Outlook: Should British Airways eject its pilot?
Wednesday 26 May 1999
This is the man, the charge sheet reads, that brought you those terrible "ethnic" tail fins, that threw away a famous and much loved livery, and that poisoned relations with his workforce, a company's greatest asset in any business but particularly in a service orientated one like air travel.
Worse still, he is busily turning the world's favourite airline into its most unloved one by allowing a quite severe deterioration in quality of service to go unchecked. Meanwhile profits have collapsed while the share price has underperformed the rest of the market by 45 per cent while under his command.
Damning stuff, but is it fair or deserved? Excuses, even when they amount to "circumstances outside our control", are the last thing a business traveller wants to hear when confronted with an obvious failure to deliver, but it is not clear that ejecting the pilot is going to solve anything for British Airways right now. No doubt there is more Mr Ayling could have done - there always is - and there have clearly been mistakes.
But actually, BA is not a company which is in crisis, hard though this statement might seem to reconcile with the tone of much recent press comment. Indeed, that it is not in crisis, given the recession which has engulfed many of its markets and the cut throat competition that has developed in others, has much to do with the strategy and vision pursued by none other than Mr Ayling.
Those that lambast Mr Ayling for poor quality of service and even poorer profits should ask themselves where British Airways would be now without the programme put in train to strip pounds 1bn out of costs by the year 2,000. More than pounds 600m of that target has already been achieved - ergo, if BA had not undertaken this transformation it would not have been reporting a profit at all yesterday, but a loss of pounds 400m.
The equation isn't quite as simple as that, it ought to be added, for at the same time as taking cost out, BA has been adding other costs in an effort to improve its competitive position, but that there would now be a severe financial crisis and that the dividend would be gone is not in doubt.
None of this comes as much comfort to BA's travelling customers. The number of FTSE100 ceo's and top investment bankers who regularly complain, if not in directly to the company then certainly at private lunch and dinner tables, about deteriorating quality of service, ought to put BA on notice of serious problems to come. There's no point in taking the axe to costs if the result is to destroy the customer base, and boy does BA have one that needs to treasured, as gold plated and high powered as they come. Even if things haven't in truth got worse, many seem to think they have. In business, perceptions are often as bad as reality.
However, none of this is justification for thinking Mr Ayling has lost the plot. Indeed, from a commercial stand point, the declared strategy of concentrating on higher margin business travel, setting up a differentiated discount airline, and honing capacity towards these ends, seems hard to fault. Mr Ayling may not survive the siren calls for his resignation. But the fact of the matter is that he is preparing British Airways rather well for the next millennium.
- 4 Alex Salmond: 'The rocks would melt with the sun before I'd ever set foot in the House of Lords'
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