British Airways boss Alex Cruz penned a rather remarkable piece in response to criticism in the U.K. over plans to renege on labor deals, firing everyone and rehiring a portion of staff at lower pay. He declares that the business is facing challenges, and that they will do the bare minimum legally required of them (“we will not step back from our legal obligations”).
He complains about the new U.K. 14-day quarantine rule being unfair (it’s rather bizarre to ‘shut the barn door’ at this point). The overall message is that the world is conspiring against them, they’re doing the best they can, so you really shouldn’t expect more of them because it’s not their fault.
Two things Cruz says ring true:
- “[O]verseas competitors will be waiting in the wings to take the landing slots at Heathrow that our MPs have suggested BA does not deserve.” and so will domestic competitors (Virgin Atlantic) and what that means is that the U.K. isn’t going to lose access to air travel if British Airways fails, there’s no public purpose in protecting or subsidizing them. And since 98.2% of BA flying is international, as Cruz is quick to point out, losing BA doesn’t even lose domestic flying.
- “British Airways has no absolute right to exist.”
British Airways is going to be a smaller airline for the next 2-3 years, and that means needing fewer staff. There are honorable ways to accomplish this and dishonorable ones. And BA has chosen a despicable path.
Depending on the work group Cruz intends or threatens to fire everyone, and rehire a portion at reduced pay (in some cases over 50% less). And it isn’t just about lower head count and less pay, but also imposing new work rules on these ostensibly ‘new’ hires. Cruz is using the opportunity of the coronavirus crisis to accomplish everything the airline has wanted but could not get bargaining with its unions, at a time when most flights remain grounded so strikes are useless.
In his piece he suggests he’s required to notify unions of layoffs, he can’t rescind those notices, so cabin crew representatives are being unreasonable in refusing to meet over concessions when the airline is formally declaring their intention to let go of staff. He’s right that if he’s going to do this he needs to say so, but the union is also on firm ground saying they won’t use that as the starting point for negotiation.
What’s most striking is that Alex Cruz does not lay out any vision for the airline nor does he offer any real defense of why the airline is worth saving. Of course a patriotic British cry would be tough for the Spaniard whose airline is owned by a conglomerate registered in Madrid, and where over 40% of ownership is based outside of Europe let alone the U.K.
I’m tearing up just thinking about how tough ol’ Alex has it. The people about to be financially destroyed due to his actions should feel for the poor guy as well.
Must be something in the Thames River, as this sob story is parallel to that we heard from the ex-CEO of BP after a drilling rig of his firm blew, contaminating the Gulf.
Apparently, the CEO of BA attended the B-School where students are taught how much an airline saves by just not operating its jets for paying passengers. We do know how Amtrak’s former CEO from DL and his entourage of EVPs eagerly embraced that assumption. Indeed, they actually believed they could sell Congress on the bonehead theory of taking a typically busy train between CHI-LA and substitute a bus between Kansas City-Albuquerque. (What weather hazards?)Thankfully, Congress refused to drink that Kool-Aid.
As for BA, the first action should be to relieve Cruz and his cohorts from any further responsibilities to conjure up the belief that when thrown against the wall, manure actually makes sense.
Interesting how the more “honorable” options always cost more than the “dishonorable” ones. It’s the free market, not ethics class. The consumers will have the next say…
Crocodile tears. Suck it up Alex or grow a pair and act like a real man. What a pile of BS.
When you respect your staff and treating them morally I may start respecting you.
Cruz is a jackass. So Parliament isn’t carrying his water. BA needs to be a smaller airline. He needs to lay off from the bottom of seniority list and work with unions to accomplish just that. BA will never be a the airline it was, and the jackass needs to accept that.
I still don’t get what people thought would happen?
We decided to turn off the world economy, in some cases, with repercussions that will last for years.
Did everyone think employment would carry on, at full pay, forever?
The UK government backstopped things for a while.., but, what exactly did you all think?
Shutting down the world was a terrible idea, and this is what happens. Tens of millions lose their jobs, people commit suicide, all that.
Why are you made at what some CEO said? Who cares. You’re tilting at windmills.
This is what we decided to do.
There are consequences to our actions team. It’s not going to end nicely because you want it to.
BA is a hollow remnant of a glorious past. The Business class is awful, the economy class is perfunctory but sold as more and the FF program has been decimated by scam charges. Corona Virus didn’t kill it, competition from real airlines did.
Get rid of the old, crew who are unwilling to ‘serve’ customers and try and limp along on the equity if the name.
“Shutting down the world was a terrible idea, and this is what happens.”
This is a common strawman argument. It’s based on the silly idea that the economy doesn’t implode if we don’t shut things down without understanding that air travel was headed for the toilet anyways because of COVID. Restaraunts were screwed anyways because of COVID. Hair salons, nail salons, gyms…any place that packed people in was going to be screwed because of COVID regardless of whether we shut down officially or just stood by and watched as people stopped flying, stopped going out, stopped going to movies, stopped doing things that packed a lot of people in to small places in order to avoid catching the disease…which would be running out of control as hospitals overflowed with patients needing ICU beds and there being none available.
Medical restrictions or no…we were going to end up in the same place.
@Douglas Swalen
Are you trying to argue that, the consequences of what we did – are not real – because your opinion is the same outcome would have happened, if we took the opposite reaction?
I can’t even type that without my brain hurting.
‘The drunk guy got behind the wheel and crashed his car into a bus of kids, causing many injures.’
BUT, in your universe
‘he would have crashed his car into the bus, even if he wasn’t drinking?’
My idea is a fact. It’s not an opinion.
Yours is conjecture – and your opinion. You can assert what you want I guess, but your opinion of what *might* have happened doesn’t change WHAT ACTUALLY HAPPENED.
We over-reacted, and turned off the world economy.
Tens of millions of people – JUST in the USA, lost their jobs, who knows how many in the world. Hundreds of millions?
They closed restaurants.
In Sweden, they didn’t. Those people have jobs still.
In Belarus, they didn’t. Those people have jobs.
Neither hospitals got overrun by anything.
So, the fact is, we locked down the world. And it’s going to hurt working-class people for years, and maybe a decade.
You can’t just ‘ignore’ what actually happened because you assert that if the exact opposite action was taken, the economy would have been ruined just the same? That’s bazar.
We forced people to close dude.
I still can’t get a haircut in June. You think everyone would have just stayed closed for months voluntarily and spent no money? No, they did it because they were forced to.
So, don’t get mad at CEOs for cutting staff – that’s a byproduct of our terrible decisions.
You can’t pass the blame here after you spent months telling everyone to shut down.
Working class people are reaping what they demanded.
Safety, at any cost.
The cost is their jobs and livelihoods.
This has very little to do with “full pay”. The changes to terms and conditions are the issue. Please explain how removing a disciplinary and grievance procedure impacts profit? Unless you want to bully your staff into submission by cracking the whip. This has long been the desire of little Willie Walsh. A despicable little man who has ruled with an iron fist for years. No wonder Air Lingus got rid of him and Virgin sacked him after 5 months. He’s a disgrace and Cruz is just a slimey incompetent individual. During his time in charge he’s fumbled his way through one disaster to another. Baggage losses, IT failures, data breaches and his most recent, hedging fuel at a loss to the tune of 1.2 billion.
Yes B.A. made record profits and pulled the rest of the IAG failures out of a hole but that was only because of drastic cuts that were not sustainable as the customer base was shrinking due to the poor service and standards that were implemented more rapidly than the declining reputation. Customers were starting to become wise to the inflated cost of a reduced service with uncomfortable seats with the absolute minimum seat pitch and buy on board sandwiches etc. He’s a master of cuts and low cost carriers that ultimately fail. No wonder American Airlines was glad to see the back of him. Thankfully they’ve started reversing some of his disastrous money saving schemes.
Finally the proposed acquisition of Air Europa is the real reason for this reduced capacity of British Airways as the Spanish along with little Willie are trying to make Madrid a hub and bypass LHR. This will ultimately be to their detriment however their greedy little eyes can’t see this and still don’t fully understand that when trying to bury someone you should always dig two graves.
No, Howard- what Douglas is saying is a fact. You are living in some fantasy world where the culprit was over-eager government regulation, rather than the Coronavirus.
There still would have been massive economic consequences from not shutting down- Sweden is entering it’s worst recession ever and 40% of the businesses are at risk of failure. They also have 10M people in a country the size of California- natural social distancing is much easier.
Flights were already half full in early March when I flew internationally- once there were thousands of cases a day, people were going to cancel travel regardless of what governments did. The airlines were already toast- not because of lockdowns, but because of people worried about getting sick and dying of Coronavirus.
You want to see a country with a better parallel to the USA that didn’t do a lockdown? Look at Ecuador- there were bodies rotting in the street. A recent study projected an additional 14x cases in the US if there were no local lockdowns. You don’t think there would have been economic consequences from an additional 1.3M deaths? No one would be going out anyway, no one would be getting hair cuts, the economy would still be in the tank.
The actions of an evil tyrannical leadership, Cruz took over £500,000 pay rise last October when the pilots were on strike, Walsh paid himself a £3.2 million bonus this March, yes right at the time they were looking to furlough staff!
IAG have billions, 42,000 staff may potentially not only become unemployed but also homeless!
Any single person who uses the tragedy of a global pandemic to push through a 10 year old plan to cut terms and conditions and pay should be ashamed of themselves, but there again that would imply that they were actually capable of having feelings!! #BAbetrayal
BA hold over 50% of the slots at what is arguably the most strategic airport in the world, especially now there are Aus – UK flights. BA obviously needs competition and if it’s foreign, it’s foreign. Having a second national carrier at heathrow in the form of Virgin (with only 7% of slots at heathrow) got BA to up its game in the 2000s. But, this is obviously not enough if Cruz and Walsh think they can treat their staff like absolutely dog merde. So, if BA disappear, they have only for themselves to blame. But, if they do disappear, someone will come and fill that space.
source: http://wpieconomics.com/site/wp-content/uploads/2019/05/19009_Virgin-Atlantic-Ticket-to-Fly-A4_02h-web-1.pdf Page 5
Cruz needs to go.
Should have been dispatched ages ago.
Too much damage already caused to what used to once be the world’s most favourite airline – not much time left before he crushes it aground!
BA has never been (mis)managed so badly!
Good Lord! That took a while for Mr Cruz to come out from under his desk! BA has shot itself in the foot. They cannot seriously expect to re-staff the airline on their new proposed terms and conditions across their very experienced workforce. Whilst BA has been the IAG “cash cow” in good times, it is now a fact that the BA staff (cost cutting saints and well polished apologists) are going to face the full force of this injustice during this crisis. BA has got over 10 billion pounds of cash at his disposal and could survive a year without flying. Willie Walsh and Alex Cruise have brought BA into disrepute and should be sacked. The BA board should also have a good look at themselves as silence is not an option anymore. #BAbetrayal
@Douglas and George
Well said and great points.
Quite prepared to take a pay ut for a limited Time, but surely if staff are having to do this by as much as 60% then it follows that Willie Walsh and Alex Cruz should do the same, also why come at staff for their contracts? Its nothing but opportunistic by BA
@Pete,
There is no free market. Walsh and Cruz are two of the biggest Welfare Queens on this planet. The whole situation with LHR slots is crony capitalism and a rigged game. Heaven only knows how much taxpayer money they have sucked up with their tentacles.
If they weren’t buying Air Europa there would be cash to preserve some jobs and be a bit fairer to the loyal staff that make an airline. The guy needs to go back to running a low cost out fit like he did at Vueling. IAG is obsessed with Spain. UK government need to get tough with thus shoddy old fashioned outfit.
Unions frequently take such bold actions to extract excessive benefits that hamper Airlines. They regularly strike and disrupt travel for thousands. They cost the company money. Now when the airlines are in a favorable position to negotiate fairer conditions, unions complain. BA management should do what’s best for the long term viability and profitability of the airline. There is an oversupply of labor, so airlines should take advantage of this negotiating position including to lay off everyone and hire new or old employees at market wages.