As previously reported when Mr Walsh warned that BA was in a fight for survival, he felt it necessary to add that this time he really meant what he said. I believe that’s because the intended audience wasn’t the staff at all but the government which he wants to let him create an anti-passenger cartel with American Airlines.
It’s always wise to look behind the immediate message when Mr Walsh issues a press release. Remember the fanfare with which the CEO announced that he was foregoing his salary in July? Today it’s announced he’s not going to draw his bonus this year as well - that’ll be three years in a row.
But hold on. Three years ago he didn’t take a bonus because he’d also accepted full responsibility for the Terminal 5 fiasco which was reputed to have claimed the company £32 million. Last year the results were so bad he didn’t qualify for his bonus, so why make a fuss about this being the third year in a row?
In any case, what he didn’t tell you until the Annual Report came out was that he got a 6% pay increase last year which took his monthly salary cheque to a belt-tightening £61,916!
The really good news for Mr Walsh is that if he meets the targets (set by one W. Walsh, of course) in three years time he’ll qualify for a long term shares scheme which will pay him £1.1million in 2012.
So in that context giving up £61,000 in July (which will be worth something like £37,800 in his pocket) seems quite modest.
Hopefully he didn’t read this morning’s newspaper which reported that he and his cabin staff earn twice as much as their counterparts at Virgin - but maybe you can’t believe everything you read in the papers.
Pensioners, recently denied the Staff Travel perk they thought they’d earned by accepting modest salaries over the years, might ask whether an annual salary of £743,000.00 isn’t more than enough for a Chief Executive who says he can’t do anything to influence his most important market, the business traveller? Should we not be paying someone who can?
Saturday, 13 June 2009
Sunday, 7 June 2009
Mr Walsh talks to the government
Why does Mr Walsh need to mention that his warnings about the end of BA etc are not just posturing or scaremongering? That sounds like the boy who’s cried wolf before and who’s not taken seriously any more.
Twice now he’s been denied his merger with AA - a merger that would serve nobody but BA and AA and do immeasurable harm to the true interests of passengers.
Could his message of impending doom really be aimed at the governments to whom he’s pleading once again to be allowed to form a cosy cartel which would control up to 65% of the traffic between a host of UK and American cities?
BA’s commercial management is a shambles. As I’ve noted before, Gatwick-New York is axed after 12 months; London-Jeddah re-introduced after a gap of four years. This sort of panic marketing wouldn’t work on a car boot stall and has no place in a modern airline.
Right now Air France/KLM sales teams are blitzing - doubling up tactical sales teams to ensure their regular clients choose their services whenever they can. At the same time BA is cutting, routes, staff, service - because that’s all it can do.
At this moment the smartest thing BA could do would be to hand the entire Heathrow operation over to a handling agency as they’ve done at almost every other airport in the world, and spend the money they’ll save hiring a sales team. Herding people needs no special skill, salesmen are a breed.
Twice now he’s been denied his merger with AA - a merger that would serve nobody but BA and AA and do immeasurable harm to the true interests of passengers.
Could his message of impending doom really be aimed at the governments to whom he’s pleading once again to be allowed to form a cosy cartel which would control up to 65% of the traffic between a host of UK and American cities?
BA’s commercial management is a shambles. As I’ve noted before, Gatwick-New York is axed after 12 months; London-Jeddah re-introduced after a gap of four years. This sort of panic marketing wouldn’t work on a car boot stall and has no place in a modern airline.
Right now Air France/KLM sales teams are blitzing - doubling up tactical sales teams to ensure their regular clients choose their services whenever they can. At the same time BA is cutting, routes, staff, service - because that’s all it can do.
At this moment the smartest thing BA could do would be to hand the entire Heathrow operation over to a handling agency as they’ve done at almost every other airport in the world, and spend the money they’ll save hiring a sales team. Herding people needs no special skill, salesmen are a breed.
Thursday, 4 June 2009
Waste of space
As we all know there lies, damn lies and statistics.
And instead of getting on with encouraging its staff to do more, better and costing less to help it out of its current predicament of flying fewer people to fewer places less often, the airline has devoted a large chunk of one page of its staff rag, BA News, to explaining why Virgin’s £64m profit is almost exactly the same as BA’s £401m loss.
Anyone who’s dealt with accountants knows how figures can be presented to reflect different faces, and for sure BA’s accounts wallahs wore out many quill pens making the £401m loss seem as little as possible - that’s what they’re paid for.
It isn’t the profit or loss that seems to matter - it’s the mindset in BA that bothers to spend time and money examining how Sir Richard managed to post a £64m profit when all they could rise to was a whacking loss. The message they convey says, "it’s OK we’re not doing as badly as it looks" - which is hardly an incentive to work harder for less.
To be fair elsewhere the CEO repeats how bad the trading environment is - but says little about how he plans to tackle it other than by paying fewer people less money. Taken to its extreme this could be the complete salvation, mothball all the aircraft, fire the staff and reduce the company’s outgoings to nil. That’s taken care of the loss then.
I repeat again, if Mr Walsh can’t get the airline into profit, then he should make way for someone who can.
Elsewhere in the paper, space is given to a self-congratulatory blub from Albion Idrizi, Commercial Manager, Kosovo and Albania who brags that he recently managed to give away two free tickets organised by the British Embassy in Albania. The letter from the ambassador "hopes that the publicity justified the donation".
Apart from the consummate sales skill Mr Idrizi shows in managing to give away two tickets (no doubt there was stiff competition from at least half of the IATA airlines in Albania) the story shows how criteria have lapsed. In BA, up to 1979 at least, we had to prove beforehand the publicity we would gain from any "trade exchange". I know because that was one of my department’s jobs. Now they only have to "hope".
Finally a footnote to reassure pensioners who are used to getting the bum’s rush from Hilary Brayfield or Clare Hatchwell (before she was elevated from Staff Travel) that rudeness is alive and well in BA.
In the latest BA News a staff member writes to complain that because BA is selling last-minute upgrades into Business class at the airport, she found she was stuck in Peasant Class despite having paid the premium standby fare which cost her three times the normal rate.
She points out quite reasonably that unless the reservations system shows that Business Class is practically empty, it’s not worth staff bothering to fork out the rip-off standby fare.
The reply from Janine Sparks, Rewards Consultant basically says "no-one forced you pay the higher rate, it’s your own fault." With that attitude perhaps Ms Sparks should be a candidate for Staff Travel Manager.
And instead of getting on with encouraging its staff to do more, better and costing less to help it out of its current predicament of flying fewer people to fewer places less often, the airline has devoted a large chunk of one page of its staff rag, BA News, to explaining why Virgin’s £64m profit is almost exactly the same as BA’s £401m loss.
Anyone who’s dealt with accountants knows how figures can be presented to reflect different faces, and for sure BA’s accounts wallahs wore out many quill pens making the £401m loss seem as little as possible - that’s what they’re paid for.
It isn’t the profit or loss that seems to matter - it’s the mindset in BA that bothers to spend time and money examining how Sir Richard managed to post a £64m profit when all they could rise to was a whacking loss. The message they convey says, "it’s OK we’re not doing as badly as it looks" - which is hardly an incentive to work harder for less.
To be fair elsewhere the CEO repeats how bad the trading environment is - but says little about how he plans to tackle it other than by paying fewer people less money. Taken to its extreme this could be the complete salvation, mothball all the aircraft, fire the staff and reduce the company’s outgoings to nil. That’s taken care of the loss then.
I repeat again, if Mr Walsh can’t get the airline into profit, then he should make way for someone who can.
Elsewhere in the paper, space is given to a self-congratulatory blub from Albion Idrizi, Commercial Manager, Kosovo and Albania who brags that he recently managed to give away two free tickets organised by the British Embassy in Albania. The letter from the ambassador "hopes that the publicity justified the donation".
Apart from the consummate sales skill Mr Idrizi shows in managing to give away two tickets (no doubt there was stiff competition from at least half of the IATA airlines in Albania) the story shows how criteria have lapsed. In BA, up to 1979 at least, we had to prove beforehand the publicity we would gain from any "trade exchange". I know because that was one of my department’s jobs. Now they only have to "hope".
Finally a footnote to reassure pensioners who are used to getting the bum’s rush from Hilary Brayfield or Clare Hatchwell (before she was elevated from Staff Travel) that rudeness is alive and well in BA.
In the latest BA News a staff member writes to complain that because BA is selling last-minute upgrades into Business class at the airport, she found she was stuck in Peasant Class despite having paid the premium standby fare which cost her three times the normal rate.
She points out quite reasonably that unless the reservations system shows that Business Class is practically empty, it’s not worth staff bothering to fork out the rip-off standby fare.
The reply from Janine Sparks, Rewards Consultant basically says "no-one forced you pay the higher rate, it’s your own fault." With that attitude perhaps Ms Sparks should be a candidate for Staff Travel Manager.
Saturday, 30 May 2009
Honour and responsibility
So Mr Walsh is going to forgo £51,000 - the salary (without bonus) that he struggles by on each month - as propitiation for leading British Airways into the worst loss of its history.
Not a small part of the record loss must be laid at the fiasco of T5 and its aftermath. According to the CEO, the responsibility for that failure lay with him. The cost to him of that failure? He declined his bonus and demanded the heads of two junior directors. Well that’s alright then.
Failure in the real world impinges directly on those responsible, but not in British Airways. Perhaps football clubs (which shed managers after half a dozen lost matches) are a bit too real-world for a realistic comparison, but do you imagine that Sir Terry Leahy will still head up Tesco if it posts the equivalent of a £400m loss?
Of course the airline has its team of spin doctors, wordsmiths who’ll put a positive gloss on Armageddon if asked. They decreed that the £400m loss was primarily due to the totally unexpected rise in the cost of fuel and the loss of its premium class passengers to other airlines.
That’ll be the same fuel that Virgin, working in the same market as British Airways, had to buy. They’ll be the same premium class passengers who like to travel from airport terminals not shopping malls and on the same aircraft as their baggage.
That’ll be the Virgin that in the same year posted a £64 million profit.
But is it wise to blame the cost of fuel? The implication is that whilst Virgin’s economists bought wisely, BA’s economists bought forward when the fuel price was at its peak, in other words, it’s someone else’s fault.
Taking the blame is a matter of honour. When his Foreign office staff failed to warn Lord Carrington that Argentina might invade the Falklands, he resigned. Can we expect the resignation of anyone in BA? Who knows, but don’t bet on it being the CEO.
Not a small part of the record loss must be laid at the fiasco of T5 and its aftermath. According to the CEO, the responsibility for that failure lay with him. The cost to him of that failure? He declined his bonus and demanded the heads of two junior directors. Well that’s alright then.
Failure in the real world impinges directly on those responsible, but not in British Airways. Perhaps football clubs (which shed managers after half a dozen lost matches) are a bit too real-world for a realistic comparison, but do you imagine that Sir Terry Leahy will still head up Tesco if it posts the equivalent of a £400m loss?
Of course the airline has its team of spin doctors, wordsmiths who’ll put a positive gloss on Armageddon if asked. They decreed that the £400m loss was primarily due to the totally unexpected rise in the cost of fuel and the loss of its premium class passengers to other airlines.
That’ll be the same fuel that Virgin, working in the same market as British Airways, had to buy. They’ll be the same premium class passengers who like to travel from airport terminals not shopping malls and on the same aircraft as their baggage.
That’ll be the Virgin that in the same year posted a £64 million profit.
But is it wise to blame the cost of fuel? The implication is that whilst Virgin’s economists bought wisely, BA’s economists bought forward when the fuel price was at its peak, in other words, it’s someone else’s fault.
Taking the blame is a matter of honour. When his Foreign office staff failed to warn Lord Carrington that Argentina might invade the Falklands, he resigned. Can we expect the resignation of anyone in BA? Who knows, but don’t bet on it being the CEO.
Thursday, 21 May 2009
Why BA must not merge
It should surprise no-one that pensioners’ main concerns about the possible merger between BA and Iberia (and the additional possibility that BA becomes a Spanish company) are the effect such a change will have on their pensions and whether the change in nationality will place the pension schemes in jeopardy. The Pensioner Trustees are reported to be investigating the question but nothing official has yet been published except that the Chairman of Trustees (who, quite amazingly, is also the man leading the merger negotiations) won't answer the question.
But step back. Why does BA really want to merge? Forget all the spin, the reason is that the airline has abandoned the basics of trade in a free market and seeks only the refuge of failure.
The fact is that since BA has abandoned any pretence of a sales force, the only tool it has to affect its sales performance is the Easyjet/Ryanair tool - seat price - conveyed via the Internet.
So what happens when selling gets tough? BA has so denuded its trading arsenal that it has only three options, 1) spend money on advertising (which is only a promotional tool, not a selling one), 2) spend money on PR (trying to get more favourable mentions in the "free" press - another promotional device), or 3) reduce the price of its product.
As a result, BA’s sales performance in recent years has been pathetic and the airline has declined in every respect except its own self-praise. How many major cities in Australia and New Zealand does the world's favourite airline serve? For those with long memories who recall services to Auckland, Perth, Melbourne and Sydney think again. BA serves just Sydney. If you want to fly from London - and a handful of other cities around the UK - to Australasia, Emirates offers you flights to Sydney, Auckland, Christchurch, Brisbane, Melbourne and Perth. What commercial potential does Emirates see in serving all those cities that BA doesn't?
Recently I travelled to Korea. British Airways doesn't even serve one of Asia's dynamo economies. My flights on KLM and Air France were full. On the same days, BA to Hong Kong, Beijing and Tokyo (the nearest BA connection points)had seats to spare, especially in Club class.
Take yet another example. Last year BA abandoned its last non-London route to the USA - Manchester to New York. Its "excuse" was that the route was "too competitive". The result is that now American carriers have a monopoly on the routes.
In this situation, since it has discard the means to compete, the only other option BA has is to reduce the competition - which is the real reason it is desperate to merge with Qantas, American, Iberia and practically any other airline that will consider taking on its Pensions Black Hole - now reputed to be £3 billion! If that is so, what assets does BA have that exceed that liability in value?
Be clear, this has absolutely nothing to do with improving either the cost or quality of air travel for the customers, though it might mean a legal regime less favourable to the interests of pensioners.
Unfortunately for BA and the other carriers involved, laws exist in many countries to stop big companies ganging together to fix prices and the supply of the product - which is what the airlines want to do and why they are seeking to have those laws, which are there to protect consumers’ interests, waived or relaxed in their favour.
Throughout the present financial crisis, the press and TV have been inundated with comments from businessmen, financial NGOs and members of the public who did more than a school term of Economics without the prefix "Home", who are demanding that the governments start behaving like ordinary people and not profligate gods.
The same should be demanded of companies working in the open market, as BA is supposed to have done since 1973.
That means matching your product and price to the market’s needs (the classic definition of marketing), advertising and promoting the product to the buyers (the classic definition of Sales Promotion) and selling more of it at the highest achievable price using the most effective means available (that’s Sales).
What that doesn’t mean is giving it away at a lower price than your competitors (and trying to make up the shortfall by stealth, charging for baggage, food, drink and access to the toilets).
Selling, especially to the business market which is identifiable and accessible, (a market BA is evidently incapable of reaching since its Premium class service is suffering most at present) is done by presentation, persuasion and personality. But of course, BA doesn’t have a sales team.
Instead it tries to hide amongst the woes of the industry - pointing out that no-one's doing better etc etc. Rubbish. What BA needs is a leader who can inspire in the way that George C Scott playing Patton in the eponymous film does in the opening sequence. BA must go out and make sure it's Air France, Iberia, KLM and all its competitors that fail and BA that succeeds. But where is that person?
And until it finds him or her we should all worry about our pensions.
What BA must definitely NOT be allowed to do is to merge with other carriers unless it can show by more than a PR-spun release from "our Willie" that it is in the customers’ interests that it should be allowed to take place. And regardless of any blarney emanating from Waterside, that means not waiving any anti-trust or anti-competition law. Allowing BA to merge May keep Mr Walsh in a job but it won't solve BA's long-term problem.
What BA must remember - as the UK car manufacturers had to learn the hard way - is that it doesn't have a god-given right to exist. If BA cannot find someone to lead it out of the malaise the present management has taken it, then it should be sold to a business and management with sufficient energy, expertise, ability and basic nous that can. If that means that our main carrier isn't British then we shall get used to it - just as we've got used to driving cars made by foreign companies.
But step back. Why does BA really want to merge? Forget all the spin, the reason is that the airline has abandoned the basics of trade in a free market and seeks only the refuge of failure.
The fact is that since BA has abandoned any pretence of a sales force, the only tool it has to affect its sales performance is the Easyjet/Ryanair tool - seat price - conveyed via the Internet.
So what happens when selling gets tough? BA has so denuded its trading arsenal that it has only three options, 1) spend money on advertising (which is only a promotional tool, not a selling one), 2) spend money on PR (trying to get more favourable mentions in the "free" press - another promotional device), or 3) reduce the price of its product.
As a result, BA’s sales performance in recent years has been pathetic and the airline has declined in every respect except its own self-praise. How many major cities in Australia and New Zealand does the world's favourite airline serve? For those with long memories who recall services to Auckland, Perth, Melbourne and Sydney think again. BA serves just Sydney. If you want to fly from London - and a handful of other cities around the UK - to Australasia, Emirates offers you flights to Sydney, Auckland, Christchurch, Brisbane, Melbourne and Perth. What commercial potential does Emirates see in serving all those cities that BA doesn't?
Recently I travelled to Korea. British Airways doesn't even serve one of Asia's dynamo economies. My flights on KLM and Air France were full. On the same days, BA to Hong Kong, Beijing and Tokyo (the nearest BA connection points)had seats to spare, especially in Club class.
Take yet another example. Last year BA abandoned its last non-London route to the USA - Manchester to New York. Its "excuse" was that the route was "too competitive". The result is that now American carriers have a monopoly on the routes.
In this situation, since it has discard the means to compete, the only other option BA has is to reduce the competition - which is the real reason it is desperate to merge with Qantas, American, Iberia and practically any other airline that will consider taking on its Pensions Black Hole - now reputed to be £3 billion! If that is so, what assets does BA have that exceed that liability in value?
Be clear, this has absolutely nothing to do with improving either the cost or quality of air travel for the customers, though it might mean a legal regime less favourable to the interests of pensioners.
Unfortunately for BA and the other carriers involved, laws exist in many countries to stop big companies ganging together to fix prices and the supply of the product - which is what the airlines want to do and why they are seeking to have those laws, which are there to protect consumers’ interests, waived or relaxed in their favour.
Throughout the present financial crisis, the press and TV have been inundated with comments from businessmen, financial NGOs and members of the public who did more than a school term of Economics without the prefix "Home", who are demanding that the governments start behaving like ordinary people and not profligate gods.
The same should be demanded of companies working in the open market, as BA is supposed to have done since 1973.
That means matching your product and price to the market’s needs (the classic definition of marketing), advertising and promoting the product to the buyers (the classic definition of Sales Promotion) and selling more of it at the highest achievable price using the most effective means available (that’s Sales).
What that doesn’t mean is giving it away at a lower price than your competitors (and trying to make up the shortfall by stealth, charging for baggage, food, drink and access to the toilets).
Selling, especially to the business market which is identifiable and accessible, (a market BA is evidently incapable of reaching since its Premium class service is suffering most at present) is done by presentation, persuasion and personality. But of course, BA doesn’t have a sales team.
Instead it tries to hide amongst the woes of the industry - pointing out that no-one's doing better etc etc. Rubbish. What BA needs is a leader who can inspire in the way that George C Scott playing Patton in the eponymous film does in the opening sequence. BA must go out and make sure it's Air France, Iberia, KLM and all its competitors that fail and BA that succeeds. But where is that person?
And until it finds him or her we should all worry about our pensions.
What BA must definitely NOT be allowed to do is to merge with other carriers unless it can show by more than a PR-spun release from "our Willie" that it is in the customers’ interests that it should be allowed to take place. And regardless of any blarney emanating from Waterside, that means not waiving any anti-trust or anti-competition law. Allowing BA to merge May keep Mr Walsh in a job but it won't solve BA's long-term problem.
What BA must remember - as the UK car manufacturers had to learn the hard way - is that it doesn't have a god-given right to exist. If BA cannot find someone to lead it out of the malaise the present management has taken it, then it should be sold to a business and management with sufficient energy, expertise, ability and basic nous that can. If that means that our main carrier isn't British then we shall get used to it - just as we've got used to driving cars made by foreign companies.
Wednesday, 25 March 2009
Spanish/London Airways
The news that British Airways is considering becoming a Spanish company after its merger with Iberia and the UK government's statement that it would not stand its way may not have any ramifications for BA pensioners but many of the 47,000 would like some reassurance.
What protection does Spanish law give pensioners? Does the UK government's protection, limited though it is, extend to pensioners of a Spanish company? Can BA, under Spanish law, do with impunity what ABAP managed to stop it doing as a British company and manipulate the pension funds for its own benefit?
No-one expects the unelected Liaison Council to be awake to this situation - after all someone has to write to them raising the issue first and then they have to decide that it's important enough to pass on to BA, but why is ABAP, the only organisation dedicated to defending our pensions, not asking these questions?
What protection does Spanish law give pensioners? Does the UK government's protection, limited though it is, extend to pensioners of a Spanish company? Can BA, under Spanish law, do with impunity what ABAP managed to stop it doing as a British company and manipulate the pension funds for its own benefit?
No-one expects the unelected Liaison Council to be awake to this situation - after all someone has to write to them raising the issue first and then they have to decide that it's important enough to pass on to BA, but why is ABAP, the only organisation dedicated to defending our pensions, not asking these questions?
Friday, 6 March 2009
And still BA dissembles.
Why can British Airways not be completely open and frank?
Touchdown for Spring 2009 has a four-pages article described as "the main changes" which ST09 will mean. On the front page the article is billed as "everything you need to know ... about the new policy" and Clare Hatchwell (now described as Customer Relations and Staff Travel Manager) gushes that "one of the key challenges has been communicating the new policy to out 100,000-strong customer base to make sure people are aware of the changes." If this is what Ms Hatchwell regards as communicating the changes to 47,000 retired "customers" she is either deluded or incompetent.
Nowhere in the four pages is the change which has so raised the ire of so many pensioners - the imposition in retrospect of a limit on the period for which they are entitled to Staff Travel - mentioned at all. Actually that's not precisely true - there's a brief mention of LoS [Length of Service] in the section written by the unctuous Robert James in a self-serving piece devoted to the unelected Liaison Council but there's no explanation.
As the Working Group recorded in its Final Report, BA isn’t going to be allowed to forget this injustice - it will be referred to whenever the opportunity arises; for example, if Mr Walsh tries to enrol the support of pensioners for his Third Runway campaign again, he’ll find that this time our support will have a price.
Unlike the unelected Liaison Council which has completely given up any pretence at fighting for fair treatment of all pensioners - in their words "we can only accept that ST09 will be introduced" - the Staff Travel Watch, organised on behalf of all pensioners worldwide, is going to be a problem for BA that won’t go away.
Touchdown for Spring 2009 has a four-pages article described as "the main changes" which ST09 will mean. On the front page the article is billed as "everything you need to know ... about the new policy" and Clare Hatchwell (now described as Customer Relations and Staff Travel Manager) gushes that "one of the key challenges has been communicating the new policy to out 100,000-strong customer base to make sure people are aware of the changes." If this is what Ms Hatchwell regards as communicating the changes to 47,000 retired "customers" she is either deluded or incompetent.
Nowhere in the four pages is the change which has so raised the ire of so many pensioners - the imposition in retrospect of a limit on the period for which they are entitled to Staff Travel - mentioned at all. Actually that's not precisely true - there's a brief mention of LoS [Length of Service] in the section written by the unctuous Robert James in a self-serving piece devoted to the unelected Liaison Council but there's no explanation.
As the Working Group recorded in its Final Report, BA isn’t going to be allowed to forget this injustice - it will be referred to whenever the opportunity arises; for example, if Mr Walsh tries to enrol the support of pensioners for his Third Runway campaign again, he’ll find that this time our support will have a price.
Unlike the unelected Liaison Council which has completely given up any pretence at fighting for fair treatment of all pensioners - in their words "we can only accept that ST09 will be introduced" - the Staff Travel Watch, organised on behalf of all pensioners worldwide, is going to be a problem for BA that won’t go away.
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