BA posts record loss

[Final 3 Greens]

I cannot say that I am particularly surprised.

BA slumps to record loss as strikes loom - Telegraph (http://www.telegraph.co.uk/finance/newsbysector/transport/6512163/BA-slumps-to-record-loss-as-strikes-loom.html)

The company really needs to realise that many if it's once loyal customer base have discovered that better value is available elsewhere and do something to get them back.

PAXBoy has posted in the past that he believes that BA is in slow terminal decline and it is hard to argue with him.

Surely Walsh cannot have long left?

[profot]

I'm in two minds with BA

I have always enjoyed excellent ground and onboard treatment and respect the crews highly but think the management, particularly senior management are complete nitwits with no idea of how to treat customers ( or their own staff come to that) and particularly loyal customers that combined give them a reasonable income stream. Very shortsighted

So, feel sorry for the crew that work hard but BA deserve these losses. Treat your customers like c**p and they will go elsewhere.

[Scumbag O'Riley]

Suspect it's the ever creative beancounters who are the only ones keeping the company away from the administrator's door.

[Final 3 Greens]

Suspect it's the ever creative beancounters who are the only ones keeping the company away from the administrator's door.

I guess you mean in defining a 'going concern?'

[sprthompson]

Irrelevant opinion of mine... It's also partly the fault of their marketing team who managed to dream up the worst TV advertising campaign they've ever had.

[Scumbag O'Riley]

I guess you mean in defining a 'going concern?'Yes basically. Making it look like their balance sheet is stronger than it really is by creative accounting. The company is only looking as good as they are (and that's absolute rubbish) by fiddling their pension fund liabilities. They even had to 'borrow' money off their pension fund recently to boost their balance sheet. I think accountants get a bad wrap from people on here, they get blamed for driving the company into loco service levels, but the crew wouldn't have jobs if the accountants didn't control costs.

As the crew costs appear untouchable due to militancy from top to bottom then the only costs the accountants can really cut are ones which affect service levels. And this is where we find ourselves.

Company needs liquidating to release LHR for the new breed of airline which will give customers decent service for decent fares.

[strake]

Perfect news for Willie.

He now has the green light to take on the unions and sort out, as perceived by industry analysts, an overpaid, underperforming workforce when compared to others in the industry. I don't know what low cost carriers pay but allegedly, with VS crew on £15kpa and BA crew earning from £25-60kpa, there does appear to be an issue. As an analyst said on Radio 4 this morning, a strike costing £10-20m over Christmas will not be seen as a problem by investors...so long as the issues get dealt with once and for all.

[Rusland 17]

Company needs liquidating to release LHR for the new breed of airline which will give customers decent service for decent fares.In my experience, BA still provides a better than "decent" level of service for decent fares.

The fundamental problem is that many passengers these days demand ever-lower fares, measured in pennies rather than pounds, and are prepared to accept an abysmal level of customer service to get them. As a result, legacy airlines are forced to lower their fares to match those of the locos (which they do - BA and other major airlines are often cheaper than the low-cost airlines on routes and dates that people actually want to travel) even though their cost base is significantly higher.

This is the new reality, and it presents a challenge that all legacy airlines must face.

[Boss Raptor]

seems like a downward spiral to me - one of the key points stated is that they will cut costs by 'reducing the number of cabin crew on flights' - that to me certainly indicates that standard/quality of in flight service will fall by default (and in my recent experience BA's in flight service isn't that great overall anyway) - so they will no doubt soon be providing a product that is perceived by the customer to be of a lesser standard than before and in many ways a lesser standard that is bettered by other carriers including some LCC's in my experience - way to go BA...not!

PS. BA lost my loyalty some 5 years ago when they moved their European service/product model to a LCC product...after that they are just another carrier in a market with other operators with better overall product and leaner costs...:cool:

[Fargoo]

The fundamental problem is that many passengers these days demand ever-lower fares, measured in pennies rather than pounds, and are prepared to accept an abysmal level of customer service to get them. As a result, legacy airlines are forced to lower their fares to match those of the locos (which they do - BA and other major airlines are often cheaper than the low-cost airlines on routes and dates that people actually want to travel) even though their cost base is significantly higher.

This is the new reality, and it presents a challenge that all legacy airlines must face.

Post of the week - nail hit firmly on head :ok:

[Final 3 Greens]

Post of the week - nail hit firmly on head

Except, BA's business model revolves very much around long haul, where very few loco's operate. Also, 3 out of the 4 cabins on most BA long haul aircraft are for premium offerings and 2/3 on the others.

And also Lufthansa group announced an operating profit for Q3.

I therefore believe that the problems are somewhat deeper than Rusland 17 opines.

[fincastle84]

Sorry to disagree with the prophets of doom. We've flown BA long haul for many years & have always had excellent service & I'm sure this will continue.:ok: The unions want to continue with outdated practices which have no place in the modern world of aviation. The crew reduction on the 74s is to reduce by 1 CC & ask the CSD to help with the service. Surely not too much to ask.
I doubt they will have the heart or the stupidity to strike, particularly after the High Court ruling yesterday. I hope I'm right as we're booked on BA59 LHR-CPT 23 Dec.

[racedo]

In my experience, BA still provides a better than "decent" level of service for decent fares.

The fundamental problem is that many passengers these days demand ever-lower fares, measured in pennies rather than pounds, and are prepared to accept an abysmal level of customer service to get them. As a result, legacy airlines are forced to lower their fares to match those of the locos (which they do - BA and other major airlines are often cheaper than the low-cost airlines on routes and dates that people actually want to travel) even though their cost base is significantly higher.

People still keep harping on with that idea when it has been disproved again and again.

You credit people with looking at lots of airlines for lower fares but then state well Legacy carriers will have cheap fares on the days that the people really need to fly and they just won't book with us.

The oft used mantra of better customer service didn't show up when thousands of people got abandoned on a couple of Augusts or bags getting left at Heathrow at Christmas or T5 fiasco.

BA does some things well and others lets say not so well BUT it doesn't do everything at a consistent high level that would persuade enough people to still fly with them .

[Final 3 Greens]

Racedo

BA does some things well and others lets say not so well BUT it doesn't do everything at a consistent high level that would persuade enough people to still fly with them .

You make a very good point, IMHO.

[Fargoo]

And also Lufthansa group announced an operating profit for Q3.

I find it laughable that someone would use Lufty as an example of why the lo-co's aren't affecting BA's profits :ugh:

[Final 3 Greens]

I find it laughable that someone would use Lufty as an example of why the lo-co's aren't affecting BA's profits

I did not say that the locos are not affecting BA's profits, just pointed out that BA has a big long haul business, where they do not encounter too many locos.

I cited Lufthansa to show that a legacy airline can make an operating profit in hard times.

LH is also subject to low cost competition on shorthaul and operates a global network, like BA, with premium traffic part of the mix, like BA.

Therefore, would you like to explain why it is not a valid comparison?

[Scumbag O'Riley]

Yes, the point went well over the head Fargoo is banging :)

A very quick scan of LH's most recent financial statements suggests that the airline part of their business is just as knackered as BA, in fact it looks like BA are cuttings costs better than LH. LH appears to have its fingers in a few other pies and that has helped them make money.

Who knows what BMI will bring to the party, seems like LH is going to pare them to the bone, and BA is talking about buying up their slots. What a joke :)

[PAXboy]

Prophet of Doom Speaking ...
One of the curious things that I have observed about companies on their last legs is that, many, many folks think that they are doing fine.

Banks are 'solvent' until the day they go bust, even though the harbingers are all visible to those that look. Woolworths retail chain in the UK went bust a year ago and thousands were surprised. I am no expert but I had been expecting it for ten years. Marks & Spencer were very close to the line a few years ago but have pulled back by concentrating on food, an area in which they have only one significant competitor (Waitrose) but the rest of their main operation is still in line for the end of it's life.

The nature of Boards of directors and similar is that they keep on thinking "We can pull this round" until it is categorically proved to them that they cannot. If WW goes there will be yet another bright and thrusting male who says "I can pull BA round" but he won't be able to.

Many companies would do better by themselves, their shareholders and staff if they admitted defeat and sold whilst still trading. The greatest majority don't and the company goes Splat, folks lose money and jobs.

Want an example of a REALLY clever airline owner who manouevered all the way down the line and then sold at the right moment of his choice? Sir Michael Bishop at BMI.

For the record, I am not a BA shareholder, nor have I ever worked for them. I have been a HIGHLY satisfied customer of them but they are no longer my first choice of LH carrier and have not been since the disgraceful dirty tricks campaign. In the air, the staff are top class.

I repeat that I do not know the timescale of BA's close but, they will not exist in their present form, management and owneship within ten years.

[Fargoo]

I'm not saying it's not a good company to use as comparison, only that things aren't all rosy in Luftys' garden either :ok:

As I see it, the LoCo's have it nailed when it comes to what passengers want for a short trip - we certainly don't. I agree with you both that some more drastic action is needed and definately don't have my head in the sand where that is concerned.

I am however totally against liquidating a 40000+ peoples jobs just to "free up" LHR for the LoCo's. It's a competetive business, those that aren't up to it go under those that are thrive. I just hope that BA survive for very selfish reasons.
No doubt if I didn't work for them I might see things slightly differently ;)

[Fargoo]

I repeat that I do not know the timescale of BA's close but, they will not exist in their present form, management and owneship within ten years.

Very prophetic! I think you may well be right though

[PAXboy]

I think the legacy airlines have an impossible task.
Not enough people wil pay for old style service
Cosy deals between govts to maintain fares are long gone
Short haul is a lost cause other than as feeder and that's going too
Staffing contracts made 20/30/40 years ago are unsustainable
Pension contracts made 20/30/40 years ago are unsustainable
Demands for green taxesIn the UK, no one wants to pay for anything! People want to have European style health care and benefits - but don't want to pay the taxes for it. The airlines have no where to run to except to slim down and start the consolidation process. BUT that is being actively prevented by govts who want to retain 'national' carriers, even if PLCs. There is still a mirage (pun intended!) of gloss and swank about airlines. As we all know, the big shipping companies came to an end and so will the big airlines. The govts all tried to hold on to car companies (for fairly sound economic reasons) and yet they have still fallen apart and moved East.

As I have said before, we shall land up with a few international groups that have sub-contracted/owned service companies. These groups will be called:
One World
Star Alliance
Sky Team
etc.But govts will not permit the companies to move towards this in a structured manner so as to retain as many jobs as poissible and cause as little loss of investment as possible. This consolidation will only happen once the majors start to tumble and there is no alternative. Then it will be thrown together and a lot of people thrown out of work. The govts will then try and take the credit for 'saving' jobs when they could have started the move eight years ago. But no one gets rewarded for preventing a disaster, only for clearing up the mess afterwards.

[BMEDFO]

BA is loosing £16.50 for every passenger it carries. No wonder Willie Walsh wants to take drastic action!

[teddybear44]

As an infrequent flyer (three / four times a year) and one who mainly flies for leisure and therefore foots the bill from my only slightly above average earnings in the S.E. England, I base my choice of carrier on the following:

1. Safety record
2. Convienent point of Departure
3. Service level on board
4. Availability of a reasonable fare

I am prepared to pay a reasonable preminum for safe and comfortable transportation of myself and my family from A to B based on my own perceptions of who can best satisfy my requirements. I prefer to choose a full service carrier as opposed to a low cost operator. I recently flew from LGW to CAG with my family and thoroughly enjoyed not only the BA flight but the airport experience in the North Terminal at LGW, where we had a nice family breakfast before we left. Crew were excellent.

There are more of us around than many think, on modest earnings who are capable of making informed choices and prioritising. Even now, with the prospect of IA on BA around winter, I have some idea of approx periods to avoid based on keeping up with current affairs. I might even pick up a bargain !

If the major legacy carriers (including BA) can keep it together and give the appearance of running smoothly with a decent product, then that will be where I put my dosh when travelling.

Sorry, but I still like to enjoy my day out flying and I want my kids to as well. I'll pay for the smiles !!;)

Ted

[jethrobee]

I personally think BA need to sort out the identity, at the moment they are trying to offer both a premium service up the front which many people (myself included) sign up to.

The problem is that they are also trying to compete with the Loco's down the back, this is a having cake and eating it scenario.

You cant get away with charging premium fares for a premium service and then trying to skimp up there to save the money. The real things they need to be looking at are the ratios of premium pax, and protecting and differentiating that from rivals.

Most of the pax who fly down the back are wanting a premium service for a low cost fare. They also need to realise that if you pay a low cost fare then you get the same levels of extra charges on BA as you do on a low cost carrier.

[teddybear44]

Flew last week LHR-AMS-LHR on BD. No meal and beverages had to be purchased but still preferred this option rather than trek to STN to potentially save a few quid on RYR. I did not purchase any beverages but would not have begrudged it if I felt the need. 2 nights in a 3 star hotel and return flight package about 190GBP purchased a little while in advance. Guessing the airfare was a pretty good deal. Take that every time !

Went LHR-GLA-LHR a week earlier on BA. Hot breakfast served but it would not have bothered me if it was only coffee / tea as only just over 1 hour. Busy flight, elbows in. Some pax declined the hot breakfast.

[Final 3 Greens]

You cant get away with charging premium fares for a premium service and then trying to skimp up there to save the money. The real things they need to be looking at are the ratios of premium pax, and protecting and differentiating that from rivals.

This analysis is spot on.

I made two return trips to Riyadh recently, from London, with BA, then Swiss and will compare the BA trip to the medium haul legs of the Swiss experience.

Both aircraft cabins were immaculate, the BA NCW seats were in a different league to the Swiss business (on an A330-200, a fleet now being replaced.)

Apart from that, the Swiss experience was better in nearly every respect

- food (BA didn't serve a light meal towards the end of a 6 hour 30 minute sector, Swiss did on a 5 hour sector) Swiss served up very tasty meals, BA's were okay (not bad, but a little tasteless)

- service, after the service, I literally didn't see a crew member for the next 3 hours and had to use the call bell for service, whereas on Swiss, the cabin was continuously and discretely 'patrolled' by a CC member, who didn't disturb you, but was there in a flash if you looked across at them

I would acknowledge that I don't use entertainment systems, so BA's may be better than Swiss's, but it is not an important factor to me.

If I was taking a 10 hour flight, I would choose the BA seat over the Swiss offer, but then again Swiss would be serving up a 340 or 330-300 with flat seats, which woud suit me as well as NCW, as I sleep easily on aircraft and anything remotely flat will do.

In every other respect, I would choose Swiss and especially in the light of BA's track record of threatened industrial action over the past few years.

[Scumbag O'Riley]

The real things they need to be looking at are the ratios of premium pax, and protecting and differentiating that from rivals.
Yeah, what would be best for us long suffering passengers in general would be for BA to quit whining and bite the bullet and downsize to a premium only airline. This would get them out of the low end market which they hardly like being in and are obviously incapable of competing in anymore and release a large number of LHR slots for new airlines to take advantage of. Low end passenger gets the loco service which they want and which there is obviously a huge market for. Suspect with BA out of the way the economy class market would be less distorted and new entrants would be more likely to take the punt on setting up long haul loco service. End result superior service and choice for both the business passenger and the economy passenger, and that is what this forum is about, innit?

It will never happen willingly as they want the slots. Lose the slots to effective competition and they are well and truly up the creek.

[PAXboy]

Indeed it won't happen. CEOs and Main Board directors do not vote themselves out (I would guess that less than 1% do so). The inclination of male human beings is to make something bigger than the next man and make more money than the next man. They will pursue ANY policy - even if it means they lose everything. They will take the risk of making more money and, when the company goes Splat and gets taken over - they blame everyone else.

Sorry to be cynical but I've worked in commerce and local govt for 30 years, as well as being a citizen of western europe ...

[jethrobee]

I agree, I cant see it happening, but I do wish they would find a better way to let the people who want low cost have low cost, while protecting the premium brand up the front.

I have been a gold card holder with BA for 10 years, I just hate what is happening to this airline.

Why do I fly BA? Well, in my opinion the premium service (seats, crew etc) are better than others on the routes I fly. I also have a gold card with Virgin and Air France. Air France really are a last resort. I do like virgin a lot, but they dont have the same coverage as BA and are actually more expensive on many bookings I make.

The thing that annoys me most with BA is that they are starting to cut cost in the premium cabins, food on my last trip back from Boston was absolutely shocking as I posted here. I am flying Cathay down to Oz in a couple of weeks, and then giving BA another chance to Boston the week after.