British Airways CEO May Get Boost From Crew's `Ballot Fatigue'
British Airways CEO Willie Walsh
Michele Tantussi/Bloomberg
Willie Walsh, chief executive officer of British Airways Plc.
Willie Walsh, chief executive officer of British Airways Plc. Photographer: Michele Tantussi/Bloomberg
July 7 (Bloomberg) -- Bloomberg's Poppy Trowbridge reports on U.K. companies' response to new European Union rules requiring firms to increase funding in defined benefit pension plans. Diageo Plc has put 2 million barrels of Whisky into a pension fund partnership, while British Airways Plc has used aircraft as security. A defined benefit pension plan links retirement payments to length of service and final salary. (Source: Bloomberg)
British Airways Plc’s cabin crew may find it more difficult to wring concessions from Chief Executive Officer Willie Walsh after less than half of the main union’s members took part in a ballot over a pay offer.
Flight attendants voted 3,419 to 1,686 against the June 25 proposal, figures released yesterday by Unite showed. About 45 percent of the workers represented by the group turned out, the lowest rate in the four votes held since November.
“It might be indicative of ballot fatigue,” Andy Cook, CEO of Marshall-James, which advises companies on employee relations, said in a telephone interview. “If that turnout is indicative of what an industrial action ballot would look like and therefore the support for industrial action, that will give British Airways a shot in the arm.”
Joint General Secretary Tony Woodley said Unite will now seek further talks with the airline to end the 18-month dispute. Flight attendants walked out on 22 days this year, costing Europe’s third-largest carrier 154 million pounds ($235 million). Walsh has repeatedly said that the airline could operate all long-haul services in the event of another strike.
Outside the union’s headquarters in London, Woodley said yesterday that he wanted a deal that all members would accept and that the low turnout was a result of the “fear factor,” after workers had been suspended or fired during the dispute.
“We’ve got to get back around the table,” Woodley said. “It’s not a question of what concessions we offer Mr. Walsh. What we want is common sense.”
Cost Savings
Walsh cut crew numbers on long-haul flights in November and wants to save 160 million pounds annually within 10 years. Of the total, 60 million pounds will come from the staffing reduction and the remainder from establishing a parallel fleet using crews with separate contracts and bargaining rights.
The 48-year-old Walsh, CEO since 2005, gained on another front yesterday, as the airline and AMR Corp.’s American Airlines won final U.S. approval to jointly set prices, sell tickets and schedule international flights through their Oneworld alliance. The airlines won exemptions from antitrust rules after requests in 1997 and 2001 failed.
British Airways rose 5.9 pence, or 3 percent, to 205.3 pence at 8:35 a.m. in London trading. Through yesterday, stock had lost 5.3 percent since Unite said on Feb. 22 that members had voted to strike, versus a 0.2 percent drop in the eight- member Bloomberg EMEA Airlines Index.
‘More Realism’
“The majority of crew might be showing more realism with regard to the world that British Airways is operating in,” said John Strickland, an analyst at JLS Consulting Ltd. in London.
In a concession to existing flight attendants, British Airways agreed last month to lift pay for two years starting in 2011 and drop benefit cuts that would have funded higher staffing levels on some flights.
Unite also wants the CEO to give ground on the withdrawal of travel perks from workers who went on strike and reinstate staff that have been suspended in relation to the dispute.
“I can’t see British Airways giving in to the demands to reinstate the travel perks,” said Cook, the former head of human resources at Transport for London, which runs the U.K. capital’s buses and subway trains. “For them that will be like rewarding bad behavior. Why go this far and then give in?”
Losing Passengers
Passenger traffic at British Airways fell 11 percent in May after flights were lost to strike action, just as industry-wide demand jumped almost 12 percent, based on International Air Transport Association figures. Traffic at the company fell a further 11.5 percent in June as the walkouts continued.
British Airways is seeking to cut the airline’s costs after the global recession pushed it to a record 425 million-pound loss in the fiscal year through March. The carrier also faces intensifying competition on its long-haul routes from Middle Eastern carriers such as Emirates, while low-cost carriers including EasyJet Plc eat into its short-haul business.
Chairman Martin Broughton said last week that Walsh’s strategy has his full support and that the company has the backing of its biggest shareholders and clients, with whom it is in “constant touch.”
“This is a wake-up call to BA,” said Unite’s Woodley. “If Willie Walsh wants to lift the specter of strike action from his schedule once and for all, he must come back with an offer acceptable to more than a tiny minority of the cabin crew. We are ready to talk.”
To contact the reporter on this story: Steven Rothwell in London at srothwell@bloomberg.net
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