There is a whole lot of speculation on British Airways and its future.  I noticed one reporter speculating on whether British Airways reputation will ever recover.  I’ve seen other stories speculating on their financial viability for the next year.  Still another story actually was making a “buy” recommendation on their stock.  In other words, it’s great sport to speculate on BA right now.

In many respects, BA’s problems with its labor are of its own making.  Long after many other global airlines wised up and trimmed their costs, BA was plunging ahead with its so very “British” service product.  Management continued to pay very generous salaries to crews, buy aircraft and send the “flag” to odd places in the world.  It was unsustainable, particularly in Europe, but they persisted along just like a drunken Alitalia as long as they could.

Two things happened.  First, Willie Walsh showed up from Aer Lingus where he spent most of his career and where he built a reputation as a CEO by transforming Aer Lingus from a doddering state owned airline into an enterprise capable of competing with the best, Ryanair.   Walsh learned how to lean out a company, maintain good service levels and operate an airline in this century. 

Second, the world airline economy crashed with unprecedented oil prices and an unprecedented decline in business travel all at the same time. 

Walsh rightly identified that BA had to be more productive.  Indeed, rather than just focus on slashing staff, he wanted concessions that allowed BA to simply compete with other airlines on productivity.  He’s worked tirelessly to reduce costs, manage money better, maintain service and improve productivity.  He’s done this despite years of relative neglect on the part of previous CEOs and, yes, he’s been brash about doing it. 

I’ll be honest.  He rubbed me the wrong way when he showed up at BA and, more importently, in the global press.  As time has gone by, I’ve changed my mind in many ways.  Now, he strikes me as much more a leader than just a cost slasher.  I’m impressed with his read of his airlines economic situation as well as his take on the markets served by British Airways. 

My own take on most of BA’s employees is that  most “get it”.   The pilots even get it and that’s saying something because pilots are generally the most militant of all labor groups.   You see, few countries have better examples for losing entire industries due to obstinate labor actions that ignore changing markets and economic climates than Britain.  Seriously, take a look at what happened to their car industry in the 1970’s.  Or their aviation industry from the 1970’s through the 1980’s. 

I’ve noticed that most British citizens who are engaged in the world understand that demanding your cake no matter what the circumstances doesn’t work and often removes an industry from your country forever.  It isn’t that they are anti-labor, it’s that they have, in most cases, become a pragmatic people and that’s good for them. 

Then there is Unite, the labor union representing crew staff (flight attendants) for British Airways.  This cheery crew has set about to inflict real and serious damage upon the airline at every opportune moment and over issues that most in the company agree have to change.  It’s as if all the labor organizers who struck against the British car industry took a 30 year holiday and showed up drunk and clueless to lead Unite. 

It’s hard to respect a union that seeks to inflict strikes on both the airline and the traveling public during, oh say, the Christmas Holiday Season.  Or after their employer announced record losses well in excess of $800 million dollars.  It’s particularly strange to see them make these choices despite the fact that a large minority of their own membership are crossing the picket lines to support their airline.  No, actually, it’s downright bizarre. 

If Willie Walsh (and the board of directors) understand anything, it is that they cannot lose the issue in this strike.  Failure to “win” on the productivity issues will set a precedent and likely see the downfall of the airline show up shortly thereafter.   While Walsh has been a very stern and scrappy fighter in all this conflict with Unite, he has, by all appearances to me, also shown great restraint in not allowing this to be personal.  He continues to show this restraint despite Unite making it not only very personal for Walsh but for anyone who attempts to help the airline as an employee. 

I’ll grant that the one petty thing I take issue with Walsh on is the travel privileges restrictions he imposed on any crew that struck.  That was a misstep and one that he pursued for too long.  It is nice to see that he’s offered to reinstate those privileges in the last round of negotiations.

Here is a kicker, during the last negotiations where Walsh was offering those privileges back, one union negotiator (Derek Simpson) was “twittering” about the negotiations in real time from his Blackberry. 

What. . . the. . . hell?

Anyone in the industry accepts that union leadership is going to tend to be loud and bombastic and even full of threats in public and especially when the cameras are own.  It’s also accepted that those same people will be restrained, professional and serious in negotiations.  Playing games with Twitter during negotiations is just a wild breach of protocol and, frankly, does a great misservice to the Unite membership. 

Why?  How do you engage in negotiations with people who play games like that and then act as if it is nothing after the fact?  It’s very difficult to do and very hard to establish trust after a breach like that. 

It also insults the public following this strike.  Yes, even the public knows that is a breach.   And it was completely unnecessary given just how close the two parties are to having an agreement.  Indeed, British Airways essentially came to an agreement when the leadership of Unite then attempted to re-open settled areas of the disagreement.  They longer Unite’s leadership continues to act as they have, the more they have to lose in both public opinion as well as negotiating leverage.

The issues that BA is fighting for with Walsh’s leadership are recognized as so important that other airlines are lending support to BA and many of them are BA’s arch enemies in the marketplace.  Seriously, who would have ever thought that Ryanair would be leasing aircraft and staff to BA in order to maintain airline schedules during strikes.

I think BA will win.  I hope that Walsh survives this strike but I do have some small doubts about that unless he manages to close this deal soon.  I don’t think BA’s reputation is in tatters for the rest of its life.  It will take a  short while and that will be that.  Anyone declaring that they’ll “never fly BA again” over this strike is almost 99.9% certainly full of it.  They’ll fly them the very next time the price is right for where they’re going.  I don’t think BA is going to become insolvent over this but I think they’re looking at several years to rebuild their financial strength again. 

The one curious thing (to me) about all of this is the apparent lack of government involvement in this conflict.  If this had been going on in the US, someone would have stepped in by now and insisted on binding arbritration and cooling off periods.  Both BA and Unite could use one of those.

Filed under: Airline News by ajax