British Airways heading for a £1bn loss- a record amount?

[Totally_Bananas]

Read this today, will this be the largest loss of any UK airline ever?

British Airways heading for a £1bn loss - Times Online (http://business.timesonline.co.uk/tol/business/industry_sectors/leisure/article7009074.ece)

[fantom]

Close it down and start again. The unions deserve it.

[A and C]

The usual simple reaction from a simple mind, both the Pilot, Engineering & most other unions have cooperated with the BA management to try to solve the problems that BA has.

One other group of employees have not been so far sighted and if they find then selfs without a job I won't shed a tear.

[teddybear44]

ditto:ok:. Sauce just aint sinking in, is it.

[G-AWZK]

So what would the ramifications on the UK aviation industry be if BA were to fold?

Would it leave the door open for AirFrance KLM and Lufty to enter and dominate or would it let new starts in the UK to flourish?

Is BA one of the few British industries that are genuinely too big to fail?

[kaikohe76]

A short while ago it was suggested, (absolutely wrongly), that Monarch might have been the next UK Airline to fold. This was a very nasty, vindictive & totally incorrect suggestion.
However, I just wonder if the truth of the matter lies with the UK's so called national carrier though. Yes it would be a great pity if BA ended up by folding, but I wonder if that's what the airline & some, not all of it's staff deserve.

[FANS]

BA will not fold.

An accounting loss is just that. Cash is all that matters when it comes to solvency and BA is fine. This is just management trying to manage the (i) the unions (ii) sink provisions and (iii) the city.

Let's move on.

[kaikohe76]

G-AWZK,

The answer surely is NO!!!

[A4]

Take a read of the BA Industrial Relations thread in the Cabin Crew Forum.

It's a revelation. Blind leading the Blind into industrial suicide. Unbelievable - like most BASSA communications according to a lot of posters on the CC forum.

If it wasn't so serious it would be funny. BA has played this one perfectly - BASSA are doomed no matter how the Court rules on Monday or which way the CC vote goes.

It's like watching a slow motion car crash.

A4

[Donkey497]

Is BA one of the few British industries that are genuinely too big to fail

Why should it be?

BA is no longer the flag carrier of the empire, although much of the management structure still seems to be from that era.

BA no longer operates the "essential services" connecting remote points of the british isles, but seems to concentrate on its international services to the detriment of the remaining UK services.

BA is no longer owned by UK plc.

BA is not exactly the biggest employer in the country

It's been said many times on various threads here that BA would be more honestly re-named as London Airways.

If all BA flights stopped tomorrow, would the world grind to a halt? No

Would UK plc grind to a halt? Likewise, no

Would the tax income from air passenger duty disappear? No.

So, in summary it's not too big to fail & if it did, it wouldn't bring the world or the country to an immediate halt.

It's only hope of a bail out is to cause secondary failure of one or more of the banks that the government has put money into.

[British Grenadier]

Here we go Nationalisation , would the gov let BA disappear ?? , i think not !!

[HamishMcBush]

Here we go Nationalisation , would the gov let BA disappear ?? , i think not !!

...and in the run-up to a General Election?

It's a great shame that the government didn't let Northern Rock and the banks go under too. Why do they deserve propping up when manufacturing industry wasn't propped up? No help for Austin-Rover, TVR etc etc

[pontifex]

Is BA too big to fail? Remember PanAm!

[leighton]

Nationlise it, subsidise it to the hilt then sell it back for pean-nuts to 'Investors' they did it before and they'll probably do it again.
Or, sell it to Richard Branson ???

[kaikohe76]

Donkey497,

I'm with you all the way, the UK & the worldwide aviation industry do not need BA at all, pity is that a great many BA Staff at all levels can not get this into their heads.
Where as I am very lucky to live, BA stopped operating here many years ago. This is not at all a problem as we have our own world class national carrier, complete with the new `Cuddle Class` seating & the CEO is seen in the body painted buff loading baggage in our adverts.
The people who will suffer whatever the outcome of the present BA farce, are the long suffering pax who remained loyal & those sensible & honourable BA Staff whose voice is just not heard.

[M2dude]

Close it down and start again. The unions deserve it


A gross insult to all the pilots. engineers and a great many other staff within the airline that are fighting to defeat this strike if it happens, and have sacrificed much to help pull BA through. Get your facts right sir, please.

[Captain Airclues]

Just to get the facts right, the projected loss for this financial year is £602m. The £1bn loss is over two years. Still bad, but not as bad as the headline tries to imply.

[Flapping_Madly]

Did not BA once have a low-cost off-shoot that was sold off?

What a great pity it was not grown as hard and fast as possible at the expense of the parent which could have been allowed to wither away.

However I'm only SLF and as my wife often says "You know nuthen".
She even gets the accent right.:*

[Re-Heat]

In a mistaken belief that BA's business was "premium passengers" and a failure to recognise that they were in the mass transportation business with a particular legacy monopoly over Heathrow, "go" was sold to easyJet as a non-core enterprise, allowing easyJet to grow substantially at low cost.

Nobody is out to get hard-working staff, but the airline's cost structure survives not as people are prepared to pay so much for BA, but that BA offers the vast majority of routings from London through a legacy structure.

The proof in the pudding is that it cannot afford either to base itself or provide any services from any other city in the UK other than London (except routings into London).

Economics always wins...eventually. Sad as it might be.


And no, I am not prepared to support it through my taxes.

[Flyluke]

Whatever the loss is, it is as nothing to the pension deficit.
Which seems impossible to rectify.

[SpeedyG]

Pensions are so " passe" - Suggest we all quit worrying over something that is now water under the bridge.. Save you own cash as neither Ste nor Company can afford the growing problem (population)

[Flyluke]

Hmm. Pension hole passe?
So it doesn't matter that all that money is missing?

[wreckless]

I don't think the money is missing .... the bankers have it all.

[Miles Magister]

Pension money is not missing, it is just that toio many big companies promissed to pay out money they never had in the first place.

[sweetie76]

Pensions are so " passe" - Suggest we all quit worrying over something that is now water under the bridge.. Save you own cash as neither Ste nor Company can afford the growing problem (population)


Indeed, a number of BA pilots (retired or approaching) are seriously considering removing their pension pot from the BA scheme and opting for 'drawdown'.

Could this be a way of partially solving the pensions 'black hole?' There would have to be incentives, maybe.....

[Longhitter]

Sweetie:

That would make the pension problem worse... BA has the disadvantage (in comparison with, for example, AF/KL and Lufthansa) that the pension deficit is actually on it's books, hurting it's financial position and ability to generate / borrow cash. At the moment it is a 3.7 billion Pound liability over which negotiation with the fund trustees is possible. The trustees can agree on a 'repair plan' and thereby avoid uncertainty and unrest amongst BA shareholders and creditors.

If everybody actually claims his or her pension pot now BA would have to come up with the cash instantly when they don't have it, and would immediately become insolvent. This is not likely to happen since a move like that would bankrupt both the company and it's pension schemes, leaving all involved with nothing...

The pension deficit is a major problem, though, and needs to (continue to) be taken seriously.

[Sir George Cayley]

Longhitter,

Are you sure? If any pension fund manager sees an employee leave the scheme before retirement date, then the long term liability stops there. OK they have to payout that employees pot (less a fat fee me thinks) but compared to the amount of money needed to cover that employees life expectancy ......:confused:

I know a couple of retired BA pilots who are both fit and healthy and in their late 70's - they could go on another 20 years.

Given a current 55 - 60 year old pilot in good health and earning 100K, no wonder the deficit is so big. :{ How much would you put aside to cover such a person for potentially 40 years of pension?

Just my take on it.

Sir George Cayley

[stormin norman]

How many uk airlines have a pension scheme on par or better than BA ? or how many
actually have a pension scheme ?

[seat 0A]

Longhitter,
Since all Euro airlines work under the same accountancy rules, also AF/KL have the pensions on the books.
At least on the KL side there are no deficits :}

[Longhitter]

0A,

That is not true. Only company pension contributions go on the books for AF, KL and LH but the values of their actual pension funds do NOT.

AF:

Employees and AF pay into national (state-governed) pension fund for all aircrew of all french airlines (cabin and pilots). Value of the fund is not on the AF books, only contributions are. AF is not liable for pensions if the fund collapses.

KL:

Employees and company pay into private pension funds that are independent but under supervision of the dutch national bank. Value of the fund is, again, not on the KL books and the only liability for the company is contributions.

I believe the situation is similar for LH, but I am not 100% up to speed on them.

The situation is definitely different for BA where both contributions and the actual value of their pension funds ARE on the books, and Iberia can even pull out of the merger if the pension deficit is not adressed to their liking.

Paying out pension pots might be cheaper in the long run, but if enough people decide to cash out now I wonder if BA has enough of it. Generating or borrowing money is very difficult for BA at the moment. A pension fund needs cash to generate cash through interest and return on investment. The BA pension funds are already 3.7 billion Sterling short, and that's 3.7 billion not generating any profit or interest to cover liabilities. If people cash out it will reduce future liabilities, but also further hurt necessary fund growth in the short run.

[aileron buzz]

Mr Bisignani, the iata chief says that airlines will need 3yrs to recover from recession and that BA is expected suffer heavier losses from the period up to March the 31st. Fasten your seatbelts as the bumpy ride continues.:E

[MD11Engineer]

The large majority of LH´s employees will be insured under the standard compulsory state pension system, in which the premium is a percentage of the employee´s gross salary and of which the employee pays half, while the employer pays the other half into the governmental pension funds. The contributions are deducted by the employer before he pays the net salary to the employee and are paid directly to the relevant pension fund. The liability of LH ends there.
Employees mikght have a supplemental company pension scheme as a perk, but since I haven´t worked for LH since a long time I don´t know any details. Generally with such schemes the employer pays a contribution to a private insurer (and can deduct this from his tax), who later will pay out the pensions.
Only top level employees will have their own, private pension plans.
The same applies to the medical insurance.

[AlpineSkier]

@Hamish McBush

No help for Austin-Rover, TVR etc etc

What a nonsensical statement - absolutely worthy of BASSA.

I don't know if you are too young or have severe memory loss, but British Leyland, Leyland Cars. BLMC, Jaguar, Austin Rover and lots of other abbreviations, were kept alive sucking on the state tit for more than 20 + years from the beginning of the 70's.

Fool !

And why the hell would anybody with any grasp of economics want to save TVR ?

Revert to first pithy comment .

[wobble2plank]

TVR was sold to a rich Russian spoilt brat and not the 'management' buyout that sadly couldn't find the cash within Peter Wheelers time frame.

The said Russian then pulled the plug and the funding. Nothing sinister there, except the fact that the cars were inverse kit cars, you bought it complete and it disassembled itself over time! :ok:

BA have good cash reserves and the backing of the city and investors as long as they kick BASSA into touch. The future, once the restructuring has run its course, is for a far better and lower cost base per passenger mile.

Time will tell and, no, there would be no bailout for BA.

[Torquelink]

What about a "Pre-Pack"? Not an an accountant but, as I understand it, the company and its existing or new shareholders decide on a new business plan using some or all of the company's existing assets, decide on new contracts to be offered to those employees it wishes to retain and, when everything's agreed, enters into /emerges from Administration having shed assets, labour and contracts that don't work and, possibly, rescheduled debt too. Presumably it could address the pension deficit too?

[Ex Cargo Clown]

If the company goes to the wall then so be it. They have deserved everything they've gotten. Closing MAN, BFS, NCL etc

I hope BASSA succeed in this, even if it means sacrificing my NAPS pension.

All those defending the company, remind me again how much Eddington, Ayling et al were paid off......

A great company to work for, but terribly managed.

[hammerb32]

Don't get me wrong I wouldn't wish redundancy or job loss on anyone and equally don't doubt that there are numerous employees at BA that are commited to both the company and their customers.

That said after watching the news coverage of the cabin crew wildly celebrating the ballott decision to strike over christmas I resolved there and then I would never fly BA again, that an employee employed to deliver customer service could celebrate the potential disruption caused to said customers holidays left me cold. I'm not an expert of the politics behind the decision and wouldn't be arrogant enough to sit in ignorance and dis-agree or agree with the stike, but to celebrate like a bunch of spoilt kids was unforgivable.

[Albert Driver]

The pension deficit quoted is exaggerated by the fact that it was last calculated at the lowest point of the recession as far as equity prices were concerned. The old APS scheme is actually well-funded and historically only goes into deficit briefly in extreme conditions. The later NAPS has always been under-funded but is not as bad as the last valuation shows now there has been a significant recovery in equities.

Not saying there isn't a problem, just that it's not terminal.

[LGS6753]

A great company to work for, but terribly managed.

I presume Cargo Clown means that BA people are overpaid, and somehow blame their current predicament on the current management?

FWIW my take on BA is:
1. it was so successul in the Eighties, just ater privatization, that its old-fashioned union-dominated working practices were not challenged. Now the cost of that luxury is coming home to roost.
2. Under no circumstances will it be bailed out if it has terminal problems.
3. The person who made the biggest contribution to the pension deficit was one G. Brown, who has raped all private sector pension schemes since 1997.

[pilot999]

It's about time Ryanair took over BA and turned it into a profit making machine, Personally I never fly withy BA, with the exception of some good guys I know, too many have their heads stuffed up their rear end.

[jerboy]

It's about time Ryanair took over BA and turned it into a profit making machine

What people seem to forget is that BA can be a profitable airline. And when it does profit, it does so exceedingly well. A quick look here British Airways - Wikipedia, the free encyclopedia (http://en.wikipedia.org/wiki/British_airways#Financial_performance) will tell you that since 1996 there have only been 3 loss making years: 2000, 2002, 2009 (and yes we're pretty sure 2010 can be added to that list too).

Sure efficiencies need to be made. I for one am dead against the proposed CC strike and do believe they need to be fair and do their bit. I know it is doubtful that premier travel will return to the levels of previous years, but it will start climbing.

Simple measures need to be taken to ensure the airline doesn't enter a downward spiral; cabin crew is just a small part of that. Management structure needs to be altered. More efficient aircraft need to be used. Unprofitable routes need to be scrapped/reduced for example.

The matter of the regions still seems to be sour point with a lot of people. The fact is if there were still a base at every major airport in the country, BA would be in much worse shape now. The market out of BHX/MAN/Scotland is primarily for LCCs. Save the odd F70 to AMS, a 757 to EWR and a A330 to DXB (airlines which are doing exactly the same as BA: Flying to their hub for you to make connections), premier traffic is limited. BA is not an LCC; their business model (rightly or wrongly) does not work for these sort of services.

So lets not write BA off quite yet. Give it time, the changes will happen.

FR will have its day where it makes a loss, plus I can't think of anyone who has their head further up their ass than MOL.

[Ex Cargo Clown]

old-fashioned union-dominated working practices were not challenged

You have got to be kidding right ???

Ever walked around Waterworld and seen the number of useless, recently graduated MBA clowns there are doing absolutely nothing ?

I will name some of the idiots that have run the airline starting with number 1 Robert Ayling

[gsky]

Ex cargo Clown

You are probably right.. in fact.. having met some of them . you are right!
but

how many of them are there ? ( do you know.?)

Are there several thousand?

( I have no idea .. do you?)

What I do think is that lots of "senior" managers, who were on very high salaries, many of whom also had a lot of experience, have left and been replaced, in the main, with younger , less experienced ( and possibly lower cost?) MBA's, who know lots of theory, but with little experience.

But are the costs of "manning " Waterworld going up, or down?
I have no idea.

However :

The fact that there are lots of "MBA clowns" at Waterworld in no way detracts from the statement :

"old-fashioned union-dominated working practices were not challenged "

Both need attention and changing .

[TURIN]

"old-fashioned union-dominated working practices were not challenged "

Bull!

They were, and still are, challenged ad-nauseum in all departments.

Take a good look at BA and what's left of it compared to the dinosaur that was privitised.

The company is a shell of it's former self. Much of what was once done 'in-house' is now farmed out or franchised.

As for the pension 'deficit'.

Again, Bull!

It's an accounting trick.

The actuaries base their findings on a period of time defined by an abitary 3 yearly review. This last review, March 09, was at the low point of the stock market and property crash. Have look at the figures. The markets, and property prices have recovered enormously since. The deficit is closer to £500 Million. The 10 year plan put in place by the company/trustees 2 years ago should be allowed to run and achieve it's goal.

See this article.

Pension fund finances improved sharply in December (http://newsvote.bbc.co.uk/1/hi/business/8453857.stm)

[Ex Cargo Clown]

Can someone please remind me how long BA took a "pensions holiday" and stopped paying into APS and NAPS.

Thanks

[LGS6753]

Most companies took pension holidays in the '90s because the Government limited the surplus that could be carried in their pension funds. So don't blame that on BA Management. As I said above, they deserve criticism for not confronting arcane working practices in the good years.:ugh:

[Ex Cargo Clown]

Most companies took pension holidays in the '90s because the Government limited the surplus that could be carried in their pension funds. So don't blame that on BA Management. As I said above, they deserve criticism for not confronting arcane working practices in the good years.

You have got to be joking !

How much are the idiotic management taking in pension funds ?

That prat Ayling, Eddington, even that complete plank Gareth Kirkwood.

Oh and ask about the dodgy dealings with Dunwoodys in the cargo sense, family on the board now I see......

[LGS6753]

Cargo Clown,

I have a sneaky feeling that you don't like some members of BA Management.:cool: In your very humble opinion, they didn't do their jobs very well. I wonder what you would have done in their place - cosy up to the unions, perhaps? Or turn a blind eye to the over-manning and Spanish practices that were destroying the company?:ugh:

It's very easy to criticize 'the management', but most armchair critics wouldn't have a clue how to start running a business. As to management pensions - they represent a very small proportion of the total pension liability.

[MUFC_fan]

No one want to report on the better than expected results? OK I'll do it:

BBC News - British Airways' £50m loss smaller-than-expected (http://news.bbc.co.uk/1/hi/business/8499691.stm)

[jerboy]

No one want to report on the better than expected results?

Good news doesn't get reported here... The doom-mongerers can't get excited about it and foresee the downfall of BA/LHR/British Aviation.

Ok 'good news' is perhaps a bit too far, bit in terms of the loss they were expecting, its relatively bloody brilliant news. Perhaps things are starting to go the right way and all the radical cost cutting is paying off.

This period covers most of the 'will they won't they strike' period (I wonder how much that cost them), but doesn't cover the snow period over January - so that will put a dent in next quarter's results.

A £50m loss sure is a big drop considering what they were profiting a couple of years back, but by the sounds of things (perhaps they meant to make it sound worse to help drive through cost-cutting measures?) it could have been much, much worse.

Maybe that £1b loss is looking unlikely now eh?

[MUFC_fan]

The £1bn was very much the top of the estimated loss - and would always be the headline figure as it attracts the attention.

I think one thing is certain from now on: all airlines will be operating more efficiently in the future and the crews will be saying goodbye to those £29k average contracts!

[LGS6753]

The reduced loss is excellent news. Because WW has taken on the unions, beaten some sense into people who were following the militants, cut costs and outsourced services.
It's what you do to survive.
It's called management.:ok:

[waco]

........British Airways...........is that the really bad pension providor that has some aeroplanes that fly out of London?

[MUFC_fan]

The reduced loss is excellent news. Because WW has taken on the unions, beaten some sense into people who were following the militants, cut costs and outsourced services.
It's what you do to survive.
It's called management.


Very much so. If there is one thing that WW has done right at the airline it is definitely taking on the unions. Had he not, BA would be on the chopping block well and truly.

The next few months will set in stone how he goes down in history, but some of the 'BA will be gone by New Year' brigade may now think that WW has saved the airline...


........British Airways...........is that the really bad pension providor that has some aeroplanes that fly out of London?


Yeh, the one that provides thousands of jobs (mostly paid very well!) and keeps London moving...

[Ian Brooks]

Jerboy
I think your details of MAN are a bit wrong.
AF 6 a day Paris mainly A320 LH to FRA 4 A320 a day KLM 6 B737 a day to AMSLX to ZRH going to 3 A320 a day, DXB nearly 800 pax a day in each direction
plus QTR and ETD another 600 to Middle East. From mid May 4 flights a day to New York plus several other US flights with probably 1500/2000 pax a day

That to me does not show an airport that has only Locost flights
I used to work in business travel and BA always wanted to send pax via London
even if they had to in effect throw the shuttle in free. Many of our pax refused to fly BA because they could get a much better deal from LH/AF/KL on long haul
connection and usually get there quicker avoiding LHR ( I know it is a lot better now
for BA connections )


Ian B