BA & Iberia to merge
Paxing All Over The World
Prices have to go up as both companies are in serious financial trouble. The want to dump staff and any other commitments that they can, and then jack prices. Just like everyone else!
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Doom-mongers
This tie-up has the making of being a great business chance. Dspite losses both airlines have made good progress in reducing costs and maximising revenues for the future.
Why so many threaders (that probably know jack**** about the airline industry) are so expressive as to how this tie is doomed is beyond me. BA and IB are both companies on the way up slowly but surely, the same critics slag off the likes of BA whatever they do?
I rest my case; If IB walk away we get £18 millions compo!!!
Why so many threaders (that probably know jack**** about the airline industry) are so expressive as to how this tie is doomed is beyond me. BA and IB are both companies on the way up slowly but surely, the same critics slag off the likes of BA whatever they do?
I rest my case; If IB walk away we get £18 millions compo!!!
Last edited by HZ123; 15th Nov 2009 at 08:14.
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Interesting to see a recent Times article noting that IB cabin crew are paid an average £44,000 pa and Pilots an average £190,000pa. Am I wrong in believing both groups work to 750 hours pa as well.
Walsh isn't finding it easy to lower BA cabin wages to £14,400 + 10%. I can only imaging the carnage if he tries this at IB. I also wonder how both BA Pilots and Cabin Crew will feel if, whilst working for the same company, TopCo(?), their new colleagues continue to earn substantially more?
Walsh isn't finding it easy to lower BA cabin wages to £14,400 + 10%. I can only imaging the carnage if he tries this at IB. I also wonder how both BA Pilots and Cabin Crew will feel if, whilst working for the same company, TopCo(?), their new colleagues continue to earn substantially more?
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gas path,
At present, person in UK/Spain for example wants to fly to the America (north/south) two ways come to mind. UK example used.
1. Fly to spain, then fly to south America.
2. Fly to north America, then fly down to south America.
These two routes will be under one roof, can anyone think prices will go down.
People flying between Spain/UK to the Americas will have less choice for better priced tickets, looking at the airline networks, guess most money will be made on the south American routes, north America - Euro has more choice so prices should remain better.
At present, person in UK/Spain for example wants to fly to the America (north/south) two ways come to mind. UK example used.
1. Fly to spain, then fly to south America.
2. Fly to north America, then fly down to south America.
These two routes will be under one roof, can anyone think prices will go down.
People flying between Spain/UK to the Americas will have less choice for better priced tickets, looking at the airline networks, guess most money will be made on the south American routes, north America - Euro has more choice so prices should remain better.
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Simon Calder will be covering this item in his show today, 2 hour show, 14.00 till 16.00.
Am sure their will be some interesting points of view.
http://www.lbc.co.uk/simon-calder-3540
Enjoy......
Am sure their will be some interesting points of view.
http://www.lbc.co.uk/simon-calder-3540
Enjoy......
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Re the IB vs BA crew costs. Iberia crew appear to be paid more than BA crew because they are paid in euros and sterling is rather low against the euro. If you convert those figures to a more realistic historical exchange rate you'll find the gap is not so large.
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In 2003 £1 was about €1.50, now it's about €1.10.
Even converting by taking £44,000 x 1.10 /1.50 = £32,300, that still makes the IB wage 32.3/14.4 = 225% of the BA wage.
Depends on how you define a "not so large gap", I suppose....
CJ
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Iberia's crew costs etc have indeed not registered as an issue in much of the coverage of this story, recent entries on this thread and here excepted:
"[Iberia] has never got over being state-owned ... there are too many pilots, cabin crew and ground staff who fail to respond to management requirements."
Just the sort of thing Willie Walsh likes to get his teeth stuck into, don't you think?
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Originally Posted by PC767
I also wonder how both BA Pilots and Cabin Crew will feel if, whilst working for the same company, TopCo(?), their new colleagues continue to earn substantially more?
Don't you worry, PC767. It's not great, but you do get used to it after a while....
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With a pension deficit of approaching 3.9 billion, which is what, twice the book value of the airline. Facing massive losses in the current financial year. Fixed costs appearing to be very much higher than the competition.
What are the options? Merger or bankrupt.
No brainer really.
What are the options? Merger or bankrupt.
No brainer really.
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Re the wages
Interesting to see a recent Times article noting that IB cabin crew are paid an average £44,000 pa and Pilots an average £190,000pa. Am I wrong in believing both groups work to 750 hours pa as well.
Walsh isn't finding it easy to lower BA cabin wages to £14,400 + 10%. I can only imaging the carnage if he tries this at IB. I also wonder how both BA Pilots and Cabin Crew will feel if, whilst working for the same company, TopCo(?), their new colleagues continue to earn substantially more?
Walsh isn't finding it easy to lower BA cabin wages to £14,400 + 10%. I can only imaging the carnage if he tries this at IB. I also wonder how both BA Pilots and Cabin Crew will feel if, whilst working for the same company, TopCo(?), their new colleagues continue to earn substantially more?
I am no party in this, but I know it is very difficult (and dangerous) to campare wages.
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Having been through a merge, I would caution that you need to doublecheck assumptions - one person's "Salary" might include all allowances and a superannuation component, and equate to a "Cost to Employer" and the other person's "Salary" might be base pay before an aircraft has been sighted, let alone boarded.
It applies to far more things than pay. You think you speak the same language because you use the same words - not necessarily so when you get right down into the detail.
For what it is worth, I'm a pessimist. The unions will want to cherry pick the best bit out of the other mob's contracts, and the employers will want to go in the other direction, and because this is Europe the unions will win and b*gger up two airlines.
It applies to far more things than pay. You think you speak the same language because you use the same words - not necessarily so when you get right down into the detail.
For what it is worth, I'm a pessimist. The unions will want to cherry pick the best bit out of the other mob's contracts, and the employers will want to go in the other direction, and because this is Europe the unions will win and b*gger up two airlines.
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Wonder where QF and AA are in all this (being previous merger candidates with BA and close family members of OW)...
I'm not convinced by the 'prices will have to rise' arguments. Part of the reason these two carriers are in such dire straits is due to competitive pressures from other carriers on most of their routes. Does anyone really think that, if there are supernormal profits to be made on any route where BA and IB will be dominant, that MOL or a clone won't be on it like a flash?
Even South American routeshave competition; if a punter wants to go to Buenos Aires, there is currently one (1) direct - BA. All others are connections - so it doesn't matter whether it's IB via MAD, AF via CDG, LH via FRA, or a North American carrier via their hub. There are enough other European and North Am carriers on pretty much any conceivable major European-Sth Am city pair to be able to argue that the competition effect will be barely a ripple.
This merger is aimed at cost savings rather than revenue increases.
With 20% unemployment in Spain, expect any back-office (ie. non customer contact) job not nailed down, to be moved. The fact that they will stay within the EU will facilitate that. Corporate-centre jobs can also be streamlined (so all you who bemoan bloated management should be happy).
Examples: some of IB's A343s are getting a bit long in the tooth... wonder how a 777 would look in IB strip... and the short-haul fleets (A320s) will be pretty well interchangeable. So - wonder where A320 maint is cheaper...
I'm not convinced by the 'prices will have to rise' arguments. Part of the reason these two carriers are in such dire straits is due to competitive pressures from other carriers on most of their routes. Does anyone really think that, if there are supernormal profits to be made on any route where BA and IB will be dominant, that MOL or a clone won't be on it like a flash?
Even South American routeshave competition; if a punter wants to go to Buenos Aires, there is currently one (1) direct - BA. All others are connections - so it doesn't matter whether it's IB via MAD, AF via CDG, LH via FRA, or a North American carrier via their hub. There are enough other European and North Am carriers on pretty much any conceivable major European-Sth Am city pair to be able to argue that the competition effect will be barely a ripple.
This merger is aimed at cost savings rather than revenue increases.
With 20% unemployment in Spain, expect any back-office (ie. non customer contact) job not nailed down, to be moved. The fact that they will stay within the EU will facilitate that. Corporate-centre jobs can also be streamlined (so all you who bemoan bloated management should be happy).
Examples: some of IB's A343s are getting a bit long in the tooth... wonder how a 777 would look in IB strip... and the short-haul fleets (A320s) will be pretty well interchangeable. So - wonder where A320 maint is cheaper...
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Curious how everyone thinks that its easy enough to "adjust" staffing levels. Due to UK law post Thatcher you get what, 1 week per year worked in redundancy payments? I stand to be corrected on this
In Spain its a little different... 45 days tax free for every year worked. Take a CC on €35K with 10 years service in Iberia. Thats a redundancy payment of: €43K per employee.
When you put engineering into the picture, logical area that has duplication of fuctions, you're talking about people earning around €50-60K pa and that have been with Iberia 20 years.
Reservations / call center staff? Yes, savings to be made here. One poster said Mexico as a dual language country could be an outsourcing center. Probaby not, Spain is already a dual language country.
So where does this leave things:
- Cheaper to retain Spanish staff
- Spanish staff can meet the language needs (No offence intended but Brits aren't exactly famed for their knowledge of languages)
- British staff can be fired quickly and easily (unions permitting)
- Spanish unions are very strong and the Spanish government is a Union backed one
If there are savings to be made with staff it doesn't look good for the UK side of things....
Finally, and maybe slightly cynical of me, but does anyone think that WW knows the benefits of cheaper labour in Spain from his time at Futura and sees this merger as a chance to take advantage of that?
In Spain its a little different... 45 days tax free for every year worked. Take a CC on €35K with 10 years service in Iberia. Thats a redundancy payment of: €43K per employee.
When you put engineering into the picture, logical area that has duplication of fuctions, you're talking about people earning around €50-60K pa and that have been with Iberia 20 years.
Reservations / call center staff? Yes, savings to be made here. One poster said Mexico as a dual language country could be an outsourcing center. Probaby not, Spain is already a dual language country.
So where does this leave things:
- Cheaper to retain Spanish staff
- Spanish staff can meet the language needs (No offence intended but Brits aren't exactly famed for their knowledge of languages)
- British staff can be fired quickly and easily (unions permitting)
- Spanish unions are very strong and the Spanish government is a Union backed one
If there are savings to be made with staff it doesn't look good for the UK side of things....
Finally, and maybe slightly cynical of me, but does anyone think that WW knows the benefits of cheaper labour in Spain from his time at Futura and sees this merger as a chance to take advantage of that?
Last edited by Morbid; 16th Nov 2009 at 09:25. Reason: Edited to add the last paragraph
Curious how everyone thinks that its easy enough to "adjust" staffing levels. Due to UK law post Thatcher you get what, 1 week per year worked in redundancy payments? I stand to be corrected on this
The figure you quoted is Statutory redundancy and pretty much applies when a company has gone bust with little if anything to pay out which the Govt ends up paying. It is also maxed at £380 per week.
Private sector employers vary in what they pay out. Few would pay just Statutory as that aside from Peeing off the staff going, which you don't care about as they leaving, sends a very important message to the staff staying. In effect you are telling the ones staying that if you need to make more people redundant then they will get the same............not a good way of keeping morale up post clearout.
It also ensures staff staying can work out how much they would on average get, example an 8 year veteran would know that potentially he/she would get max of 4 weeks pay later so they may decide to jump ship sooner or knowing last cull got 6 weeks means they could get 48 weeks means they would stay in hope.
On average most companies would pay something between 4-8 weeks depending on the company, age, cost etc but each company is different.
I think I could safely say BA would not pay statutory.
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It is interesting that people are approaching this mostly from the Anglo-Saxon perspective (logical as pprune is mostly British orientated, I guess). But the rape and pillage mentality that business has in the UK/USA axis (mostly responsible for the current economic crisis) is not what is applicable here.
The Air France take-over of KLM is the model that this will be based on. Most people on this forum are thinking more along the lines of a Delta, Northwest Airlines merger, where one dominant party imposes itself on the other. This would be a recipe for failure. It has taken baby steps at Air France KLM to get to the point where they are now (six years running). On the operational level they are not integrated in any way shape or form. One company (Air France KLM Group), two Airlines (Air France and KLM), and three businesses (passengers/cargo/maintenance) is the model. Each airline in the group has to keep its own house in order. If the BA (mis)management has any other ideas it will turn out very badly.
But I sure hope they retain their outrageous bonuses. It was great to read that the bankers are still doing business as normal on that count, it gives the airline managers hope. Morals are not taught in business school.
The Air France take-over of KLM is the model that this will be based on. Most people on this forum are thinking more along the lines of a Delta, Northwest Airlines merger, where one dominant party imposes itself on the other. This would be a recipe for failure. It has taken baby steps at Air France KLM to get to the point where they are now (six years running). On the operational level they are not integrated in any way shape or form. One company (Air France KLM Group), two Airlines (Air France and KLM), and three businesses (passengers/cargo/maintenance) is the model. Each airline in the group has to keep its own house in order. If the BA (mis)management has any other ideas it will turn out very badly.
But I sure hope they retain their outrageous bonuses. It was great to read that the bankers are still doing business as normal on that count, it gives the airline managers hope. Morals are not taught in business school.
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Thanks Recedo, I believe the most interesting part of what you say is the following:
So basically it would cost a whole lot less to fire the Brit than the Spaniard (salaries etc being equal).
Sobering thought...
On average most companies would pay something between 4-8 weeks depending on the company, age, cost etc but each company is different.
Sobering thought...
On average most companies would pay something between 4-8 weeks depending on the company, age, cost etc but each company is different.
I think I could safely say BA would not pay statutory.
I think I could safely say BA would not pay statutory.
Please note the term "BASIC PAY". It's a lot less than salary for many BA staff.
One individual refused the 'voluntary' redundancy package and had his employment terminated on the grounds of redundancy at the statutary rate (approx 1 week's pay/years service).
That went to tribunal. He got the voluntary package back and took it.