Rod's Words of Wisdom
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Rod's Words of Wisdom
The following is from a BA press release issued today. So, what's BA going to do?
Rod Eddington looks at the elements which underpin a successful business
As British Airways continues to conduct a "Future Size and Shape Review" of its operations, Chief Executive, Rod Eddington, looks at the elements which underpin successful companies.
"What are the characteristics of a successful business? This is on all our minds as we continue the work to decide on the best future size and shape of British Airways. Among the things we need to do is make enough profit to compete with other successful businesses, whether they are airlines or not.
"We need to be able to offer shareholders as good a return on their money as they would get if they invested it elsewhere. We also need to make enough money for capital investment.
"Most other successful businesses, including the best airlines, aim to make a £10 profit for every £100 of revenue they generate - an operating margin of 10 per cent. At the moment we don’t manage that even in good years.
"If we are to reach that goal, we will have to have the right products matched to the right fleet and routes, and continue to offer excellent customer service. Our costs will have to come down.
"The work being carried out under the Future Size and Shape Review at the moment is aimed at helping us put the building blocks in place to achieve this competitive level of profitability in the future.
"That way, British Airways and those who work for the airline will have a far more secure future."
January 24, 2002
Rod Eddington looks at the elements which underpin a successful business
As British Airways continues to conduct a "Future Size and Shape Review" of its operations, Chief Executive, Rod Eddington, looks at the elements which underpin successful companies.
"What are the characteristics of a successful business? This is on all our minds as we continue the work to decide on the best future size and shape of British Airways. Among the things we need to do is make enough profit to compete with other successful businesses, whether they are airlines or not.
"We need to be able to offer shareholders as good a return on their money as they would get if they invested it elsewhere. We also need to make enough money for capital investment.
"Most other successful businesses, including the best airlines, aim to make a £10 profit for every £100 of revenue they generate - an operating margin of 10 per cent. At the moment we don’t manage that even in good years.
"If we are to reach that goal, we will have to have the right products matched to the right fleet and routes, and continue to offer excellent customer service. Our costs will have to come down.
"The work being carried out under the Future Size and Shape Review at the moment is aimed at helping us put the building blocks in place to achieve this competitive level of profitability in the future.
"That way, British Airways and those who work for the airline will have a far more secure future."
January 24, 2002
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Running around like headless chickens is a phrase that comes to mind.
The word airline and management shouldn't be used in the same sentence, still what does Rod Eddington care, if it all goes tits up I've no doubt he'll walk away with a tidy sum, enough to put down as a deposit for a nice little retirement place in Australia.
The word airline and management shouldn't be used in the same sentence, still what does Rod Eddington care, if it all goes tits up I've no doubt he'll walk away with a tidy sum, enough to put down as a deposit for a nice little retirement place in Australia.
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I think I might be able to help you here, Rod.
"What are the characteristics of a successful business? This is on all our minds as we continue the work to decide on the best future size and shape of British Airways. Among the things we need to do is make enough profit to compete with other successful businesses, whether they are airlines or not.”
A successful business has a product that people want to buy at a price they are prepared to pay. They don’t mind paying more if they believe they’re getting real value for money. For a product to be a premium product, it must be of exceptional quality and stand alone in the market place. You have a duty to operate efficiently to best serve the interests of both customer and investors.
"We need to be able to offer shareholders as good a return on their money as they would get if they invested it elsewhere. We also need to make enough money for capital investment.”
Maximising return on investment comes from constant attention to detail, ensuring that your product remains ahead of the pack, and constantly reinvesting in the product. At the same time you must keep operating costs to the absolute minimum. Your business should be cheap to run but lucrative at the same time. Borrow only to invest.
"Most other successful businesses, including the best airlines, aim to make a £10 profit for every £100 of revenue they generate - an operating margin of 10 per cent. At the moment we don’t manage that even in good years.”
Unfortunately, you seem to be blind in one eye when it comes to your staggering costs.. . . ."If we are to reach that goal, we will have to have the right products matched to the right fleet and routes, and continue to offer excellent customer service. Our costs will have to come down.”
You won’t do that by paying subsistence wages to miserable staff. Invest in customer service and operational staff – get rid of administrative staff. Structure your business to be lean and mean. Use the best of modern IT to streamline your management to the minimum possible. Reward your employees to attract and retain the best possible individuals. INCENTIVISE.
"The work being carried out under the Future Size and Shape Review at the moment is aimed at helping us put the building blocks in place to achieve this competitive level of profitability in the future.”
Before 9/11 BA employed more people per aircraft than any of our competitors, after 9/11 you employ even more. You have the biggest, most unwieldy, most internecine, most conservative, most introspective, most inertial, most political, most feudal, most reactionary, most EXPENSIVE management in the business. Do yourself a favour and bin them.
"That way, British Airways and those who work for the airline will have a far more secure future."
It’s up to you Rod. Your move.
. .
"What are the characteristics of a successful business? This is on all our minds as we continue the work to decide on the best future size and shape of British Airways. Among the things we need to do is make enough profit to compete with other successful businesses, whether they are airlines or not.”
A successful business has a product that people want to buy at a price they are prepared to pay. They don’t mind paying more if they believe they’re getting real value for money. For a product to be a premium product, it must be of exceptional quality and stand alone in the market place. You have a duty to operate efficiently to best serve the interests of both customer and investors.
"We need to be able to offer shareholders as good a return on their money as they would get if they invested it elsewhere. We also need to make enough money for capital investment.”
Maximising return on investment comes from constant attention to detail, ensuring that your product remains ahead of the pack, and constantly reinvesting in the product. At the same time you must keep operating costs to the absolute minimum. Your business should be cheap to run but lucrative at the same time. Borrow only to invest.
"Most other successful businesses, including the best airlines, aim to make a £10 profit for every £100 of revenue they generate - an operating margin of 10 per cent. At the moment we don’t manage that even in good years.”
Unfortunately, you seem to be blind in one eye when it comes to your staggering costs.. . . ."If we are to reach that goal, we will have to have the right products matched to the right fleet and routes, and continue to offer excellent customer service. Our costs will have to come down.”
You won’t do that by paying subsistence wages to miserable staff. Invest in customer service and operational staff – get rid of administrative staff. Structure your business to be lean and mean. Use the best of modern IT to streamline your management to the minimum possible. Reward your employees to attract and retain the best possible individuals. INCENTIVISE.
"The work being carried out under the Future Size and Shape Review at the moment is aimed at helping us put the building blocks in place to achieve this competitive level of profitability in the future.”
Before 9/11 BA employed more people per aircraft than any of our competitors, after 9/11 you employ even more. You have the biggest, most unwieldy, most internecine, most conservative, most introspective, most inertial, most political, most feudal, most reactionary, most EXPENSIVE management in the business. Do yourself a favour and bin them.
"That way, British Airways and those who work for the airline will have a far more secure future."
It’s up to you Rod. Your move.
. .
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Well said Roobarb, I couldn't have put it better.
When Skippy arrived I thought that he would make the changes needed.
He certainly said all of the right things.
Unfortunately he seems to have been hoodwinked by the existing senior management.
When Skippy arrived I thought that he would make the changes needed.
He certainly said all of the right things.
Unfortunately he seems to have been hoodwinked by the existing senior management.
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Subsistence wages to miserable staff!!!!!!
That's us in BA CitiExpress. Unfortunately see what Rod has done to us. He took us (a small but profitable airline), mixed us with Brymon, (another small and profitable airline), and then produced the master stroke, he mixed us with BAR, which has all the high cost base associated with the admin and non-productive staffing levels of mainline, and hey presto:
Six months later, we're losing a fortune.
Hoo****ingRay.
[ 24 January 2002: Message edited by: Fourpuffs ]</p>
That's us in BA CitiExpress. Unfortunately see what Rod has done to us. He took us (a small but profitable airline), mixed us with Brymon, (another small and profitable airline), and then produced the master stroke, he mixed us with BAR, which has all the high cost base associated with the admin and non-productive staffing levels of mainline, and hey presto:
Six months later, we're losing a fortune.
Hoo****ingRay.
[ 24 January 2002: Message edited by: Fourpuffs ]</p>
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And then there's the previously very profitable Cityflyer merged with huge loss-making EOG situation..... but that has rather been PPRuNe'd to death...!
<img src="wink.gif" border="0"> <img src="rolleyes.gif" border="0">
<img src="wink.gif" border="0"> <img src="rolleyes.gif" border="0">
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I think I'd rather be Ppruned to death than suffer the death of a thousand cuts associated with BA which is all we've got at the moment.. .Bases to close, jobs to go, yeah, life is really really good in what used to be BRAL - not that it was ever great you realise.
I've got my doubts as to whether RE has any idea how to run an airline.............chop it up into small pieces yes, come up with fancy names for the latest slash-and-burn scheme yes, but actually get out there and run the show day to day - that he has never done. Look at the carcasses he has left behind; CX, AN.. .I think the man just fancies himself as a strategist, and it has never occurred to him that all these computer models and outlandish schemes might actually affect real people..........both customers and staff........
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Nice one Roobarb...
This is what we've been telling our esteemed leader for some time now... Rod, please wake up and do something about Waterworld. We are not saying this because we're looking after ourselves instead of them. We are saying it because it is fact! We, as an airline, have far more office staff than any one else! That can't be good. So ignore what those idiots who brief you are saying... and do the right thing. Controlling costs is good, but we as pilots are subject to the airframe x y = pilots. (With y being variable depending on the shorthaul/longhaul mix.) This, put soimply means that when you have the most productive pilots of any major airline worldwide (I stand to be corrected if anyone knows better...) then you cannot make them work harder!!!! The law prohibits it!!! So, you work it out.
Currently we have cabin crew who work extremely hard... ( and I am careful about my choice of words here... because they do spend a lot of time at work which is tiring!) Sadly, due to the insanity of their rostering rules they are ridiculously unproductive and yet still always tired! You need to sort that out Rod...
Morale is at an all time low since I joined (about 5 years ago...) and it's not all post Sep 11.
As our ultimate boss- although I don't report to you directly- I expect you to LEAD. You don't seem to be doing that. With my job title comes responsibility (SFO Shorthaul fleet) and I cannot escape that. (Not that I would want to!!!!) You bear the responsibility for the airline's ultimate outcome. I am pleased to read in your statement that you seem to acknowledge that fact, because there is no escaping it.
So please Rod, when FSAS reports back, although I'm sure you're well in the know as to their findings so far... (if you're not then you should be...) then please consider very carefully whether what they are proposing is what is best for us all... Because what is making me nervous in seat 1R (that's a window seat) isn't terrorists coming into my flight deck- My maglite has that covered- but filling out form UB40 in the benefits office. And I think I probably speak for many of us. We're normal people Rod, who just want to fly aeroplanes for a good employer.
Right, I've said enough!!!!!
Best Wishes all,
Fat Tony
This is what we've been telling our esteemed leader for some time now... Rod, please wake up and do something about Waterworld. We are not saying this because we're looking after ourselves instead of them. We are saying it because it is fact! We, as an airline, have far more office staff than any one else! That can't be good. So ignore what those idiots who brief you are saying... and do the right thing. Controlling costs is good, but we as pilots are subject to the airframe x y = pilots. (With y being variable depending on the shorthaul/longhaul mix.) This, put soimply means that when you have the most productive pilots of any major airline worldwide (I stand to be corrected if anyone knows better...) then you cannot make them work harder!!!! The law prohibits it!!! So, you work it out.
Currently we have cabin crew who work extremely hard... ( and I am careful about my choice of words here... because they do spend a lot of time at work which is tiring!) Sadly, due to the insanity of their rostering rules they are ridiculously unproductive and yet still always tired! You need to sort that out Rod...
Morale is at an all time low since I joined (about 5 years ago...) and it's not all post Sep 11.
As our ultimate boss- although I don't report to you directly- I expect you to LEAD. You don't seem to be doing that. With my job title comes responsibility (SFO Shorthaul fleet) and I cannot escape that. (Not that I would want to!!!!) You bear the responsibility for the airline's ultimate outcome. I am pleased to read in your statement that you seem to acknowledge that fact, because there is no escaping it.
So please Rod, when FSAS reports back, although I'm sure you're well in the know as to their findings so far... (if you're not then you should be...) then please consider very carefully whether what they are proposing is what is best for us all... Because what is making me nervous in seat 1R (that's a window seat) isn't terrorists coming into my flight deck- My maglite has that covered- but filling out form UB40 in the benefits office. And I think I probably speak for many of us. We're normal people Rod, who just want to fly aeroplanes for a good employer.
Right, I've said enough!!!!!
Best Wishes all,
Fat Tony
Sounds like RE has recycled his famous "great airline, bad business" speech he gave at AN when he ordered the CRJs. Once again he stressed the need for a 10% return on sales. He never made it but was gone before the sh*t hit the fan.
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This is the scariest thing I have ever heard, what planet is Rod living on. Even the Governor could spout better Cr%p than this. It is complete investor talk, it sounds as though he is trying to butter up the shareholders before he announces another un-thought, weak, macro, big plan, hair brained, non airline scheme. This man is out for the BIG BANG, either a KLM or American deal that will make him look good to the Murdoch’s of this world.
Yes, the airline industry is the same as any other business; you collect revenue and make sure your cost’s reflect this by being lower (i.e. profit). But you need to make sure you understand the fundamentals of the business you are in. Plainly Rod does not, as mentioned not wanting to flog a dead forum, but he has royally screwed LGW and is on his way with the other regional bases.
The conclusion, unless you are within commuting distance of LHR, LOOK FOR ANOTHER JOB!
Yes, the airline industry is the same as any other business; you collect revenue and make sure your cost’s reflect this by being lower (i.e. profit). But you need to make sure you understand the fundamentals of the business you are in. Plainly Rod does not, as mentioned not wanting to flog a dead forum, but he has royally screwed LGW and is on his way with the other regional bases.
The conclusion, unless you are within commuting distance of LHR, LOOK FOR ANOTHER JOB!
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Heard it all before..
The last incumbent of Rods seat used the same philosophy, except he used ICI as a comparison and stated that 17.5% was considered a reasonable return on investment. Curiously, having set ICI as a benchmark, BA are indeed matching ICI in share performance! CR@P!
Highland Division only made 12.5% (after contributing to LHR support services)and look where they are now...routes operated by franchisees.
Looks like Rod has no ideas of his own and will follow in Bob's footsteps.
The last incumbent of Rods seat used the same philosophy, except he used ICI as a comparison and stated that 17.5% was considered a reasonable return on investment. Curiously, having set ICI as a benchmark, BA are indeed matching ICI in share performance! CR@P!
Highland Division only made 12.5% (after contributing to LHR support services)and look where they are now...routes operated by franchisees.
Looks like Rod has no ideas of his own and will follow in Bob's footsteps.
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Element which creates an unsuccessful business
Having Rod Eddington at the helm?
I hope Mr Ed takes notes of some of the excellent postings especially from Roobarb and Tony and perhaps he could take lessons in management from Herb Kellerher
Having Rod Eddington at the helm?
I hope Mr Ed takes notes of some of the excellent postings especially from Roobarb and Tony and perhaps he could take lessons in management from Herb Kellerher
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BA have to grasp the nettle of cabin crew pay as the reward for these staff is 2-3 times the industry norm.
The cabin crew unions have skilfully played sucsesive week managments to elivate the TOTAL reward package for a cabin crew member with six weeks training to above that for the licenced aircraft engineers who have taken years train.
Untill this wage bill is bought in line with the rest of the industry BA will not stand a chance.
The cabin crew unions have skilfully played sucsesive week managments to elivate the TOTAL reward package for a cabin crew member with six weeks training to above that for the licenced aircraft engineers who have taken years train.
Untill this wage bill is bought in line with the rest of the industry BA will not stand a chance.
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Yes - excellent posts, particularly Roobarb's.
The sad news is, guys and girls, that I do not think that RE reads pprune, (some parts of his 'PPRUNE CV' are less than pretty!) and since none of his senior management/advisors are likely to be seeking 'more time with their families', not one of they who 'lurk' here will be recommending the necessary actions.
I am assured that the city gurus are well aware of the required action and that if a downward spiral in flying activity is the perceived result, (rather than in overheads - ie in support rather than operational costs), any prospects of support from the city will be on the 'dream sheet' and RE will be spending more time with HIS family! (Albeit well provided financially).
It appears that his announcement that BA is not going to 'compete with the low-cost carriers' and the recent news from FR and Easy will probably trigger a retreat from short-haul, with a resultant hike in overheads for the long-haul business.
NB MOL and Stelios: start talking to Boeing and AirBus (or the Guvnor!) NOW about wide bodies. Cash in on the 'invisible leader' while he lasts.
Apologies to the good Captain P,
!HUGE! thread creep but....
Where IS the 'guv'? Awfully (read 'beautifully') quiet round here, ain't it?
Is he where he belongs, in a cage in Guantanamo Bay, or has HE decided to spend more time with his family?
Heaven help them!
[ 25 January 2002: Message edited by: flt_lt_w_mitty ]</p>
The sad news is, guys and girls, that I do not think that RE reads pprune, (some parts of his 'PPRUNE CV' are less than pretty!) and since none of his senior management/advisors are likely to be seeking 'more time with their families', not one of they who 'lurk' here will be recommending the necessary actions.
I am assured that the city gurus are well aware of the required action and that if a downward spiral in flying activity is the perceived result, (rather than in overheads - ie in support rather than operational costs), any prospects of support from the city will be on the 'dream sheet' and RE will be spending more time with HIS family! (Albeit well provided financially).
It appears that his announcement that BA is not going to 'compete with the low-cost carriers' and the recent news from FR and Easy will probably trigger a retreat from short-haul, with a resultant hike in overheads for the long-haul business.
NB MOL and Stelios: start talking to Boeing and AirBus (or the Guvnor!) NOW about wide bodies. Cash in on the 'invisible leader' while he lasts.
Apologies to the good Captain P,
!HUGE! thread creep but....
Where IS the 'guv'? Awfully (read 'beautifully') quiet round here, ain't it?
Is he where he belongs, in a cage in Guantanamo Bay, or has HE decided to spend more time with his family?
Heaven help them!
[ 25 January 2002: Message edited by: flt_lt_w_mitty ]</p>
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If Rod Eddington is going to withdraw from shorthaul because he can't compete with the low cost carriers, what will he do when Stellios buys 767's? Withdraw from longhaul as well?
At least BM have made an attempt at meeting the cheap and cheerfuls head on. These is still a market for full service short/medium range. It's not the market's fault that BA can't make any money at it.
There is room in the market place for both ends of the scale. All BA have to do is work out how to it within their means, and it's not really difficult to see how is it? In an age of Kia Prides and Ladas, people still buy BMWs and Mercs.
At least BM have made an attempt at meeting the cheap and cheerfuls head on. These is still a market for full service short/medium range. It's not the market's fault that BA can't make any money at it.
There is room in the market place for both ends of the scale. All BA have to do is work out how to it within their means, and it's not really difficult to see how is it? In an age of Kia Prides and Ladas, people still buy BMWs and Mercs.
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I might have misread this a few weeks ago, I think it was in Skyport at Gatwick but there was an article in there where BA was providing language courses in France for french kids. This is the kind of drivel we need to get rid of. Oh and skim about 20% off the top of management, if their as good as they say they are they shouldn't have problems getting new jobs. It pobably won't have to be a business they know anything about because they've coped so far.
Also I don't think BA needs to go the route of lo-cost because everybody else is jumping on it, sooner or later there are going to be too many lo-costs all trying to outdo each other there is still a market for some kind of premium service in short haul.
[ 25 January 2002: Message edited by: mainfrog2 ]</p>
Also I don't think BA needs to go the route of lo-cost because everybody else is jumping on it, sooner or later there are going to be too many lo-costs all trying to outdo each other there is still a market for some kind of premium service in short haul.
[ 25 January 2002: Message edited by: mainfrog2 ]</p>
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Interesting reading
Market for some kind of premium service in short haul.
Hmmm, how big certainly not as large as the economy market, that has implications.
Isnt the real value in BAs short service haul the routes she owns. Prime destination. How much is that worth?
But really there is only one option, compete.
People vote with their pound-euros first.. .Then they look for quality out of that. We all do.. .ie Safety, service, airport.
Hows it achieved, its obvious isnt it.
The Markets There make use of it people.
Market for some kind of premium service in short haul.
Hmmm, how big certainly not as large as the economy market, that has implications.
Isnt the real value in BAs short service haul the routes she owns. Prime destination. How much is that worth?
But really there is only one option, compete.
People vote with their pound-euros first.. .Then they look for quality out of that. We all do.. .ie Safety, service, airport.
Hows it achieved, its obvious isnt it.
The Markets There make use of it people.
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Dear Mr Eddington,
Its quite simple if you can't beat them (low costs ) join them, but lets do it quickly you've already sold off one golden opportunity.
But for christs sake start managing and lets start seeing some results so far a lot a talk and little else.
Its quite simple if you can't beat them (low costs ) join them, but lets do it quickly you've already sold off one golden opportunity.
But for christs sake start managing and lets start seeing some results so far a lot a talk and little else.