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Demise of BA

Old 29th Aug 2001, 18:28
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nhl
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Post Demise of BA

BA seem to be in terminal decline.
Staff morale is low as management continually try to outsource.
Concentration on business traffic is not working as recession approaches.
Pilots are ready for a fight on pay.
285 employees per aircraft.
Looks like Rod is at the helm of his third disaster. http://portal.telegraph.co.uk/money/.../29/cnba29.xml

[ 29 August 2001: Message edited by: nhl ]
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Old 29th Aug 2001, 18:32
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And your point being????
Has BA pissed you off somewhere along the line???
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Old 29th Aug 2001, 18:40
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All other things being equal, I would fly with an airline that didn't insult my gastronomical sensibilities with an "All Day Deli" Just what you don't need for breakfast.
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Old 29th Aug 2001, 18:59
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Oh no not the recession thing again

In the UK many companies such as Easyjet
Ryanair Rolls Royce Smith + Nephew
Woolworths are doing better than ever
BA made a loss last year profit this
year ?

Inflation is Low, Growth is 2% (nowhere near
a recession), Unemployment falling, Interest
rates lower than 20 years ago

Some people are using this telecoms/IT recession as an excuse for failure
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Old 29th Aug 2001, 19:28
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I have to totally disagree with both nhl and Bally. This month I've flown as a pax 8 times, 4 times with bmi, the rest with BA. BA completely put bmi to shame. On the evening shuttle BA provide everyone with a good meal , bmi just throw out a tasteless sandwich. The early morning breakfast is better too. Furthermore, the seats are more comfortable, the crew are more friendly and the check-in facilities are far better. I could carry on.

Regarding the recession; its not entirely true. Yes some sectors are suffering, particularly some parts of the financial sector, but as a whole the economy is doing well. When house prices start falling and high street spending plummets then we'll call it a recession. At the moment things may have slowed in some sectors of the economy but as a whole its certainly not a recession in this country. The US is suffering but again, the economy is still growing, if only just.

Recession - looking at retail sales - I think not...
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Old 29th Aug 2001, 19:50
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Sorry RVR800. Merrill Lynch (BA’s own broker) said yesterday that it was cutting this year's estimates before tax and exceptionals from 150m profits to 65m losses and next year's profits forecasts from 316m to 88m. Full story is in today’s Daily Telegraph (see the link in the first posting too).
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Old 29th Aug 2001, 23:42
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I've just read the Merrills report on BA.
It starts with:
BA shares are ultimately likely to outperform on the anticipation of improvement in the macro backdrop.
It goes on to say:
Yield looks attractive, management plans to hold div.
More specifically,we have shown in this section that changes in the NAPM have led a change in BA's passenger mix at points in the past. (NAPM is stabilising.)
The benefits of the controllable elements of yield are materialising more strongly than anticipated.
This reflects the fact that BA appears to be taking share of the premium market.

Sounds like more sensationalist reporting from the press.
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Old 30th Aug 2001, 01:41
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Just to correct you RVR800 vis a vis (get it!!)
Inflation is Low, Growth is 2% (nowhere near
a recession)
By UK Governments own statistics and admission the UK is, and has been for several months, in recession. I don't claim to understand these things but I am told that 2% growth does not keep pace and needs to be 5% or more (?).
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Old 30th Aug 2001, 14:42
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Al T

I dont know where your source is but the Annualised UK growth rate stands at 2.1%

We are NOT in a recession (This is neative growth over 2 quarters)

If you dont believe me read
http://www.statistics.gov.uk/pdfdir/oie0801.pdf

[ 30 August 2001: Message edited by: RVR800 ]
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Old 30th Aug 2001, 15:33
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RVR800

I really must be a little more careful in what I write! Manufacturing is back in recession in UK. That was well publicised at the end of July this year. I think I am correct in saying that the Governor of the BoE has acknowledged that fact as well. I also remember that there was a question at PMQs and the fact was also acknowledged. One link to a news report though http://www.guardian.co.uk/recession/story/0,7369,52 8659,00.html

Al

[ 30 August 2001: Message edited by: Al T Meter ]
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Old 31st Aug 2001, 03:15
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Ice Viper

My point is- can they survive.
My answer to your query is, yes.

It's all very well debating whether or not there is a recession. BA are proud to boast that their market share of premium transatlantic traffic has risen. Despite this rise, though, they have still seen an overall fall in traffic because of the fall in this market.

They are basically a civil service type operation with practices dating back to the 1960s, and unless there is major change they cannot survive in the highly competative world in which they operate.

I forsee that they will retrench to a long haul only operation at soley Heathrow in an attempt to prolong their existance.
Maybe the government will bail them out, or maybe it will be politically advantageous to allow them to fold in an attempt to demonstrate the folly of privatisation.

GustyOrange

Don't forget that Merrill Lynch are employed by BA.

[ 30 August 2001: Message edited by: nhl ]
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Old 31st Aug 2001, 03:35
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I agree that we are not in a recession. Yes, manufacturing is in recession. However, on today's BBC Radio 4 I heard that personal debt (mortgage, overdraft and credit card) has increased in the year to end June by some 45%. That does not bode well.

Japan has not recovered from the 1989/1991 recession. The States are teetering on the edge. So, we have to be mindful of what could happen.

[ 30 August 2001: Message edited by: PAXboy ]
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Old 31st Aug 2001, 04:05
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Official definition of a recession = two successive quarters (6 months) of negative growth.


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Old 31st Aug 2001, 11:05
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From ATW Online:

British Airways has suffered yet another downgrade by house broker Merrill Lynch.
The investment bank now is forecasting that BA will post a full-year pre-tax loss of 65 million ($94 million), revised downward from a previous estimate of pre-tax earnings of 150 million. For 2003, pre-tax expectations have been slashed from 316 million to 88 million. In its most recent research note, Merrill Lynch said it is worried about the effects of economic slowdown and the impact of rising costs, including those due to result from the next round of wage negotiations. Additionally, the report noted, there are potential implications for earnings from seeking antitrust approval with American Airlines, as US and European regulators will ask BA to give up landing slots at London Heathrow. Commenting on the downgrade, BA said in a statement that the announcement was "not out of the ordinary" given current market conditions.
 
Old 31st Aug 2001, 11:28
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Talk of BA's demise is premature.

One World is growing nicely
The AA deal is coming together
Ayling has left
BA's strategy of switching to premium service and cutting capacity is now being followed by almost every major carrier (2 years later than BA!)
BA has about the highest credit rating of any airline
BA is widely regarded as having amongst the very best service of any airline
Staff morale is an issue (but you show me a major corporation that hasn't a problem there and anyway I would say that's improving with Eddington)

I totally agree with the comment about bureacracy though - serious work needed there!

BA's no different to any other carrier - it's having a tough time at the moment but losses of 65m are trivial for an organisation of BA's size.

As for can it survive - fear not my friend BA will outlive all of us!

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Old 31st Aug 2001, 11:38
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Don't think BA's declining. Just don't understand why they give up all their promising little projects like Go and Deutsche BA.
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Old 31st Aug 2001, 14:41
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It gives me no pleasure to see BA in its current condition, but as one correspondent has already said, MG is a major player in BA equities and we might be forgiven for thinking that there’s a bit of propaganda going on here. Several employee groups are approaching pay round negotiations, and it’s standard BA practice to carry out its internal politics in the national press. The reporting on BA’s prospects has been selective to say the very least, but it does give the image of a cash strapped company to those who would ask for inflation busting pay rises. What better than for the suits to pitch up to the negotiating table looking thin and emaciated and threatening severed limbs to greedy union hacks.

Not surprisingly, we’ve seen it all before. The company turned over 9.25bn last year so there is cash flow, it’s simply that the company is as yet unwilling to deal with its massive and burgeoning administrative empire. The figures are much vaunted these days, but at 285 employees per aircraft, they out-strip Air France for state leviathans. If thousands of redundancies are necessary then so be it. It’s nothing more or less than they’ve been told since than Ayling Bob began his incumbency of ineptitude.

In the uncomfortable event of the company going bust, there would be no shortage of buyers to come along and manage the infrastructure and resources of this company in a far more effective and sensible manner. The only losers would be those such as the aliens from Waterworld with their tenuous grasp on reality and inability to understand the airline industry or customer service. Pay and conditions would have to remain competitive since the whole industry is suffering from a serious skills shortage, and the need to retain and recruit experienced staff will not be lost on an enlightened management.

As far as the pilot pay round is concerned, there is some serious catching up to be done. You’ll not have missed the Airtours pilots saying that they wanted pay-parity with Easy Jet and Ryanair, no mention of the ‘World’s Favourite’. We can expect all kinds of threats and ultimatums from the management, but if nothing is done to address the slide in P&C’s, then the trickle of leavers will turn into a steady stream, and the company will not be able to attract the right kind of applicant. Unfortunately for the ‘Havard Hardmen’, the market has changed and they’re now having to compete. The most recent attempt by the Prince of Darkness to do the training on the cheap has resulted in massive training costs, not helped by the Loons of the Lake buying lots of Eurobuses and having to convert/train hundreds of pilots.

I think that cynicism over the companys’ tactics has reached such a stage now where we simply don’t give a $%^. Every pay round we’re told that either we’re just recovering and it would be a shame to spoil it, or we’re going down the toilet and we can’t afford it. The net result is they have abused our good nature for far too long and it stops right here. The current pay claim is carefully thought out and is quite affordable, and frankly if the company is on its uppers then perhaps they won’t have the stomach for a fight. Our new Chief Pilot – The Lord Protector is not known for his depth of understanding nor his loyalty to his colleagues. There is considerable speculation that his tenure and his thirty pieces of silver are dependent upon delivering the heads of his colleagues. That we’ll see as the order of battle emerges. In the mean time the watchword is as always – don’t believe everything you read in the press. There is more going on behind the scenes than may be immediately obvious.

One of the favourite sayings is that BA prospers despite its management. The company, or it’s offspring are here to stay. Let’s pray that its management is not.

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Old 31st Aug 2001, 15:59
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A very good post there Roobarb, right on the money so to speak.

I'm sure BA will pull through, but it my become very costly if the "mangaement" get any bright "ideas"!
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Old 31st Aug 2001, 17:21
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Spot on Roobarb!

An excellent post that goes straight to the heart of the matter.


Regards
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Old 31st Aug 2001, 22:04
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Cool

Compared to other majors BA ain't doing That bad....
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