I cannot say with certainty that British Airways' management are most responsible for the current dire accounting position the carrier finds itself in. But it is particularly interesting that CEO Mr Walsh leads a team that deems the public demonisation of their front line staff a prerequisite to preventing a calamitous financial stall.

There are 13,000 pilots and cabin crew in a total headcount of 40,627. A public battle and fixation on this 30% of staff who face customers seems a curious way to built a harmonious, customer service tilted company.

Still, on this count I tip my hat to Mr Walsh's Investor Relations and PR squads - for the press has given them an easy ride. It is rare to see such a lack of media cynicism to his well-trailed CEO stunt of foregoing a month of pay and then a few weeks later floating the same idea for those staff who did not receive £90,678 in company-paid pension contributions last year (page 70).

That may seem irrelevant. But in its last accounts BA recorded a pension deficit roughly equal to its market cap of £1.4bn. And that represents an improved position - the last actuarial triennial in 2006 put the hole at £2.1bn.

Guess where an instant £400m of the reduction came from in 2007? Staff - including those terrible 1970's (in spirit) work to rule trouble makers - who agreed to less retirement benefits (which were not notably generous to begin with) and an older retirement age. The overall deal is also good for ongoing annual savings of £80m*.

That staff contribute that much and then see 1 in 3 of their number demonised a scant 24 months later as recalcitrant saboteurs seems a tad hypocritical.

Now, had they been responsible for the price fixing scandal and fines of 2007 (£270m and counting) it would be understandable. Or had they decided to sell the low cost carrier Go at the moment it became profitable in 2001 for £200m only to see it resold a bare year later for £374m to EasyJet who now carry more passengers than BA that, too, would be a mitigating factor. Or, having done that, had they then decided that being a one-trick London to NY pony was a Good, Diversified Strategy well, there too, demonisation might be a fair option. And is there a need to mention the customer goodwill (and compensation money) lost with the bungled Terminal 5 opening? It is not easy to stack 28,000 bags in a corner because they cannot be delivered with their owners.

So, in the circumstances, that management led by CEO Mr Walsh and CFO Mr Williams now talk about the high cost base of "legacy carriers" and attempt to set-up cabin crew as villains is very amusing in a pantomimish sort of way. Or it would be were a minority's livelihoods not, it appears, being lined up against the cost of past strategic mis-steps.

*Yet even this may not be enough with some analysts questioning the last pension deficit assessment. Citi, for example, expect the next actuarial triennial valuation (this September) to put it between £3bn and £3.5bn.

NB: Some scribe bias due, possibly, to the several BA and Air France staff he knows.

Bookmark and Share


Related Posts with Thumbnails