Business Comment: BA needs to boost its efficiency programme
Tuesday 05 August 1997
It is extraordinary how quickly the costs can mount up when staff vote with their feet - or rather their sick notes - and passengers decide to check in elsewhere. The strike costs are significantly above analysts' expectations. Together with a warning that the strong pound could leave a further pounds 200m dent in profits this year, it was enough to send the shares spiralling down another 30p, making for a near 20 per cent retreat since its full-year results back in May.
Admittedly, BA has been buffeted by more than just poor employee relations. The continuing failure to receive regulatory approval for the alliance with American Airlines and the damage caused by the strength of sterling are at least as bad for sentiment.
But if BA is to repeat the success it achieved in the first decade after privatisation, then the business efficiency programme will be the key. One-off costs of pounds 125m are small beer in comparison to potential benefits of pounds 1bn.
The difficulty for BA is that as soon as it finds ways of saving money, new opportunities to spend it pop up. Although the efficiency programme is now two years old, the staff bill is rising, not falling or remaining static.
Launching a low-cost airline is not really the answer. BA has effectively been carrying out just such a policy by franchising out the name, livery and flight code to other airlines. Yesterday, but for the skill of a pilot, the dangers inherent in that strategy could have come home to roost too.
- 1 All Blacks Aaron Cruden misses New Zealand flight after drinking session, has brilliant excuse
- 2 Kim Kardashian 'nude photos' leaked on 4chan weeks after Jennifer Lawrence scandal
- 3 'F*ck it, I quit': TV reporter Charlo Greene quits live on air in spectacular fashion
- 4 Alicia Keys leaks nude photo 'to create a kinder and more peaceful world'
- 5 Clothes store Joy angers mental health campaigners with Twitter exchange on bipolar disorders
Scotland could still declare independence – even without referendum, says Alex Salmond
Scottish referendum results: Cross-party consensus collapses amid Tory-Labour spat on the 'English question'
Hilary Mantel 'should be investigated by police' over Margaret Thatcher assassination story, says Lord Bell
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Plebgate MP Andrew Mitchell called officer a 'little s**t', claim court documents 'exposing ex-Chief Whip's 'record of abusing police'
Archbishop of Canterbury admits doubts about existence of God
iJobs Money & Business
£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...
£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...
£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...
Up to £80000: Saxton Leigh: My client, a large commodities broker, is looking ...