November 6th, 2009
02:29 PM GMT
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LONDON, England - I always look forward to interviewing British Airways CEO Willie Walsh. No matter how much doom and gloom there is in the industry, the Irishman has a smile on his face and also has a positive spin on his airline going forward.

That was the case again early Friday when he did his normal round of recorded interviews in London as BA announced their latest results.

Yes, BA recorded a record pre-tax half-year loss for the six months to September, yes the airline faces possible strikes by cabin crew, yes oil prices are going up again, yes premium traffic is being hit hard, yes airlines make little money from the majority of those passengers that sit in the back half of the airplane - but Walsh still appears more optimistic then the heads of the other European legacy carriers.

Why, you ask. And with good reason: BA is in the midst of drastic cutbacks. It's mothballing planes (if only temporarily), cutting thousands of jobs (3,000 more announced Friday), delaying the delivery of new airplanes, wringing out hundreds of millions of dollars in costs.

Walsh says these aren’t just steps to get through the recession. He says short haul premium traffic has changed, for good, and BA needs to make "structural changes" to reflect that reality. If you have ever flown from London to Edinburgh or Paris to Amsterdam and wondered why people paid triple for the privilege of sitting in a seat no bigger than those in the rest of the single-aisle plane, companies have asked the same thing and decided to cut back. BA says that will not return.

What seems to be on the rebound is premium traffic yields (average price per passenger per mile). That is where BA makes its money. Of course its just recorded a record loss, so there is a long way to go, but if companies are willing to pay just a little more for a flexible business ticket, then as Walsh says, BA may be "bottoming out."

This, of course, could all go horribly wrong if cabin crew go on strike just before Christmas, which is entirely possible. Walsh didn’t smile when he reminded me that the union has not yet even balloted for a strike, much less announced a date to walk out (all because, believe it or not, of BA’s plan to cut the number of cabin crew on long-haul flights from 15 to 14).

Walsh has a challenging time ahead.

BA is known for its decent service, great Web site and friendly enough staff, but has to compete with the incredibly well managed and well financed Middle East airlines that are ever expanding.

On the other side, Ryanair is driving hard towards its goal of being Europe’s biggest airline that charges peanuts for flights, many of which compete on BA routes.

Meanwhile, Walsh has to battle unions, cut more costs, and deal with a huge pension deficit while trying to grow the business through its never-ending attempt to merge with Iberia and by increasing an alliance with American Airlines.

Can he keep smiling?

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Filed under: Air industry

soundoff (5 Responses)
  1. linda

    BA's big loss doesn't surprise to me, I consider the problem is probably due to poor management and the new one piece baggage regulations and other costs set by BA. As a frequent long haul flyer, I don't like to pack my stuff all in ONE big luggage, and if i take two luggages then I would be CHARGED for the second luggage. One of the most ridiculous costs ever regulated. BA's extra charges for this and that is really irrelevant, but some of the problems BA suffers is partly to be blamed by the BAA, the baggage delay, missing, computer blackout causing cancelled flights etc... Don't just blame on the business recession but blame on the companies poor service.

    November 7, 2009 at 4:21 am |
  2. gurvinder

    BA get real, to save money outsource check in, loading, dispatchers
    you got to many frontline staff. Most of the other airlines at Heathrow have done this. Get real BA flying is competitve, save money.

    November 7, 2009 at 7:46 pm |
  3. Donna

    Get your facts straight. It is not soley because of the plans to cut the number of cabin crew on long-haul flights from 15 to 14. It is imposing all kinds of conditions on crew (that were not in contracts) without any negotiation. My crew member husband has seen his trip quality and quantity plummet due to BA giving the better trips to cheaper newer crew. So his earnings are way down. He has half a month of availability! They want to make flexible schedules, thereby having the right to remove trips out from under crew at the last minute. Crew apparently have no right to a home life. In the meantime, they barely reduced the salary for pilots and compensated them with BA shares.
    Crew do NOT want to strike but they are treated with contempt, pretty sad for some who have given their whole working lives to BA. Your reporting is one sided and shows contempt for the working man.

    November 8, 2009 at 7:58 am |
  4. Jim Davies

    No. He should have been fired after the T5 debacle and especially as his incompetant managerial team got caught in fraudulant business with Virgin.
    His staff have lost all confidence in him and the sooner the Board realise that he's taking BA down and fire him, the better.

    November 10, 2009 at 5:14 pm |
  5. J R Caterham

    Lufthansa please please take over BA and fire Walsh, and his senior management cronies without golden handshakes, for sheer incompetence. My issues with BA are too numerous to mention here. Walsh is out of his depth and only a company like Lufthansa can solve
    the problem.
    I do have a choice and no longer fly BA. Ex Gold Card holder.

    December 13, 2009 at 1:27 am |

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