You are reading a single comment by @hippy and its replies.
Click here to read the full conversation.
London Fixed Gear and Single-Speed is a community of predominantly fixed gear and single-speed cyclists in and around London, UK.
This site is supported almost exclusively by donations. Please consider donating a small amount regularly.
@hippy
Battered Airways
Despite being our flag carrier, BA hasn't had much good press of late. The rising price of crude oil reduced airline profits, helping BA to lose £50 million in the final quarter of 2009. Seven days of strikes are sure to have hit its profits in March, despite this upbeat profit outlook released on 29 March.
In total, these two strikes lopped as much as £45 million from BA's profits. Also, BA has two big staffing issues which simply won't go away:
First, its now-closed final-salary pension scheme is massively under-funded. Indeed, BA's pension deficit hit £3.7 billion in 2009, almost £1 billion more than BA's current market cap of £2.8 billion. Indeed, BA's pension deficit is proving a sticking point in its proposed merger with Spanish carrier Iberia. (Editor's note - BA has since announced preliminary terms of its planned merger with Iberia, forming a new company called International Airlines)
Second, BA's cabin crew are the most highly paid in the UK: reportedly, they are paid twice as much as their opposite numbers at Virgin Atlantic. BA is determined to tackle this overhead -- hence the two strikes by cabin crew last month. BA struck back by removing strikers' valuable travel benefits, which include one free flight a year and a 90% discount on other BA flights.
Alas, BA's executives then proceeded to shoot themselves in the foot once again. On 25 March, BA awarded seven executives a package of share options worth £3 million. These options will vest in 2013 if BA meets certain performance targets. Not the greatest PR move you might say...
http://www.fool.co.uk/news/investing/company-comment/2010/04/07/ba-vs-ryanair-the-latest-round.aspx