BA to make U-Turn in their Business plan
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BA to make U-Turn in their Business plan
Just herad on Bloomberg that BA are takin a U turn in their business plan.. But i didn't hear any more...
Can anyone shed any light on this???
i.e. Will they go back to hving "Econ" PAX on flights, or is it anything to do with CitiExpress???
Can anyone shed any light on this???
i.e. Will they go back to hving "Econ" PAX on flights, or is it anything to do with CitiExpress???
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I heard that they're going to try to spread CitiExpress into their mainstream operation.
They've now got a particularly devious DFC, combined with a chief exec with a dreadful pedigree of strife with pilots.
First target will be Domestic routes, and they've just shut their Scottish pilot base as a precursor to this attack.
Interesting times!
They've now got a particularly devious DFC, combined with a chief exec with a dreadful pedigree of strife with pilots.
First target will be Domestic routes, and they've just shut their Scottish pilot base as a precursor to this attack.
Interesting times!
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Just wondering, but how is this a u-turn in strategy? I'm sure that they will be sticking to their policy of getting higher fare-paying passengers on board as it seems to be showing rewards. I don't think that they are u-turning, just amending a small part of their strategy.
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From this weekends UK papers:
The Observer: British Airways and American Airlines began an intensive campaign of lobbying in London, Brussels and Washington last week in a fresh attempt to merge their transatlantic businesses.
The Independent on Sunday: British Airways will this week slash fares on 80 of its European routes.
The Observer: British Airways and American Airlines began an intensive campaign of lobbying in London, Brussels and Washington last week in a fresh attempt to merge their transatlantic businesses.
The Independent on Sunday: British Airways will this week slash fares on 80 of its European routes.
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Well done Rod!
All that nonsense about GO not being strategic - We're a full service airline. £110m - good return on investment.
Have to say it had me fooled as well as 3I and Babs.
All the time Rod realised the blindingly obvious. BA didn't need to start a low cost airline. It already had one - itself.
Now the fun starts.
All that nonsense about GO not being strategic - We're a full service airline. £110m - good return on investment.
Have to say it had me fooled as well as 3I and Babs.
All the time Rod realised the blindingly obvious. BA didn't need to start a low cost airline. It already had one - itself.
Now the fun starts.
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As usual, the media have got it completely wrong!
BA is still focussed on the premium (profitable) end of the business, and thus BA has not changed its strategy of cutting capacity, and focussing on premium passengers.
What it is doing is trying to shed the reputation that it is an expensive airline when compared to low cost carriers. We all know (well do you?) that (apart from the single rule...so take a return against a rweturn) the walk up fares of the low costs against BA are roughly the same!!
Thus BA are trying to let people know that the cheap fares are there, and always have been, and are roughly the same as the low costs!!!
So sorry guys, no change of strategy here!! In fact you will probably see AF & LH cutting capacity in the not so distant future. They cannot sustain the current level of growth in the current market conditions!
BA is still focussed on the premium (profitable) end of the business, and thus BA has not changed its strategy of cutting capacity, and focussing on premium passengers.
What it is doing is trying to shed the reputation that it is an expensive airline when compared to low cost carriers. We all know (well do you?) that (apart from the single rule...so take a return against a rweturn) the walk up fares of the low costs against BA are roughly the same!!
Thus BA are trying to let people know that the cheap fares are there, and always have been, and are roughly the same as the low costs!!!
So sorry guys, no change of strategy here!! In fact you will probably see AF & LH cutting capacity in the not so distant future. They cannot sustain the current level of growth in the current market conditions!
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Cowboy,
Thanks for that info! I had assumed that Go priced the same way as Ryanair and Easyjet! I stand corrected!!
I think that most people think that ALL of Easyjet's and Ryanair's fares are much cheaper than BA, which is just not true!!
If you hunt around, the same bargains can be had at BA as the low cost boys!!
Thanks for that info! I had assumed that Go priced the same way as Ryanair and Easyjet! I stand corrected!!
I think that most people think that ALL of Easyjet's and Ryanair's fares are much cheaper than BA, which is just not true!!
If you hunt around, the same bargains can be had at BA as the low cost boys!!
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Cowboy,
Thanks for that info! I had assumed that Go priced the same way as Ryanair and Easyjet! I stand corrected!!
I think that most people think that ALL of Easyjet's and Ryanair's fares are much cheaper than BA, which is just not true!!
If you hunt around, the same bargains can be had at BA as the low cost boys!!
Thanks for that info! I had assumed that Go priced the same way as Ryanair and Easyjet! I stand corrected!!
I think that most people think that ALL of Easyjet's and Ryanair's fares are much cheaper than BA, which is just not true!!
If you hunt around, the same bargains can be had at BA as the low cost boys!!
Guest
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Doubt they would integrate Citiexpress. BA promised pilots that buying BRAL would not make the combined Bral and Brymon a training base, nor train pilots on props/regional jets, and if chopping all European routes off to them they would be recinding on this promise. If it was integrated, then it would mean TEPs would go off to regions on props: going against what they said. In addition they promised not to integrate it all anyway.
Mind you: do you trust corporate promises?
Mind you: do you trust corporate promises?
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Low cost doesn't always mean the cheapest.
Just bought a ticket with BA over the internet for £164 LGW-LYS.Reason is because a LGW-GVA with EZ was £180 which when compared with BA's offer, wasn't such a good deal.
BA is an airline who sees a bit further ahead than most of the others. If BA is at loss, the others will follow within 1 year. Conversely, when BA changes its strategy (and get dragged in the mud for it) things are already improving whilst the competion is still a year or two behind (regarding product on offer, market targeted, capacity changes,...).
BTW I am not talking about the North American market, as I know very little about it.
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If you can't save the engine...save the airframe
html and the img tag don't work in signatures AMEX, so I've pasted your grenouille above to see if it does....atb, mate. £6
[This message has been edited by Sick Squid (edited 20 June 2001).]
Just bought a ticket with BA over the internet for £164 LGW-LYS.Reason is because a LGW-GVA with EZ was £180 which when compared with BA's offer, wasn't such a good deal.
BA is an airline who sees a bit further ahead than most of the others. If BA is at loss, the others will follow within 1 year. Conversely, when BA changes its strategy (and get dragged in the mud for it) things are already improving whilst the competion is still a year or two behind (regarding product on offer, market targeted, capacity changes,...).
BTW I am not talking about the North American market, as I know very little about it.
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If you can't save the engine...save the airframe
html and the img tag don't work in signatures AMEX, so I've pasted your grenouille above to see if it does....atb, mate. £6
[This message has been edited by Sick Squid (edited 20 June 2001).]
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I dont know whether any of you guys work for said airline but.... i do and beleive me all of rods strategies are backward.
BA will soon pull out of Gatwick alledgedly because no one wants to fly from there!?!?!?.
There is no morale left at lgw for us engrs 18 months left!. Rods concerns are for shares not staff!.
I learned about flying from that!!!!!!!!!.
BA will soon pull out of Gatwick alledgedly because no one wants to fly from there!?!?!?.
There is no morale left at lgw for us engrs 18 months left!. Rods concerns are for shares not staff!.
I learned about flying from that!!!!!!!!!.
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Hangarpilot,
Some of us may work for said airline, and I am interested to know why you think Rod's strategy is incorrect? You will see in the next six months or so, AF and LH in particular cutting back on their capacity, as in times of an economic downturn, you have to stimulate demand with decreases in price to get the same amount of pax aboard. If you cut too much...well you lose money. This is essentially what BA were having to do. This, combined with a product (club world) that was a little past its sell by date, with an erratic quality of service (I have not been here for long, and used to work for CO in the USA...and this was the major complaint of BA from all the people I met) and you have an unprofitable operation. Thus downsizing aircraft (most companies are doing this anyway....compare the number of new pax 747's odered with that of B777's) and updating the product, is the way forward in an increasingly competitive world. Why would you disagree?
With regard to LGW....well, what would you do? BA does not have enough slots, and indeed LGW is not big enough to be a full hub. If there was a second runway, and upgraded terminal...then it could be a good hub. But in the abscence of feed traffic from a hub operation, you have to rely on the O&D traffic. Unfortunately, most people wanting to fly to London for business, will go to LHR as this is more convenient than LGW for there business meetings. I would agree that the transport links are good, but how long does it take to get to LGW from central london by cab compared with LHR? A long time. Thus, the yeild's you get from a pax at LGW are much less than that of LHR, which ultimately mean that the operation is not going to be profitable (even though EOG/CityFlyer have lower cost bases!). If you suddenly said that all carriers that cannot operate from LGW due to bilateral reasons (DL, CO, NW etc) could move to LHR, they would all move tomorrow!!! There must be something in that!!
I can see two futures for LGw. If a second run was built, and BA could expand there, I would imagine that LGW could be turned into a good transfer hub, with LHR as the point to point airport. However, the ods of this happening in the next ten yeatrs are almost nil. Therefore, the other options would be to change the operation from a transfer/hub operation to a point to point operation, cncetrating on key routes at a higher frequency. This is what Rod is doing, and it is the correct move.
If you would disagree, what would you suggest that BA do. Remember, BA have a government that could not give a damn about aviation, and would rather see traffic go to LH/AF/KL rather than address the problem of under investment of our air traffic infrastructure. This is the opposite of France/Germany/and even Holland.
I am all for staff morale, and indeed I totally agree with the CO philiosphy with regard to how to keep staff happy. CO is extremely good at keeping staff informed, and explaining any desicisions; Something that BA is not good at!! This is bad, and urgently needs to be changed. But remember, Rod is employed by the shareholders, and not the staff. His job is to produce the greatest return for them! You need a good balance of staff morale (happy staff = good service to pax = happy pax = profit) and also careful cost control. If you compare BA's costs of operation, with that of, say the US majors (even after the pilot wage increases), BA still has a much higher cost base. This needs to be addressed, but NOT at the detrement of the business.
[This message has been edited by DPIT (edited 20 June 2001).]
[This message has been edited by DPIT (edited 20 June 2001).]
Some of us may work for said airline, and I am interested to know why you think Rod's strategy is incorrect? You will see in the next six months or so, AF and LH in particular cutting back on their capacity, as in times of an economic downturn, you have to stimulate demand with decreases in price to get the same amount of pax aboard. If you cut too much...well you lose money. This is essentially what BA were having to do. This, combined with a product (club world) that was a little past its sell by date, with an erratic quality of service (I have not been here for long, and used to work for CO in the USA...and this was the major complaint of BA from all the people I met) and you have an unprofitable operation. Thus downsizing aircraft (most companies are doing this anyway....compare the number of new pax 747's odered with that of B777's) and updating the product, is the way forward in an increasingly competitive world. Why would you disagree?
With regard to LGW....well, what would you do? BA does not have enough slots, and indeed LGW is not big enough to be a full hub. If there was a second runway, and upgraded terminal...then it could be a good hub. But in the abscence of feed traffic from a hub operation, you have to rely on the O&D traffic. Unfortunately, most people wanting to fly to London for business, will go to LHR as this is more convenient than LGW for there business meetings. I would agree that the transport links are good, but how long does it take to get to LGW from central london by cab compared with LHR? A long time. Thus, the yeild's you get from a pax at LGW are much less than that of LHR, which ultimately mean that the operation is not going to be profitable (even though EOG/CityFlyer have lower cost bases!). If you suddenly said that all carriers that cannot operate from LGW due to bilateral reasons (DL, CO, NW etc) could move to LHR, they would all move tomorrow!!! There must be something in that!!
I can see two futures for LGw. If a second run was built, and BA could expand there, I would imagine that LGW could be turned into a good transfer hub, with LHR as the point to point airport. However, the ods of this happening in the next ten yeatrs are almost nil. Therefore, the other options would be to change the operation from a transfer/hub operation to a point to point operation, cncetrating on key routes at a higher frequency. This is what Rod is doing, and it is the correct move.
If you would disagree, what would you suggest that BA do. Remember, BA have a government that could not give a damn about aviation, and would rather see traffic go to LH/AF/KL rather than address the problem of under investment of our air traffic infrastructure. This is the opposite of France/Germany/and even Holland.
I am all for staff morale, and indeed I totally agree with the CO philiosphy with regard to how to keep staff happy. CO is extremely good at keeping staff informed, and explaining any desicisions; Something that BA is not good at!! This is bad, and urgently needs to be changed. But remember, Rod is employed by the shareholders, and not the staff. His job is to produce the greatest return for them! You need a good balance of staff morale (happy staff = good service to pax = happy pax = profit) and also careful cost control. If you compare BA's costs of operation, with that of, say the US majors (even after the pilot wage increases), BA still has a much higher cost base. This needs to be addressed, but NOT at the detrement of the business.
[This message has been edited by DPIT (edited 20 June 2001).]
[This message has been edited by DPIT (edited 20 June 2001).]
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We all know why BA's costs are so high, certainly not due to their very efficient and relatively (in world terms) underpaid pilots.
No the reason their costs are so high is too many of DPITs ilk. Get rid of them and pay the pilots properly.
Incidentally normal nigel, they have closed their Scottish pilots base despite the 757s still doing shuttle. Why did they do it, who knows?
No the reason their costs are so high is too many of DPITs ilk. Get rid of them and pay the pilots properly.
Incidentally normal nigel, they have closed their Scottish pilots base despite the 757s still doing shuttle. Why did they do it, who knows?
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Sorry but DPIT, despite not being a pilot (nobody's perfect ) has shown lots of wisdom so far. I may not always agree with him but I would be glad to meet him at compass (or is is watesrside) for he is not a narrow minded (manager, bean counter) person.
His previous experience (CO) and if I remember well, his inquisitive look regarding BA showed that he can bring something positive to this great airline who doesn't lack of ideas but more what I would call finesse (how to treat staff for example).
DPIT, always a pleasure to read exchange ideas with you.
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If you can't save the engine...save the airframe
) has shown lots of wisdom so far. I may not always agree with him but I would be glad to meet him at compass (or is is watesrside) for he is not a narrow minded (manager, bean counter) person. His previous experience (CO) and if I remember well, his inquisitive look regarding BA showed that he can bring something positive to this great airline who doesn't lack of ideas but more what I would call finesse (how to treat staff for example).
DPIT, always a pleasure to read exchange ideas with you.
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If you can't save the engine...save the airframe
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MrUppity,
You certainly do live up to your name! Although I find your tone a little off, I am interested in your point. In my opinion, BA does have too high a headcount, and needs to bring it down. So, here, I am going to have to agree with you. The cuts have to come, in what you so eloquently describe as "my ilk".
Interestingly enough, you obvously know in exact detail what I do! You also presume that as a "beancounter" I hate all pilots. WRONG...I wanted to be a pilot. Indeed, got a RAF Scholrship, got a PPL...and then ran out of money!! I unfortunately, failed the BA tests, so decided, as I have a genuine love for all things aviation, to go into the management. Whenever I travel on duty or for pleasure, I always politely ask if I can jumpseat...and genuinly enjoy it. I think, that the flight crew also enjoy talking to me, as unlike some people I can have a sensible discussion!.
There are several areas where I would cut costs...and none of these are on the operational side. I also disagree with outsourcing as a away of cost cutting...I am assuming that you haven't read Gordon Bethune's (CO's CEO & Chairman also an ex- PILOT!!!!) as he is a beancounter, and all beancounters are bad!!!!! However, he makes a valid point about outsourcing, and to cut a long story short, he brought all of CO's catering inside the airline.
Thus...amazing....a "beancounter" who agrees with getting rid of other beancounters!!!
To make a serious point though, I like to look on the matter with a mature attitude, and not a childish one which Mruppity seems to do. At the end of the day, we are all in this together, and we can BOTH make a difference!
AMEX, thank you for that glowing recommendation; Much appreciated. You are correct, I am based at Waterworld!!! Are you still at EGKK working for the airline we both love?
I like to think that I am one of the 'new generation' of BA staff who are not corporaty blinkered. I will not say "yes" when everybody else does if I do not agree. I will always put my point across, and back it up. Unforuntately, during bad Bob's times, there were too many yes men!!
Anyway, must go...thanks again for your recommedation!
[This message has been edited by DPIT (edited 21 June 2001).]
[This message has been edited by DPIT (edited 21 June 2001).]
You certainly do live up to your name! Although I find your tone a little off, I am interested in your point. In my opinion, BA does have too high a headcount, and needs to bring it down. So, here, I am going to have to agree with you. The cuts have to come, in what you so eloquently describe as "my ilk".
Interestingly enough, you obvously know in exact detail what I do! You also presume that as a "beancounter" I hate all pilots. WRONG...I wanted to be a pilot. Indeed, got a RAF Scholrship, got a PPL...and then ran out of money!! I unfortunately, failed the BA tests, so decided, as I have a genuine love for all things aviation, to go into the management. Whenever I travel on duty or for pleasure, I always politely ask if I can jumpseat...and genuinly enjoy it. I think, that the flight crew also enjoy talking to me, as unlike some people I can have a sensible discussion!.
There are several areas where I would cut costs...and none of these are on the operational side. I also disagree with outsourcing as a away of cost cutting...I am assuming that you haven't read Gordon Bethune's (CO's CEO & Chairman also an ex- PILOT!!!!) as he is a beancounter, and all beancounters are bad!!!!! However, he makes a valid point about outsourcing, and to cut a long story short, he brought all of CO's catering inside the airline.
Thus...amazing....a "beancounter" who agrees with getting rid of other beancounters!!!
To make a serious point though, I like to look on the matter with a mature attitude, and not a childish one which Mruppity seems to do. At the end of the day, we are all in this together, and we can BOTH make a difference!
AMEX, thank you for that glowing recommendation; Much appreciated. You are correct, I am based at Waterworld!!! Are you still at EGKK working for the airline we both love?
I like to think that I am one of the 'new generation' of BA staff who are not corporaty blinkered. I will not say "yes" when everybody else does if I do not agree. I will always put my point across, and back it up. Unforuntately, during bad Bob's times, there were too many yes men!!
Anyway, must go...thanks again for your recommedation!
[This message has been edited by DPIT (edited 21 June 2001).]
[This message has been edited by DPIT (edited 21 June 2001).]
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<font face="Verdana, Arial, Helvetica" size="2">BA set for heavy weather
By Mark Odell
Published: June 20 2001 18:39GMT | Last Updated: June 20 2001 19:21GMT
British Airways' short term outlook took a turn for the worst on Wednesday after Merrill Lynch said it was cutting its profit forecasts by more than 40 per cent for this year as the prospects for the airline sector continued to look bleak.
Merrill Lynch, one of the airline's two house brokers, said it was lowering its pretax profit forecast, before exceptionals, from £256m ($358m) to £150m for the current year to the end of March 2002, and by 15 per cent the next year.
The earnings downgrade will come as a blow to BA, which has received widespread praise for its strategy of cutting capacity to focus on more profitable business traffic. In May, the airline reported pre-tax profits of £150m, up from £5m a year earlier, which was its worst performance in 18 years.
At the time of the results in May, Rod Eddington, BA's chief executive, warned that the economic slowdown, the impact of the foot-and-mouth and continued high fuel costs were beginning to affect business.
But Merrill Lynch said the outlook for traffic growth, mix and pricing had since deteriorated with the additional "unexpected phenomenon" of a snowballing of big pay rise demands from airline pilot unions, the most powerful labour force in the industry. BA will start negotiating new contracts with its pilots later this year.
"Most importantly, no carrier is yet reporting to have identified any stabilisation in these trends, let alone a turning point," Merrill Lynch said in a research note.
The broker said it was now forecasting BA's traffic to fall by 10 per cent year-on-year, after a 20 per cent slump in April and May across the North Atlantic, the airline's main source of profit.
The downgrade in BA's earnings follows a series of profit warnings from the big four US airlines in last few days. The slowdown in the US economy has hit US carriers much harder than expected. In the past two weeks, Merrill Lynch has downgraded its forecasts this year for the US airline industry as a whole from a net profit of $570m to a loss of $750m.
"The trends seen in the US industry appear to be manifesting in Europe with a lag of 3 to 6 months," the broker said.
BA's shares, which have fallen more than 10 per cent in the last two weeks, closed 5 pence lower at 329p.
Source: FT</font>
By Mark Odell
Published: June 20 2001 18:39GMT | Last Updated: June 20 2001 19:21GMT
British Airways' short term outlook took a turn for the worst on Wednesday after Merrill Lynch said it was cutting its profit forecasts by more than 40 per cent for this year as the prospects for the airline sector continued to look bleak.
Merrill Lynch, one of the airline's two house brokers, said it was lowering its pretax profit forecast, before exceptionals, from £256m ($358m) to £150m for the current year to the end of March 2002, and by 15 per cent the next year.
The earnings downgrade will come as a blow to BA, which has received widespread praise for its strategy of cutting capacity to focus on more profitable business traffic. In May, the airline reported pre-tax profits of £150m, up from £5m a year earlier, which was its worst performance in 18 years.
At the time of the results in May, Rod Eddington, BA's chief executive, warned that the economic slowdown, the impact of the foot-and-mouth and continued high fuel costs were beginning to affect business.
But Merrill Lynch said the outlook for traffic growth, mix and pricing had since deteriorated with the additional "unexpected phenomenon" of a snowballing of big pay rise demands from airline pilot unions, the most powerful labour force in the industry. BA will start negotiating new contracts with its pilots later this year.
"Most importantly, no carrier is yet reporting to have identified any stabilisation in these trends, let alone a turning point," Merrill Lynch said in a research note.
The broker said it was now forecasting BA's traffic to fall by 10 per cent year-on-year, after a 20 per cent slump in April and May across the North Atlantic, the airline's main source of profit.
The downgrade in BA's earnings follows a series of profit warnings from the big four US airlines in last few days. The slowdown in the US economy has hit US carriers much harder than expected. In the past two weeks, Merrill Lynch has downgraded its forecasts this year for the US airline industry as a whole from a net profit of $570m to a loss of $750m.
"The trends seen in the US industry appear to be manifesting in Europe with a lag of 3 to 6 months," the broker said.
BA's shares, which have fallen more than 10 per cent in the last two weeks, closed 5 pence lower at 329p.
Source: FT</font>