Whatever happened to BA?

The
‘nation’s favourite airline’ has been staggering from one disaster to another
for the past half decade. And there are no immediate signs of a let-up. Linda
Pettit investigates how BA has lost its momentum in the past few years

British
Airways (BA) was one of the biggest and best known of the global blue chip
companies. It offered staff generous holidays, reduced airfares, a profit-share
scheme and enviable social and sports facilities.

Its
£200m Waterside building in Harmondsworth, Middlesex, was the very latest in
design with shops, cafés and quiet areas, hailed by BA as being the “structural
capital that defines what the company does and where it’s trying to go".

BA
thought about its staff and for graduates it became the preferred company to
work for.

But
all was not as it seemed, and in the 1990s the controversial former chief
executive Bob Ayling clashed with flight crews who were suspicious of his
future plans. Relations with the British Airline Pilots’ Association got so bad
neither side spoke for three months. A consultant was finally called in to
repair the damage.

In
2000, BA’s fortunes took a real nose-dive. Pre-tax profits to March 2000
slumped from £225m to £5m. High fuel prices and the strength of the euro
against sterling were blamed. However, new chief executive Rod Eddington
promised ongoing cost efficiency measures and a renewed focus on staff morale.
But in December 2000 it was announced that 1,000 staff at Gatwick Airport would
lose their jobs.

The
following year, profits were back up to £150m, despite the outbreak of foot and
mouth disease impacting on flights into the UK. But on 11 September 2001 the
devastating events in New York and the Pentagon decimated the travel industry
and BA, like many others, was fighting for its life.

Within
days, 20 aircraft were withdrawn from service and 7,000 jobs were lost. BA made
losses for that year of £200m. “We’ve had to take a series of tough decisions
to protect British Airways for the long term,” said Rod Eddington at the time,
“it has meant sacrifice and hardship for our people.”

With
the SARS outbreak and the war in Iraq taking two more swipes at the airline
business, there was little respite. The ongoing economic weakness and intense
competition from low-cost operators piled on yet more pressure.

BA’s
‘Future Size and Shape’ recovery strategy set out to reduce costs in manpower,
distribution, procurement and information technology. Headcount was to be
reduced by 10,000 by March 2003, and by 13,000 the following year. Some 36,000
workers had their pay cut – from the flight deck and cabin crew, to engineers,
administrative staff and ground staff. BA also discussed with unions withdrawing
the Christmas extra week’s holiday pay and planned to stop incremental pay
increases. BA’s directors reduced their own pay by 1 per cent and senior
managers faced a 10 per cent pay cut.

The
tough strategy inevitably hit staff morale, with an unofficial strike by ticket
and baggage-handling staff last July being symptomatic of the problems. The row
was over the proposed introduction of a swipecard entry system – a clocking in
and clocking out regime. Hundreds of flights were cancelled as a result.

Staff
accused BA of failing to consult staff before introducing the system, a charge
denied by management who said they’d consulted with unions for the previous 12
months. The dispute was finally settled, but cost BA between £30m and £40m.

However
bitterness among check-in staff remained. One employee, a British Airways
veteran with 15 years’ service told Personnel Today: “We have all worked
closely with BA to save thousands of pounds post-September 11. We don’t mind
change. We do mind disrespect.” 

A
spokeswoman  for the Transport &
General Workers Union said the decrease in morale at BA had been gradual. Pay
negotiations had been stretched and staff numbers axed. She said BA simply
failed to give adequate reassurances about the implications of the new swipecards,
swelling rumours about changing the working culture.

Today,
another 3,000 jobs at BA could still be set for the chop. This month, the
unions have urged the company not to include compulsory redundancies, and to
recognise the value added by staff, who have delivered around £700m in savings
since 2001. With this, a discrimination row over the retirement age for pilots
and a massive black hole in the company’s final salary pensions scheme, it’s
going to take a lot more than a decent cappuccino and a sports club to get
staff back on side.

BA:
how it happened

December
2000           1,000 jobs lost at Gatwick
Airport

September
2001           Disaster at World Trade
Center, New York, leads to slump in air travel and the loss of 7,000 jobs

October
2001              36,000 employees get pay
cuts

February
2002             Plans to simplify booking
systems announced

May
2002                    BA announces
losses of £200m. Its ‘Future Size and Shape’ strategy is outlined

August
2002                 Six months into its
structural change programme, BA announced improved financial results

January
2003                New pay deal for
pilots negotiated, simplifying the pay structure and improving pensions

July
2003                     BA director
publicly implies that pilots skive during summer holidays

July
2003                     Wildcat strike by
check-in staff over new Automated Time Recording (ATR) system

November
2003           Pensions shortfall of £133m
a year revealed

December
2003           5,000 jobs at risk as part
of further staff cuts planned for 2004

January
2004                BA air crew challenge
discrimination laws relating to retirement age of 55

February
2004             Unions warn that further
staff cuts shouldn’t be compulsory redundancies and should recognise the value
of staff

 

(ends)

 

 

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