Summary
A ballot leading to potential industrial action will only harden British Airways executives to go further for cost cutting. For all the jobs the union wants to protect, do they realise that they’ve pressed the “self-destruct” button?
Analysis
Securing jobs has always been at the core of the union and British Airways’ talks. Neither side wants to see headcount go down, particularly when service will be impacted. Having fewer staff doing more work is a recipe for employee angst – Bob Ayling will testify to that!
Just as the IAM union strike hit Boeing last fall, the US aerospace giant is widely believed to tip its hat to South Carolina for a second 787 production line to move away from contractual strife every few years when negotiations break down.
Similarly, if a strike ensues at British Airways, then Willie Walsh and his team will look to take a leaf out of Michael O’Leary’s book – in that they’ll outsource cabin crew to agency staff.
In one fell swoop, British Airways would slash costs, wages and pensions outlay while still being able to take the benefit of a more flexible work force that can be adjusted far more quickly than can the current crop of unionised employees.
Some Boeing employees now question the wisdom of their two-month strike, since it has not afforded them any more security than before – equally, British Airways will owe striking staff nothing either if they move to get cabin crew on a "need-to-use" basis.
Without being able to make the necessary cutbacks to its cost-base, British Airways will languish in the doldrums. It has already pushed back its A380 deliveries as well as progress payments on its 787s and its pension black hole provides more intrigue than any astronomer could ever hope for through an observatory.
To that end, if a strike, as is believed will occur, then the British Airways unions will have pushed more of its members towards the axe of job cuts next year. British Airways is headed for another big loss, its traffic figures have been so weak you have to wonder whether the airline may even consider offloading some of those lucrative positions to claw back some revenue.
Lets face it, if you can’t make money with 41% of slots at London Heathrow Airport, your business model is both outdated and needs a fundamental overhaul from top-to-bottom.
Business models built on dependency of high yield fares is dead and it is never coming back (least not in the form we've been accustomed to over the last decade).
On the bright side, British Airways will probably end up getting its anti-trust immunity with Iberia and American Airlines – after all, the DoT and DoJ would have to be ridiculously oblivious to the financial plight of British Airways to see otherwise.
Full circle, the unions have to realise that British Airways is fighting for its life.
As the wounded airline industry traverses through a dangerous and unknown land, the only way to ensure survival is to cut off the limb causing the most pain – the union has unwittingly placed its members’ necks on the line and you have to wonder whether they ever had their interests at heart.
If members vote for strike action, passengers will be aggrieved – not at British Airways management who are trying to save the airline, but at the people and cabin who cannot be bothered to look after number one – the customer.
This author consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
