BA and Project Columbus III
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Lizanne has had the BALPA document for days, yet the full extent hasnt been given to us. We are led along to believe that it is a 'sweetheardt' deal.
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What does WW need to do to make a rights issue appealling? He needs to show a likely improvement in operational efficiency which means, basically, getting more of each £ of revenue down to bottom line profitability. That's not just now in the downturn, but in future when revenue improves. How does he achieve it? Partly by looking for cost reductions and greater operational flexibility, eg by re-negotiating staff operating conditions
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At the end of the day, whether there is a Rights Issue or not the government will not allow BA to go bust, when so may of its competitors get state aid. JAL has just received a 'soft loan' from the Japanese government to tied it over and as we all know, Alitalia, Air France, Olympic, SAS even Aer Lingus ...would never be allowed to go bust.
As for VIRGIN, no one knows how much money Branson is pumping into it.
If British Airways failed it is as if Britain has failed. That is the problem when you have the countries name in its logo.
As for VIRGIN, no one knows how much money Branson is pumping into it.
If British Airways failed it is as if Britain has failed. That is the problem when you have the countries name in its logo.
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At the end of the day, whether there is a Rights Issue or not the government will not allow BA to go bust, when so may of its competitors get state aid.
If British Airways failed it is as if Britain has failed. That is the problem when you have the countries name in its logo.
Join Date: Jul 2005
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This government has neither the money nor the inclination to bail out BA. British Leyland failed, British Steel went out to Corus. The Government has sat back and watched Vauxhall get sold without any guarantee of job security.
They don't give a stuff about private industry, only that it provides the taxes to pay for their golden pensions and parachutes. Mandelson is a parasite who never thinks pro-actively.
Don't ever believe that BA can't go bust.
They don't give a stuff about private industry, only that it provides the taxes to pay for their golden pensions and parachutes. Mandelson is a parasite who never thinks pro-actively.
Don't ever believe that BA can't go bust.
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SP #1106
"At the end of the day, whether there is a Rights Issue or not the government will not allow BA to go bust"
I genuinely hope you are not relying on this when deciding whether or not to push BA to the brink. The market certainly does not share your optimism. At yesterday's closing price, BA was valued at the book value of its tangible assets as at 3/09. In other words, investors currently value BA at the price it could get for selling its property and planes. That's a bit simplistic, but it most definitely is not pricing in any kind of government handout. Also, your "bail out" policy only works until June 2010. I'd suggest there is no hope whatsoever of a Cameron government bailing out BA. Or, if it did, the consequences for you would be way worse than anything WW might inflict on you. Can you honestly see an Old Etonian underwriting Union privileges at BA?
I do agree with you that BA will not "go bust" or disappear. It has a very large number of valuable slots at LHR which lots of airlines would like to have. I also agree with you that BA is still something of a prestige brand. I'd probably articulate it in a different way ("flag carrier" airlines disappeared 20 years ago). So, worst case, somebody would buy BA, or it could be split up. The two questions are: do you want that, and who are your possible new owners? Only you can answer the first question, but I can have a stab at the second, and it won't be any of the established legacy airlines that would buy BA. There would be all kinds of competition issues, eg we know that the EU will bar anything that further concentrates slots at LHR. We know it because slot concentration at Dublin was their one objection to the Aer Lingus-Ryanair combination. If anyone else buys BA, what is the risk they'll want more change more quickly? Would they be buying a long term business, or a turnaround situation that can be restructured and then sold on to another airline quickly?
Would you prefer to be in a stronger airline that gets through the downturn, or risk being one of those that doesn't make it and is swallowed up? There are clear benefits to being one of the survivors. There will be a lot fewer airlines in a few years time, meaning the potential for bigger market shares for the survivors. However, BA still needs to be operationally efficient to then take full advantage. And it needs to change even to get there.
I genuinely hope you are not relying on this when deciding whether or not to push BA to the brink. The market certainly does not share your optimism. At yesterday's closing price, BA was valued at the book value of its tangible assets as at 3/09. In other words, investors currently value BA at the price it could get for selling its property and planes. That's a bit simplistic, but it most definitely is not pricing in any kind of government handout. Also, your "bail out" policy only works until June 2010. I'd suggest there is no hope whatsoever of a Cameron government bailing out BA. Or, if it did, the consequences for you would be way worse than anything WW might inflict on you. Can you honestly see an Old Etonian underwriting Union privileges at BA?
I do agree with you that BA will not "go bust" or disappear. It has a very large number of valuable slots at LHR which lots of airlines would like to have. I also agree with you that BA is still something of a prestige brand. I'd probably articulate it in a different way ("flag carrier" airlines disappeared 20 years ago). So, worst case, somebody would buy BA, or it could be split up. The two questions are: do you want that, and who are your possible new owners? Only you can answer the first question, but I can have a stab at the second, and it won't be any of the established legacy airlines that would buy BA. There would be all kinds of competition issues, eg we know that the EU will bar anything that further concentrates slots at LHR. We know it because slot concentration at Dublin was their one objection to the Aer Lingus-Ryanair combination. If anyone else buys BA, what is the risk they'll want more change more quickly? Would they be buying a long term business, or a turnaround situation that can be restructured and then sold on to another airline quickly?
Would you prefer to be in a stronger airline that gets through the downturn, or risk being one of those that doesn't make it and is swallowed up? There are clear benefits to being one of the survivors. There will be a lot fewer airlines in a few years time, meaning the potential for bigger market shares for the survivors. However, BA still needs to be operationally efficient to then take full advantage. And it needs to change even to get there.
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So,
£29,400 basic pay old CC.
£35,000 basic pay old purser.
£45,000 basic pay old CSD.
£20,000 allowances.
Diversion, reading lights and temp control (CC bunks), wheelchair, towels , plus plus plus and staying in some of the best hotels world wide etc etc etc.
The story going around is BA CC cost about double VS CC as a rule per hour of flying.
I am interested to know how much do BA want to reduce the above T&C's/cash as a % of the package in place now and how much are the CC unions thinking as a deal that will get the wolf to back off ?
Feeling the tempo of posters on here a allows me to take a wild guess, BA want 25/30% reduction and CC unions would accept 4/8%, can any of the more informed on here pick any numbers/% ?
£29,400 basic pay old CC.
£35,000 basic pay old purser.
£45,000 basic pay old CSD.
£20,000 allowances.
Diversion, reading lights and temp control (CC bunks), wheelchair, towels , plus plus plus and staying in some of the best hotels world wide etc etc etc.
The story going around is BA CC cost about double VS CC as a rule per hour of flying.
I am interested to know how much do BA want to reduce the above T&C's/cash as a % of the package in place now and how much are the CC unions thinking as a deal that will get the wolf to back off ?
Feeling the tempo of posters on here a allows me to take a wild guess, BA want 25/30% reduction and CC unions would accept 4/8%, can any of the more informed on here pick any numbers/% ?
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Technically it started as only 14%, half would be met by a mix of pay and productivity measures, the other half by the introduction of a "new fleet". (That is new recruits on market rate with industry standard agreements.)
Over a period of years of course the new fleet would take over as old people left and thus the whole operation would one day reach a standard competitive cost base.
BASSA says it's quite happy to negotiate a settlement as long as it does not affect pay, does not reduce crewing levels, protects all jobs and does not involve a new fleet, which leaves............... ?
Now the situation is worse with 16 aircraft being stood down so the targets may have moved a little.
Over a period of years of course the new fleet would take over as old people left and thus the whole operation would one day reach a standard competitive cost base.
BASSA says it's quite happy to negotiate a settlement as long as it does not affect pay, does not reduce crewing levels, protects all jobs and does not involve a new fleet, which leaves............... ?
Now the situation is worse with 16 aircraft being stood down so the targets may have moved a little.
Last edited by plodding along; 24th Jun 2009 at 11:07.
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I suspect most of the savings can be made by newfleet and some productivity improvements without too much of a salary hit. And while the green eyed monster is rearing it's head about "some of the best hotels world wide", they are nothing of the sort, just standard business level hotels. Virgin share a few of them too.
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JP
I agree that another airline will not buy BA as it stands. It is more likely an investment company will buy BA, hive off the non core parts of the airline, enforce new terms and conditions, probably mass redundancies - then sold on. This will leave what remaining staff there are on worse contracts to what they are on now, or worse still, no job.
So SP if you want to be part of that, you and you're colleagues are well on the way. It will probably be the only thing BASSA will achieve
and who are your possible new owners?
If anyone else buys BA, what is the risk they'll want more change more quickly? Would they be buying a long term business, or a turnaround situation that can be restructured and then sold on to another airline quickly?
So SP if you want to be part of that, you and you're colleagues are well on the way. It will probably be the only thing BASSA will achieve
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SP & Others
Incidentally, I forgot to mention your belief that being "British" will save BA. There are lots or very recent examples of companies dropping the "British" from their corporate name. Such as:
Incidentally, ever wondered why such companies drop the word "British"? It's simply to make themselves more marketable internationally. They worked out that they gained more outside the UK by dropping "British" than they gained internally. Hardly surprising when only 1% of the world's population is British. So the question is, was Bob Ayling really wrong to stick "global" (but weird) art all over the tails of BA planes all those years ago?
Anyway, SP, just something to consider. For me, I think your belief that being the "flag carrier", and "British" will ensure government largesse is misplaced.
- British Petroleum plc. Now just plain BP plc
- British Gas plc. Now just BG plc
- British Aerospace. Now BAe Systems plc
Incidentally, ever wondered why such companies drop the word "British"? It's simply to make themselves more marketable internationally. They worked out that they gained more outside the UK by dropping "British" than they gained internally. Hardly surprising when only 1% of the world's population is British. So the question is, was Bob Ayling really wrong to stick "global" (but weird) art all over the tails of BA planes all those years ago?
Anyway, SP, just something to consider. For me, I think your belief that being the "flag carrier", and "British" will ensure government largesse is misplaced.
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Well Jay Pee we can agree to differ.
I do not think that 40,000 jobs going in BA, plus all the people who work indirectly for the carrier, is anything the government can stomach. There are far less workers in the UK car industry now, yet the government rushed out the scrappage scheme to protect their jobs....and many more on the Continent and around the world as well!
Plans fo a third runway seem like a complete joke in hindsight, yet Willie campaigned so hard for it. Now the UK may not even have its national flag carrier any longer, due to Walsh's expected impositions and the resultant industrial mayhem.
I think it is a disgrace that this man, applying the same tactics at Aer Lingus after 9/11, can come to the UK and be allowed to destroy its flag carrier on the anvil of profit. This is not about the survival of the airline, it is the unacceptable face of unbridled capitalism.
I do not think that 40,000 jobs going in BA, plus all the people who work indirectly for the carrier, is anything the government can stomach. There are far less workers in the UK car industry now, yet the government rushed out the scrappage scheme to protect their jobs....and many more on the Continent and around the world as well!
Plans fo a third runway seem like a complete joke in hindsight, yet Willie campaigned so hard for it. Now the UK may not even have its national flag carrier any longer, due to Walsh's expected impositions and the resultant industrial mayhem.
I think it is a disgrace that this man, applying the same tactics at Aer Lingus after 9/11, can come to the UK and be allowed to destroy its flag carrier on the anvil of profit. This is not about the survival of the airline, it is the unacceptable face of unbridled capitalism.
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If BA goes under it'll be because of the economic climate and the failure to respond to the collapse of the premium travel market, not because they lost £100M on an abortive cabin crew strike. You can try to personalise it all you want, demonise Willie Walsh if you will, but he's only doing what any competent CEO would do. Changing the man won't change the strategy. 7 days til the hangmans noose tightens round BASSAs neck!
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SP - WW & Aer Lingus
I have to say you confuse me with your constant references to WW's "failure" at Aer Lingus. I don't know anyone that shares your view. Aer Lingus was saved by WW, not destroyed by him. WW came up with a strategy to fight back against Ryanair, which involved matching them for price, extending the route network, and going LoCo. To be fully implemented, it required fleet renewal and expansion, something the Irish government could not finance. WW recommended privatisation in order to raise the finance. Ahern would not commit, so WW brought matters to a conclusion by submitting an MBO proposal. Maintaining Aer Lingus as a quasi-full service airline which, in reality, was dominated by the DUB-LHR route, was a one-way bet to bankruptcy. Once EU fares deregulation was implemented, and Ryanair could fly to Stansted for under €50, then Aer Lingus' €300 economy fares simply resulted in empty planes.
WW made Aer Lingus profitable. Before that it was a typical state-owned "flag carrier" that, like most similar organisations, managed the near-economically impossible feat of being a monopoly that lost money.
I suspect I know why you view WW as a failure at Aer Lingus. No doubt BASSA keeps in close fraternal contact with SIPTU over in Ireland and they tell you what a Dickensian mill owner-type he was. They had similar discussions with WW about restructuring to yours. I won't bore you with the details. They're too depressing anyway. Just one thing to keep in mind, though. WW managed to grow Aer Lingus (more routes, more planes, more flights) whilst, at the same time, cutting staff numbers. Not sure how you manage that unless the organisation is grossly inefficient to begin with.
WW made Aer Lingus profitable. Before that it was a typical state-owned "flag carrier" that, like most similar organisations, managed the near-economically impossible feat of being a monopoly that lost money.
I suspect I know why you view WW as a failure at Aer Lingus. No doubt BASSA keeps in close fraternal contact with SIPTU over in Ireland and they tell you what a Dickensian mill owner-type he was. They had similar discussions with WW about restructuring to yours. I won't bore you with the details. They're too depressing anyway. Just one thing to keep in mind, though. WW managed to grow Aer Lingus (more routes, more planes, more flights) whilst, at the same time, cutting staff numbers. Not sure how you manage that unless the organisation is grossly inefficient to begin with.
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I do not think that 40,000 jobs going in BA, plus all the people who work indirectly for the carrier, is anything the government can stomach. There are far less workers in the UK car industry now, yet the government rushed out the scrappage scheme to protect their jobs....and many more on the Continent and around the world as well!
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Carnage. How have you managed to come to the conclusion that Walsh is competent?
Savings from cabin crew contracts will make no difference to whether BA survives or not. Why should employees accept permanent changes to their pay if management don't do the same?
The latest communique from Walsh (Title no longer "Fight for Survival" but "Action for Survival"!!) is reasonably upbeat with a certain amount of back peddling about our demise.
By replanning capital expenditure he aims to finish the financial year with £1 billion in cash, down from £1.4 billion. So, there is "no immediate threat" to our business. We have performed "significantly better" than the industry average and we have "significantly more cash" than many of our competitors. Not bad at all. Very good in fact.
The tone of his letter seems to suggest he has lost the confidence of his own staff. He mentioned how the newspapers haven't made "pretty reading". Oh how your work for free scheme has backfired Willie. Crew on the BA ESS forum are in open revolt. It is amazing! Like a virtual picket line.
He is still after structural changes to the employee cost base, and describes these as "essential" to our short-term survival and to our long term viability. Why? We are outperforming our competitors and he has identified no structural reason which would support permanent structural changes to the employee cost base
Yes Jay Pee there were inefficiences at Aer Lingus, no doubt some due to pay awards negotiated by Walsh when he was an IALPA rep. BA has been privatised for a long time and although somewhat top heavy, has done quite well over the years. BA is competitive on EU routes price wise and offers a free bar and food as well.
By putting Aer Lingus in the low cost pool, what can they offer that is better than RyanAir? They can't undercut them on price, so service sells after all. Aer Lingus should have stayed a full service airline selling itself on the quality of its product and the professionalism of its crews.
Savings from cabin crew contracts will make no difference to whether BA survives or not. Why should employees accept permanent changes to their pay if management don't do the same?
The latest communique from Walsh (Title no longer "Fight for Survival" but "Action for Survival"!!) is reasonably upbeat with a certain amount of back peddling about our demise.
By replanning capital expenditure he aims to finish the financial year with £1 billion in cash, down from £1.4 billion. So, there is "no immediate threat" to our business. We have performed "significantly better" than the industry average and we have "significantly more cash" than many of our competitors. Not bad at all. Very good in fact.
The tone of his letter seems to suggest he has lost the confidence of his own staff. He mentioned how the newspapers haven't made "pretty reading". Oh how your work for free scheme has backfired Willie. Crew on the BA ESS forum are in open revolt. It is amazing! Like a virtual picket line.
He is still after structural changes to the employee cost base, and describes these as "essential" to our short-term survival and to our long term viability. Why? We are outperforming our competitors and he has identified no structural reason which would support permanent structural changes to the employee cost base
Yes Jay Pee there were inefficiences at Aer Lingus, no doubt some due to pay awards negotiated by Walsh when he was an IALPA rep. BA has been privatised for a long time and although somewhat top heavy, has done quite well over the years. BA is competitive on EU routes price wise and offers a free bar and food as well.
By putting Aer Lingus in the low cost pool, what can they offer that is better than RyanAir? They can't undercut them on price, so service sells after all. Aer Lingus should have stayed a full service airline selling itself on the quality of its product and the professionalism of its crews.
Last edited by Stall Pusher; 23rd Jun 2009 at 23:05.
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Having £1 billion at the end of the year relies on implementing the business plan in full. If it isn't done then we'll have less than £1.2 billion. We still need to tap the capital markets to move forward to the tune of £600M, and that won't be forthcoming if they don't see strutural change in BA to guarantee a return on their investment. The cabin crew contribution won't save BA in isolation, nor will the pilots' , but that doesn't mean either of us should be exempt.
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Customer service will not be improved if you take crew off of the aircraft.
A job is known as "work" as it tends not to be "leisure"...