Disaster that left airline worth less than Just Eat
THE unceremonious way British Airways has pressed the ejector button on its boss Alex Cruz is a sign of just how desperate the situation is at our national airline. Mr Cruz is paying the price for the pandemic – and for presiding over the most toxic period in BA’s industrial relations in recent memory.
That is saying something, when one reflects on the litany of industrial disputes his predecessors at BA have endured over the past three decades.
His exit was greeted with undisguised glee by union officials, who accuse him of masterminding the worst attack on employees in the history of the company.
Whatever the truth of that, his confrontation with Unite and the GMB over 12,000 redundancies and pay cuts for longstanding staff earlier this year escalated with spectacular venom.
In its campaign, Unite projected ‘ BA Betrayal’ slogans at night-time on landmarks including the Angel of the North and Harrods in London.
Unfortunately for Mr Cruz, it was not just the unions who had him in their sights.
Criticism also came from unusual quarters including the Conservative chairman of the transport committee, who described the BA job cuts as a ‘national disgrace’.
Early in his five-year reign, Mr Cruz performed well, delivering record profits – but he also made other mistakes.
HE presided over the IT meltdown in 2017 that left 75,000 passengers stranded. To the disgust of some passengers, he also axed the free food on short-haul flights. Luis Gallego, the new chief executive at IAG, the Anglo-Spanish giant that owns BA, certainly lost no time in ousting Mr Cruz when he took the helm last month.
His successor Sean Doyle will have his work cut out to navigate the airline through its troubles. BA, which celebrated its centenary last year, has survived two world wars but coronavirus is by far the biggest peacetime crisis it has ever faced.
The virus brought air travel to a standstill, leaving empty skies and planes marooned.
With revenues from ticket sales slashed to a fraction of normal income but debts and bills still having to be paid, BA has been burning cash at a rate of £20million a day.
Such is the scale of the crisis that BA has even been reduced to selling off the art from the first-class lounges: a Bridget Riley, Cool Edge, fetched £1.875million at a Sotheby’s online sale. That sum makes barely a dent in the losses, which came in at more than £700million for the second quarter of this year, dwarfing the red ink from 9/11 and the financial crisis. The company has taken advantage of Bank of England loan cash, swelling its considerable debt pile and it has raised £2.5billion from shareholders including the Qataris.
Ignominiously, BA’s parent group is now valued at several billion pounds less on the stockmarket than takeaway delivery operator Just Eat. So much for the self- styled world’s favourite airline.
Yet the UK Government, unlike the French, Germans and Americans, has declined to offer a bailout to BA or other airlines here.
Any hopes of recovery are being stymied by the fiasco over airport testing and the failure so far to open a corridor with the US so vital transatlantic routes to resume.
So, however Alex Cruz may be lambasted by disgruntled staff or blamed by IAG for failing to bring the union hardmen to heel, making him a scapegoat will not ease BA’s predicament.
For our flag carrier to revive, and for our future as an open trading economy post-Brexit, the Government needs to get Britain flying again.