[AnthonyDunn]

JulianCucumberpatch – 21/06/2012 09:52 GMT

I have read and reread your post and cannot disagree more strongly. with it. Your attempt to conflate 1970s industrial strife in the car industry with current BA industrial relations is simply ludicrous.

The 1970s saw a wholly politically motivated take-over of significant parts of the trades union movement which was determined to pursue industrial strife in pursuit of their long-term political ends. I came across this at first hand whilst at Oxford University in the late 1970s when I ran smack into the Militant Tendency, Spartacist League, Revolutionary Communist Party (and a host of other extreme leftist groups) who had infiltrated the local Labour party and who had implemented a campaign of infiltration and wilful disruption at the British Leyland Cowley plant. I well remember thinking that it was my future and that of future generations that these zealots were destroying. Their only goal was disruption and economic destruction.

The problem with BL management was that they allowed the loonies to take over control of much of the management functions at Cowley (and elsewhere within BL’s operations). By the time they finally decided to tackle this, the situation was almost totally out of control – hence the advent of Sir Michael Edwards who had the cajones to face down the militants. Beyond that, the problem with BL was too many poorly designed products compounded by poor manufacturing quality arising from the industrial strife and then a management who did not know how much things cost to manufacture so they even lost money on successful products. The company was bled white with the costs of industrial disruption, inefficiency and mis-pricing.

In stark contrast, BA management (with which I have NO personal, professional or financial relationship) are determined to manage the company (it’s what they’re paid for) and do it profitably. Unlike much of the European aviation industry, BA is now cash generative again. Whereas you seem only too ready to place ALL responsibility for industrial relations issues on Willie Walsh, you appear noticeably averse to placing any level of responsibility upon staff who are wedded to out-of-date and restrictive working practices and pay structures. And I am no particular fan of the man. What I do recall is the comment made by another airline profession (who I really do dislike): Michael O’Leary. The latter described BA as (an indebted) pension fund with wings.

It would appear that you would have preferred BA to have flown (financially) into the ground rather than tackle the fundamental management and cost structure issues within the company. So it is then doubly odd that you castigate BA management for doing what was necessary to avoid the fate of British Leyland… Could this be because you have an axe to grind with BA management? Could it be that you are a disenchanted member of BASSA?

[JulianCucumberpatch]

Of course it is posters like Mr Dunn and VK who like to compare industrial relations in BA as the problems caused by union dinosaurs, rather than the ineptness of its management.

British Leyland failed not because of the workers striking, but becuase the management had them making very poor products like the Marina and Allegro. What made it worse was these products also competed with each other, rather than the competition.

Sometimes due to management incompetence when a shortage of gearboxes meant that production would have to be halted, management would pick a fight with the unions who unfortuantely reacted and did not rumble managements tactics in covering up their own mistakes.

British Airways did not need to show a £950m profit in 2007 -08, when the storm clouds were already gathering. As the BBC’s Robert Peston stated, the subsequent loss in the following financial year “was entirely of BA’s own making”. The Walsh picked a fight with his frontline staff, even though they had got very close to his demands for productivity and savings. Why? Why embark on confrontation that cost over £200m when the union was within £10m of management demands?

I hope Mr Dunn that you have adequate pension provision, but you deride BA as pension fund with wings. You don’t mention the reasons why there are deficits in many pension funds in the UK. The removal of tax credits by Gordon Brown took many billions out of pension funds, plus companies like BA took contribution holidays and used surpluses to fund severance payments.

Looks like management incompetence and short termism once again to me, rather than the ordinary worker reacting against such dire mis-management.

[SimonS1]

Short termism? BA have had management issues for years. Dear old Lord King left shortly after the ‘price fixing’ debacle, Robert Ayling was removed after a big fall in profits and Walsh has done for industrial relations what the Boston strangler did for door to door salemen.

The big loser in all this has been the shareholder.

The alternative to change though is going bust. Bit like the band playing while the Titanic sunk.

[Cedric_Statherby]

It is fascinating how this thread keeps itself alive. I draw one conclusion from this above all, which is that all on this forum, whether loyal BA staff, BA management, Customers or merely Brits who still have a soft spot for what was once “the flag airline” (but in truth is now just another private company), do care about what happens to BA.

Unfortunately what has happened to BA, like all other airlines, is that the economics of the airline industry have turned against them in the last 5 years. Very very few legacy full service airlines in Europe are prospering, and some have disappeared completely – Malev being only the latest. BA might also have crashed had not changes been made.

This does not mean that the changes were handled well – either by management or staff. Both established positions that were initially too rigid and too difficult to row back from, and both had to make difficult concessions. But both have by and large made the required adjustments to their starting positions and the airline is still flying. This is certainly not the out and out failure that some posters seem to see.

Ultimately, the airline industry needs to face facts, and its changed environment. It is no longer earning the profits or therefore able to pay the wages it used to and thinks it deserves. And yes, I think that last comment applies to management as well as other ranks.

[JohnHarper]

While BA is of course at one level any other private company it is also for many the most public face of the UK overseas which I think is why people care about what it says and represents. I think the same is true of all legacy carriers which necessarily are still associated by name with the country they represent.

BA has fallen a long way since the days of privaitisation when it was something to be proud of when I bought my first shares. I wonder how many people would buy shares in it now, I know I wouldn’t and of course they have been a very poor long term investment.

[craigwatson]

“for many the most public face of the UK overseas which I think is why people care about what it says and represents”. Then it’s a good thing that BA has fallen as far as the country has.

[travelgator]

Embarrassing and shaming as it is to say this as a Brit, BA is the perfect airline for us. Like the UK it has failed to keep up with market developments, exploits its employees (pays them pittances with the excuse that the salary is meant to be a secondary income and not a primary (!), doesnt reward true talent unless it is spotted by mediocre middle management, and then doesn’t even pay for their uniform shoes or handbags!), and views costsaving as the be all and end all. BTW,
has anyone actually seen what is behind the cladding at T5? Scary….

[BeckyBoop]

Cedric, nice post 😉 x

John, If BA/IAG share were giving out the 10% discount to new shareholders then i would be interested in buying the minimum 200 shares especialy if i were flying in F or J on personal trips because you would make your money back very quickly and i would be less concerned about reciveing a dividend because i would be saving on the cost of the ticket.

[Tete_de_cuvee]

The FT Reports 21/06 from the IAG AGM

IB will challenge the arbitrator ruling that although IB were entitled to launch its low cost airline Iberia Express but it would have to include all pilots in the overall pay scale even if working conditions in the two parts of the company were different.

(Maybe the arbitrator found it difficult to equate the mega salary packages paid the board with their pleas that poverty demands structural change)

Apparently Sepla (Balpa equivalent) is accusing some IAG managers of “Waging war against pilots”

In Q1 2012 IB Lost Euro 170 million…..

Walsh didn’t hide his frustration with the pilots telling them they were “selfish” (pot & kettle springs to mind).

The AGM had questions as to Why there was a lack of dividends? A fear that IB would lose its Spanishness. One asked whether future meetings would be held in English in Gibraltar?.

To me it appears that IB and Spanish shareholders don’t like the set up and neither do BA and English shareholders …. can someone please demerge before BA a pulled into oblivion…. Walsh can stay managing the IB element.

[BeckyBoop]

TdC did they say anything about offering shareholder discount to new investors?

I had a quick peek at the resolutions and results document. Resolution 3 – To approve the management of the Board of Directors had a 94% approval of the current board.

http://www.iairgroup.com/phoenix.zhtml?c=240949&p=irol-meeting

[Tete_de_cuvee]

Walsh reopens row with Spanish pilots.

The IB pilots are demanding the same treatment as BA pilots, which does not discriminate across fleets. Will Walsh capitulate to the IB pilots or rue capitulating to BA’s pilots?

http://www.guardian.co.uk/business/2012/jun/21/iag-willie-walsh-spanish-pilots

Note the lead paragraph …

Walsh says ‘selfish’ strike action is putting at risk the future of British Airways’ sister airline Iberia

If the IB pilots are putting at risk the future of BA/IB, I dread to think what the far more serious risk from the increasingly dire Spanish economy is going to do!

Someone should tell him that crying Wolf a second time doesn’t wash, even though this time it really is a “fight for survival”.

BB – I haven’t seen anything wrt Shareholder discount from the AGM and doubt if there is anything, though the anomaly will need to be rectified.

The resolutions didn’t allow a vote elect/reject board members as per most corporate AGMs, so there wasn’t an opportunity for a corporate governance focussed NED to be put forward.

[AnthonyDunn]

JulianCucumberpatch – 21/06/2012 11:38 GMT

I would suggest that you read other people’s comments before attempting to put words in their mouths.

At no point did I write that BL’s demise was “all the fault of the workers”. Not having been born yesterday, I am, similarly, very well aware that BA and many other UK companies took extensive pension contribution holidays in the 1980s (presumably when their actuaries told them they could do so) and rued the day they listened to the advice – even if it did flatter their results for several years as a result.

The pensions issue has many causes and not just Gordon Brown’s removal of tax credits. As to whether my own pension is adequate, I doubt it but that is to digress massively from this thread. Which is whether BA can be trusted under Willy Walsh.

Having encountered friends and colleagues who’ve panned BA for its failure to smell the coffee and face up to the changed market for travel owing to the success of O’Bleary’s “bus with wings” business model, when BA’s management finally attempted to address the issues of uncompetitive cost structures and ridiculously, antediluvian labour practices, they have been slagged off by the likes of yourself in much the same way that Sir Michael Edwards was at the time. It is clearly a case of damned if they do, damned if they don’t.

Where we may see eye to eye is that if WW is demanding concessions and salary reductions from others, then the first person to sign up to any such concession should be himself. And very, very publicly. Regrettably, over the past few decades whenever the issue of boardroom pay has raised its head, there has been a stubborn refusal to admit that senior management has been on a “smash and grab raid” of shareholders’ funds entirely unrelated to corporate performance. I cannot see how the explosion in senior management and boardroom pay can do anything other than alienate the majority of staff who are having to make concessions and take wage cuts. In this respect, Willy Walsh is as egregiously at fault as the rest of the directocracy in the UK.

[SimonS1]

Sound post there Anthony.

Labour practices that are 20 years out of date and management who are on the gravy train. Buying a Spanish airline at exactly the time that the Spanish economy goes off a cliff.

The good thing though is if they reintroduce the 10% shareholder discount there will be a big rush for shares, after all at the current price you could probably recover the cost of the minimum shareholding with one bucket and spade trip to Alicante.

[VintageKrug]

I always felt the 10% discount is of far greater value to me than any proportionate dividend would have been.

I’m lucky that it still operates for former BA shareholders, but it can’t go on for ever as it unfairly discriminates against former IB and new IAG shareholders, and is of course of no material benefit to institutional investors.

Sir Martin is a fan, and from a corporate governance perspective encouraging a diversified smaller shareholder base is a positive.

[LPPSKrisflyer]

The discount is only of value if you fly with BA regularly, for those of us who don’t, dividends would be very welcome very soon. In any event, it should not be an either or scenario, dividends should be paid and in future at the expense of Walsh et al digging their snouts deeper in the trough.

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