nominal pay cuts..or unbelievably call for strike action...that it will be compulsory for the Board to place the company into administration.

"BA 2010" will then be started with everyone having to interview for the new jobs at the new "take it or leave it" rates. The days of the senior cabin crew earning pilot's pay will then be over. The payment of anything other than salary and basic allowances for the pilots will have gone.

My guess is that February 2010 will be the cruch time.:(

[hautemude]

What baffles me about the adverse criticism of BA that I read on this website as well as others is why do people fly with BA more than once if they are so awful? Perhaps it is because BA is the only one to serve the destination you require. If so, ask yourself why they provide a service to an unpopular destination. If it was profitable, would not the bearded wonder have cherry picked it long ago? The other answer is that the adverse critics are either full time miserable gits or the employees of another airline. For those of you who are professional airline employees, it is probably because you failed to get in or know you never would, i.e plain jealous. Perhaps you work for Ryanair!

[kotakota]

Ok , straight up , I am an ex BA captain , left 5 years ago after 10 years service , because I was 55 and had to retire ( at the time - not now of course ) left with the proverbial bitter/sweet taste that is BA . Infuriating ( TOO BIG etc ) but some of the greatest people I ever worked with , so also very enjoyable . Right , that is off my chest ,now...
I left in 2004 with a salary of 55k so the ' average 'of 107 k is actually the top increment of 24+ years service , and BA are trying to get these elite few to take early retirement - smart move.
As usual , the press / Branson , whatever , distort the facts - quite normal with their 'tall poppy' syndrome . RB will one day be hated as much as GB by the British public - just read some of the blogs about Virgin Rail. But he will not care - he will win. He knows Brits are gullible.
He has fed off the most profitable routes available and never pioneered a route out of UK (apart from Vegas which explains a lot ) and has only ever provided a service to the fithy rich and vulgar to their fleshpots. Never actually tried to provide a service to the British people , like trying to serve a cooked breakfast to 144 peeps between MAN and LGW with about 20 minutes in the cruise , probably failing to perfect it , but trying nonetheless.
There ARE 2 weaknesses with BA and ONE is the amount the CC are paid without consistency in their performance , and TWO , the number of 'Middle Management ' who do not give a toss .
You can read every day about the aggrieved passengers on BA , but if you dig deep you can also find millions of contented ones , who paid a pretty fair price ( in Economy ) , checked in at the now-wonderful T5 , had an on-time flight to their destination wherever in the world , and have no axe to grind , but we never hear from the ones who get what they paid for - do we ,
?
Sure , it does go wrong , and Heathrow can be bloody frustrating ( to passengers too ! ) but if BA disappeared tomorrow it would not be long before the public got really pissed off .
Virgin Airways ? Perish the thought , and I speak for millions.

[5150]

but if BA disappeared tomorrow it would not be long before the public got really pissed off

Why? There are plenty more long haul options than flying with the bearded one, and BA's short haul operation is moribund, as is the rest of the operation if they don't do something about it, and fast.

A long haul operator out of Heathrow is what they should aim for now - nothing more, nothing less . . . . .

[411A]

All this talk about whether BA will survive...or not.
I expect it will, however, it will need to trim down considerably, the pilots will more than likely lose much if their beloved pensions, the CC, if they persist in their hard-headed ways, will be dismissed for cause and new ones hired...and the eventual outcome will be quite a profitable operation, serving fewer destinations.

Those folks who are demanding better conditions at FR had better take heed, if BA can strong-arm their employees to lesser conditions, FR employees stand absolutely no chance whatsoever of improving theirs.

In both cases, there are winners and losers.
Winners...management, shareholders, customers.
Losers...employees and suppliers.

Slim and trim is the watchword of todays airline industry.
Fat and overstuffed...dead as a doornail.

Like it or not.

[Basil]

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.
What an interesting socialist point of view.
Have you ever read of the lifestyle enjoyed in the Kremlin in the 1930s or, indeed, studied the behaviour of any socialist in a position of authority?

[SASless]

has only ever provided a service to the fithy rich and vulgar to their fleshpots

Guess you never made a run to Lagos then!

I know things change over time but Lordy fellow....the Virgin crews I rode out of Lagos were very good news! Far better than the BA!

[Basil]

kotakota,
Well done getting a command within 10 years - took me 18, but I was always crap :}
What a good summary.
I have worked for several outfits but still keep an eye on BA. There are times when I could walk into the CE's office (whoever he may be at the time) and shake him. I want to see BA succeed. I was on secondment to another outfit in the eighties when King & Marshall turned the passenger appeal around from zero to hero. We heard from our premium pax (in my other airline) and K&M did a great job. (Would've hated to work directly for old King but they were an effective team).
Is Willie posturing as the CC think? I don't know but my gut feeling is that he is not. What BASSA has to consider is: "Will the gumint bail BA out or not?"
Who knows? (Been done before in a cowboy film :))

[HeathrowAirport]

The problem I think with BA personally is there loosing money in the Premium side of things, thats were the dosh is made, I recently flew to Frankfurt, 757 was packed to the brim in economy and the return on the A319 was full BUT the Premium section was almost fully empty.

BA will if they cant help it go bust, but the govement will obviously help them out of it, Its the National Carrier and If someone has the figures its like a 50+% of Heathrows movements and that makes £billions GBP for the economy per year.

[Skipness One Echo]

Its the National Carrier UK

There's no such thing anymore actually. BA have the pension deficit from Hell and a cost base on cabin crew coupled with a militancy rare in modern Britain that F***s the passenger over a lot when things go wrong. I dated a BASSA apologist once, it was quite revealing.

If BASSA strike for a prolonged period, BA may fall, and UK aviation will be all the poorer for it, for I can't see a British airline ever serving such a network again starting from scratch, certainly not Virgin.

Leahman Brothers and GEC fell, who knows who may be next. I personally think they'll be taking the new B777-300ERs as planned, and then the B787s and A380s.

[racedo]

In short the answer is Yes they can the likelihood is NOT as there would be some type of Assistance offered which would ensure it doesn't happen.

Based on the media article 40% of the Premium passengers were bankers who aren't going to be flying anywhere for a while. There isn't another group who can easily fill that gap in the medium and I doubt in the long term at the prices companies were willing to pay. There goes a huge cash influx.

Ultimately it will come down to the amount of cash they posess as there is a figure reached when bankers start to get worried and suppliers reduce their credit from 7-8 weeks down to 1 week.

9/11 changed the marketplace and while post 9/11 the industry boomed there was a clear warning that the slowdown for 1 year after that day was the time to look at what you were doing and slim down accordingly to match revenue and costs.

I believe in 10 years time people will look at the Salaries people were on now and wish they could earn that amount.

[Desk-pilot]

As an ex-BA staffer now working as flight deck in the loco sector I have to say I find this thread unrealistic and depressing. I don't think BA will go bust, I do think their problems are no different to KLM, Lufty etc right now and they're still one of the very few global supercarriers in terms of routes, fleets, terms and conditions, training, service excellence and capacity to innovate. The current issues will only lead to the emergence of a stronger and fitter BA and that is no bad thing. However I do believe BA has made some very bad business decisions at a strategic level in recent years.

1. Its focus on high yield transatlantic is in my estimation flawed. BA always needed to play in all market sectors.
2. The sale of GO - I opposed it at the time and I oppose it now. BA had the makings of a serious low cost operation there and could have remained dominant and profitable on shorthaul via GO. They also wouldn't have had to renegotiate mainline employment contracts if they had permitted Go to gradually become BA shorthaul.
3. They continually failed to identify opportunities to identify into new business areas to boost revenue - e.g. The wheel. I believe at one time BA were making £50m a year profit from operating this and generating millions more in brand impact. I also recall at one time they had requests from around a dozen cities worldwide who also wanted their own version. 10x£50 million is £500m profit plus huge global brand impact, but the management said it wasn't core activity and hence it was ditched.

Flying into Manchester today where my Father was BA cabin crew in the seventies brings home the appalling lack of BA tail fins there now compared to then. BA should never have abandoned the regions and adopted a fortress LHR mentality. If they hadn't allowed it to happen, the world and indeed our profession and industry wouldn't have to suffer the likes of Michael O'Dreary and his appalling airline.

There are few companies in Britain that can lay claim to being world leaders - BA, BAe and Roll Royce are the only ones we have in aviation, I wish them and their staff well despite now working for a rival airline.

Desk-pilot

[George Zipper]

To the staff at the coal face (pilots, CC, check-in, customer service) I think you do a great job. You need to take it from a frequent traveller like me who can benchmark airlines in terms of price/value/service.

I've flown with most and like I've already said, I'll go BA any day.:)

[tigger2k8]

i'd be very disappointed if BA went bust, and i hope to **** (< insert creative word where the *s are..) that the government would step in, if they can bail banks out then they can bail out an airline that represents Britain.

[xray one]

A reality check please. Yes anything is possible as history has showed, however, BA is a strong company and this is only a glitch. Do all airlines need to improve their standards, yes. The problem with airlines such as BA who make huge profits when times are good, the attention to detail is forgotten and they get sloppy - yet again large companies do not learn lessons from past recessions. (where did the previous years £750 million profit go?)

As for Virgin, they do a good job, offer a slightly different service and keep BA 'honest'. Without them do you think the standard and service on long haul services would have improved? As for Virgins profits, whichever way you look at it, at least they made a profit through identifying problems ahead and did something about it.

As for wild rumours (Virgin making 10 million loss per month) back up what you write. Don't just pick a number for shock sake, it doesn't help anyone.

We're being told there are the signs of 'green shoot' in the economy. Hopefully all out there will survive and emerge stronger - lets not talk ourselves into a P45

[apaddyinuk]

As for Virgin, they do a good job, offer a slightly different service and keep BA 'honest'. Without them do you think the standard and service on long haul services would have improved? As for Virgins profits, whichever way you look at it, at least they made a profit through identifying problems ahead and did something about it.

Without dishing your otherwise excellent post, I do not feel that it is Virgin who keep BA honest because after all, BA dont keep Virgin "honest" if Virgins recent results are anything to go by. As BBC World has recently advertised, Virgin Atlantics success is based on Media Spin/Hype and not so much on Business Acumen! LOL!

Virgin compete on a very limited number of routes, indeed they are key routes and yes they compete with BA directly more then any other single carrier but BA still has a huge number of high profile and high standard competitors worldwide which it must fight against! I think these airlines have as much influence on BA's standards as any other!

[wobble2plank]

As for Virgin, they do a good job, offer a slightly different service and keep BA 'honest'. Without them do you think the standard and service on long haul services would have improved? As for Virgins profits, whichever way you look at it, at least they made a profit through identifying problems ahead and did something about it.

Also don't be fooled by RB's pious approach. The only reason that VA didn't get right royally screwed along with BA and the other airlines over the price fixing scandal is that he went running to teacher first.

[TheKabaka]

Hi Paddy

Our management are still going to receive bonuses,

No they won't

our CEO is still totally over payed

Less than nearly all other FTSE 100 companies.

we are still planning on introducing brand new longhaul aircraft

Which will operate routes for a lower cost than the current fleet (747/767)

we are still going to spend a fortune refitting all the First Class cabins

We need to be offering equivalent or better product to our customers. If BA stands still it is really going backwards.

we are spending a fortune at present replacing a faulty inflight retail machine which we spent a fortune on a few years ago

Possibly, lets hope it is an improvment

money is still being pumped into OpenSkies which is clearly failing in its promises

No it's not

BA is still intend on launching its A318 LCY-JFK service despite the market totally drying up etc etc etc!

It seems a large bank has bought a number of seats on each service making it a viable route.

I think alot of your info is from BASSA and therefore fundamentally flawed, no matter how long your economics studies took!

[fmgc]

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.

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. What these social psychopaths seem to forget is that it is not just the CEOs and Directors that will suffer, but thousands and thousands of ordinary working people with mortgages, families etc.

If BA went bust how many people would this effect? Not just employees but suppliers as well?

These so called Entrepreneurs have little sympathy for the ordinary worker and are only concerned about feeding their own pockets and egos.

Now I am not saying that Governments should continually bail out Companies that are failing, but please stop the hatred of other businesses as they employ ordinary people!

[fmgc]

As an example, I saw something like "Goodbye SkyEurope" written on the side of a FR aeroplane the other day.

I think that is in really bad taste and really is Machiavellian!

[The SSK]

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

Two words: Laker Airways

[fmgc]

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.

[racedo]

Two words: Laker Airways

What about the use of their computer systems to steal Virgin Premium passengers which they lost the court case about in 1991.

[fmgc]

As i say, doesn't make it right!

[Xeque]

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.

[G-AWZK]

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?

[daz211]

I think BA got into bed with AA to start flights from STN for one reason.
The AA STN-JFK route was only set up to get rid of EOS and MAXJET :=.

[Akrapovic]

As i say, doesn't make it right!

So why bring it up then??

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!

[Skipness One Echo]

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.

[CaptJ]

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.

[HZ123]

CaptJ ; You should have the rank of 'admiral' very well stated and an accurate view on our aviation times.

[Beancounter1]

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.

[stormin norman]

Good post CaptJ -spot on

[icarus sun]

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.

[ORAC]

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.

[racedo]

Making a profit and generating positive cashflow is the only way a company can continue in business,

You can still make a profit but go bust...........Polly Peck with Asil Nadir was an example, course this was fraud but still reported profits.

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.

[Mr Flaps]

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.

[Riverboat]

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

[TURIN]

This month has brought voluntary pay cuts from pilots and engineers (pilots still have to vote on the plan)

Erm, what voluntary pay cut would that be?

Engineering has made no pay cuts at all. Cut staff, yes but not pay. :confused: