To fly. To serve. It may be the tagline of one of the UK’s best known brands, but passengers of British Airways can be forgiven for grimacing at what has been dished out to them recently.
In the past two years, BA customers have endured data leaks affecting more than 550,000, an IT meltdown which cost it £58m, and days of strike action which this week alone grounded 1,700 flights, left its Heathrow T5 hub a ghost town and is costing the airline at least £40m a day.
All of this on top of the usual ‘travel chaos’ weather events which affect all carriers.
The brand damage follows BA’s much-derided move down-market to scrap free seat selection and food and drink on economy short-haul flights in a cost-cutting drive to compete with budget carriers.
The budget-busting coincided with Alex Cruz buckling into the CEO’s chair at BA in early 2016, having led its sister airline, Vueling, which follows the low-cost model.
If anything, a showdown with the well-paid pilots at union Balpa is all part of Cruz’s cost-cutting strategy that plane-spotters saw a mile off and the airline’s parent, International Airlines Group (IAG), demand.
The ensuing stand-off spilling out of mediation, ruining travel plans and inflicting even more damage to the airline’s dented brand was less of a certainty, but deemed necessary to reverse IAG’s share price decline which analysts say was sky-high this time last year based in-part on Cruz’s cost control at British Airways.
Maintaining control of pilots’ pay will be worth yesterday’s share slide in the long-run and is yet another test for Cruz who is charged by IAG head office to balance competing with the likes of Emirates and Singapore Airlines on long-haul and ‘buses of the skies’ Ryanair and Easyjet on short-haul routes. It isn’t an easy balancing act.
While you won’t have to search far to find a leisure or business passenger who has sworn off the British flag-carrier, City analysts and IAG are keeping the faith that the BA boss will continue to deliver profitability (making around £2bn in profits in the last full year) for the mothership.
Aviation analysts agree that the airline’s financial performance is somewhat insulated from headline-grabbing mishaps, IT underinvestment and a much-diluted brand power.
That profit protection is due to a legacy issue from well before Cruz’s tenure and more permanent than a few PR disasters: Heathrow airport.
It’s full, but BA controls around 55 per cent of all the landing slots. And BA’s west-London hub remains the airport of choice for its sought-after high-value travellers.
Although the summer slide of both its share price and reputation is unwelcome turbulence for the airline – and certainly its customers – this week’s battle may prove a necessary blip on the radar in the long-run.