Like Gordon Brown after Tony Blair and Tony Blair after he buddied-up with George W. Bush, British Airways can't seem to win for losing. Bounced about by skyrocketing fuel prices, weighed down by security costs and fears, grounded by an enormous, drifting volcanic ash cloud that brings a near-supernatural quality to flying, BA not only faces the travails other airlines do, but also has a tsunami of industrial action - i.e., strikes - to look forward to this spring.
"Bloody hell,'' as the Brits are wont to say.
Unite, a union that represents BA cabin crew, has already led two short but costly walkouts this year over the money-losing airline's attempts to reduce its operating costs and rewrite work rules. Now, it plans to launch four more walkouts: from Tuesday, May 18 to Saturday, May 22; again from May 24-28; and again from May 30 to June 3; and yet again from June 5-9.
Between erupting volcanos and volcanic union leaders, BA executives say the carrier is on-track to lose 1 billion pounds sterling (nearly $1.5 billion USD) in 2010. That would come on top of losing 401 pounds (nearly $600 million USD) last year.
BA says it will fly - albeit at reduced capacity - through the forthcoming walkouts, as it did through the earlier ones. Even so, the labor actions can't help but disrupt and perhaps ruin travel plans for many BA customers who hope to enjoy their Whit Sunday holiday or jet to the World Cup tournament in South Africa. BA says it will operate all flights out of London's Gatwick and City airports. The carrier also claims it will fly about 60 percent of international flights at London Heathrow airport and 50 percent of domestic flights there, using cabin crew who want to work and leasing aircraft from other airlines.
"We are confident that many crew will ignore Unite's pointless strike call and support the efforts of the airline to keep our customers flying,'' BA's CEO, Willie Walsh, said in a statement. Ironically, Walsh, who has taken a tough stand with labor, was the chief pilots' union negotiator early in his career at Aer Lingus, the Ireland carrier.
Stakeholders - workers, executives, investors and travelers - can argue over the particulars of BA's downsizing plans - and the devil, as they say, is always in the details. But it is hard to quibble with the broad strokes or the need. I can say as a frequent BA flier and aviation industry reporter that this historic, high-quality airline could well be in a fight for its survival. It needs to reduce costs, or no airline.
I sympathize with cabin crew members. I was on staff at a daily newspaper - newspapering being perhaps the only industry that is losing altitude more quickly than commercial civil aviation - and I saw my workplace downsized, employee benefits cut and my pension slashed by one-third. I have felt the pain of restructuring, and it really hurts. That said, BA needs to cut costs in this very turbulent environment. Taking down the company won't help anyone.
As a sympathetic but skeptical observer, it looks to me that Unite has embraced kamikaze logic. If it can't get what it wants, it will attack, attack, attack, and damage whatever it can.
I have seen this before, too. I watched over the past decade as employees - led most visibly by cabin crew - at United Airlines turned the once-friendly skies downright frosty when management cut staffing, salaries and benefits during United's long bankruptcy restructuring, and senior management, led by CEO Glenn Tilton and his most golden of parachutes, made millions. That hurt United workers and retirees. Unfortunately, United cabin crew took it out on the easiest targets, United's customers, without which there would be no airline and workers would have no jobs, no benefits, no snazzy uniforms. One has to hope that the planned merger of United and Continental Airlines - which will, if regulators agree, create the world's largest airline - will go forward with Continental's kinder, gentler corporate culture in the lead.
As for beseiged British Airways, may the gods of the sky save BA from destructive unions. And for Unite, may it straighten up and fly right with new, less self-destructive leadership.
Showing posts with label Glenn Tilton. Show all posts
Showing posts with label Glenn Tilton. Show all posts
Friday, May 14, 2010
Saturday, July 4, 2009
A New Declaration of Independence, for United
On this 4th of July, long-struggling United Airlines should declare its own declaration of independence - from Glenn F. Tilton, the chief executive officer, chairman and president of parent UAL Corp.. Tilton has had nearly seven years to get United to straighten up and fly right, and hasn't done it. It's time for a change.
Last weeks' computer meltdown at the start of the July Fourth holiday weekend at United's biggest hub, Chicago O'Hare International Airport, is just the latest of a long string of errors.
Tilton, airline-industry watchers will recall, became boss at United in September 2002, coming to the airline from Chevron Texaco after a long career in the oil business. In December 2002, Tilton led United - which bled some $5 billion in losses since mid-2000 - into Chapter 11 banruptcy protection. There it languished for more than three years, finally emerging from the Chapter 11 cocoon in February 2006, having off-loaded employee pensions to the Pension Benefit Guarantee Corp. and squeezed remaining employees for salary and benefits cuts.
The result? A smaller, angrier workforce, one prone to taking out their bitterness on their customers. I well remember the sarcastic "mahalos'' (thank you) from a flight attendant on a trip to Hawaii and the general air of disgruntlement that United workers have shown the traveling public over the past few years. Their attitude - rooted in helpless anger at Tilton and other top managers - has turned the once-friendly skies downright hostile.
Since emerging from bankruptcy, United has lurched from one crisis to another under Tilton's stewardship. It launched and folded a discount carrier within a carrier, called Ted. It tried and failed to merge with US Airways. Now, it is trying to launch a marketing and revenue-sharing agreement with Continental Airlines, a plan that may help United but must first pass the scrutiny of anti-trust regulators in the Obama Administration.
United needs all the help it can get, especially if it can't work closely with other carriers or merge outright, which Tilton, rightly, has long wanted to do. "Consolidation is the answer'' to United's problems, Tilton told me when I interviewed him at Beijing Capital Airport, during a Star Alliance meeting in 2007. He may well be right, but if the political and business skills to close a deal aren't there, the point will be moot.
Even though the entire airline industry has been flying through turbulence this decade, United's financials are much worse than average. The carrier eked out a rare profit of $403 million in 2007, but lost a thumping $5.34 billion last year. The first quarter of this year has been more of the same: a loss of $579 million.
Late last month, UAL issued $175 million in fresh debt, on which it is paying sky-high 17 percent interest; the industry average is just a bit more than 8 percent interest, according to Bloomburg. Reports the New York Post: "UAL was planning to sell the debt at 12.75 percent interest, but was forced to sweeten things due to both a lack of investor interest and management desperation, said analyst Roger King, of CreditSights.''
I have met Tilton several times. He is affable in person, gives you a firm handsake, looks you in the eye. He is a bright man and was successful in business before going to United, but his policies have failed United's workers, its shareholders and its retirees. Indeed, retirees have simply been devastated. I saw this first-hand: I interviewed pensioners who took major hits when United shed its pensions while reorganizing in Chapter 11. One husband and wife I interviewed for the San Francisco Chronicle had both worked at United; their past and their future were tightly tied to the struggling airline. To say they were worried is to understate the facts.
It's time for Tilton to go. United's employees deserve a fresh start, its shareholders deserve to see some black ink and the millions of travelers who fly on United deserve a better airline.
Last weeks' computer meltdown at the start of the July Fourth holiday weekend at United's biggest hub, Chicago O'Hare International Airport, is just the latest of a long string of errors.
Tilton, airline-industry watchers will recall, became boss at United in September 2002, coming to the airline from Chevron Texaco after a long career in the oil business. In December 2002, Tilton led United - which bled some $5 billion in losses since mid-2000 - into Chapter 11 banruptcy protection. There it languished for more than three years, finally emerging from the Chapter 11 cocoon in February 2006, having off-loaded employee pensions to the Pension Benefit Guarantee Corp. and squeezed remaining employees for salary and benefits cuts.
The result? A smaller, angrier workforce, one prone to taking out their bitterness on their customers. I well remember the sarcastic "mahalos'' (thank you) from a flight attendant on a trip to Hawaii and the general air of disgruntlement that United workers have shown the traveling public over the past few years. Their attitude - rooted in helpless anger at Tilton and other top managers - has turned the once-friendly skies downright hostile.
Since emerging from bankruptcy, United has lurched from one crisis to another under Tilton's stewardship. It launched and folded a discount carrier within a carrier, called Ted. It tried and failed to merge with US Airways. Now, it is trying to launch a marketing and revenue-sharing agreement with Continental Airlines, a plan that may help United but must first pass the scrutiny of anti-trust regulators in the Obama Administration.
United needs all the help it can get, especially if it can't work closely with other carriers or merge outright, which Tilton, rightly, has long wanted to do. "Consolidation is the answer'' to United's problems, Tilton told me when I interviewed him at Beijing Capital Airport, during a Star Alliance meeting in 2007. He may well be right, but if the political and business skills to close a deal aren't there, the point will be moot.
Even though the entire airline industry has been flying through turbulence this decade, United's financials are much worse than average. The carrier eked out a rare profit of $403 million in 2007, but lost a thumping $5.34 billion last year. The first quarter of this year has been more of the same: a loss of $579 million.
Late last month, UAL issued $175 million in fresh debt, on which it is paying sky-high 17 percent interest; the industry average is just a bit more than 8 percent interest, according to Bloomburg. Reports the New York Post: "UAL was planning to sell the debt at 12.75 percent interest, but was forced to sweeten things due to both a lack of investor interest and management desperation, said analyst Roger King, of CreditSights.''
I have met Tilton several times. He is affable in person, gives you a firm handsake, looks you in the eye. He is a bright man and was successful in business before going to United, but his policies have failed United's workers, its shareholders and its retirees. Indeed, retirees have simply been devastated. I saw this first-hand: I interviewed pensioners who took major hits when United shed its pensions while reorganizing in Chapter 11. One husband and wife I interviewed for the San Francisco Chronicle had both worked at United; their past and their future were tightly tied to the struggling airline. To say they were worried is to understate the facts.
It's time for Tilton to go. United's employees deserve a fresh start, its shareholders deserve to see some black ink and the millions of travelers who fly on United deserve a better airline.
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