Outlook: Ayling's seat looks uncomfortable
Tuesday 10 August 1999
In truth, no-one really knows. Had BA's cost-cutting zeal not led it into a damaging and morale sapping dispute with its cabin crew, then perhaps standards of service, customer satisfaction and hence profits would have held up better. Likewise, had BA not spent inordinate management energy pursuing the ultimately futile alliance with American Airlines, then the product might have retained more of its edge over the competition.
In the absence of certain knowledge, the market has, reluctantly, given Mr Ayling and his co-pilot, Lord Marshall, the benefit of the doubt. The shares may have been a lousy investment, underperforming the all-share index by nearly a half since Mr Ayling took charge. But nobody has been able to suggest a better strategy for coping with the buffeting BA's transatlantic business has suffered. With BA it has become a case of manyana and yesterday there was another helping of jam tomorrow for investors. Having got almost as far as he can with cost cutting Mr Ayling has decided to start cutting capacity.
By 2002, BA will be selling 6.5 million fewer seats, largely by introducing smaller aircraft, and says Mr Ayling hopefully, carrying fewer unprofitable passengers.
Mr Ayling says BA will emerge from the current turbulence with lower costs, a younger fleet, and the most profitable customers. But it is a brave chief executive who tells the world there are certain customers he does not want. BA's strategy is also dependent, in part, on other airlines showing the same self-restraint as BA and cutting, or at least freezing, their capacity.
Unless the clouds begin to clear soon for BA, then it can only be a matter of time before the seat occupied by Mr Ayling also becomes a casualty of the cutbacks.
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