Bumpy Ride Ahead for Beseiged British Air

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.

oneworld, Ready or Not

MARINA DEL RAY, Calif. - The high-end airline alliance oneworld celebrated its 10th anniversary last year. This year, it's accelerating efforts to further integrate its 11 members on the operational side. Those changes are coming both alliance-wide and in bilateral deals between member airlines hoping to get through tough economic times by joining forces.

Indeed, deals - pending and fondly hoped-for - dominated talk by airline CEOS at yesterday's conference here on the breezy, sunny seaward edge of Los Angeles.

One item that got everyone's attention was the ever-closer cooperation between American Airlines and Japan Airlines. JAL is restructuring in bankruptcy, and is expected to emerge as a much smaller, leaner operation. That has focused the minds of executives at American, who helped convince JAL to stay with oneworld after rival alliance SkyTeam wooed the Japanese carrier in hopes that it would peel away from oneworld and join SkyTeam. Didn't happen.

JAL's president, Masaru Onishi, attended the conference. He didn't confirm reports in Japan's Nikkei business daily that JAL will cut up to 16,500 jobs. Nor did he comment on a report in U.S.-based Business Week that JAL has proposed paring pension payments to retirees by as much as 50 percent.

Onishi did join American Airlines CEO Gerard Arpey - who chairs oneworld's directors - in touting plans for joint trans-Pacific cooperation.

Japanese media have reported that JAL's major creditors are demanding huge international cutbacks. If a big route reduction actually happens, JAL will become more of a short-haul, Japan-focused airline. That would open up international opprtunities for its Japanese rival, All Nippon Airways, a member of Star Alliance. It could also mean American greatly ramps up its own trans-Pacific service.

JAL spokeswoman Yap Sze Hunn told me at the conference that the big decisions on JAL's restructuring are expected to be made this June or July.

I asked Arpey if American, in essence, wants to take over any abandoned JAL international routes. Referring to applications to the U.S. and Japanese governments for antitrust immunity, Arpey replied that "Until we get immunity, we are not allowed to talk to JAL about routes.''

But, Arpey added, should antitrust protection be granted, the two carriers will launch a number of joint ventures that could reshape trans-Pacific air travel, especially on well-traveled routes between Asia and North America. He didn't spell out what those ventures would be.

Already, Arpey said, AA and JAL have 11 employee teams working on matters of mutual interest. He said AA is, for example, sharing information from its FuelSmart program - i.e., how to cut back on use of costly and polluting jet fuel - with JAL.

For now, JAL and AA are funneling passengers onto each other's flights, relocating operations in major airports so that transfers between airlines become faster and easier for travelers, and expanding access to AA airport lounges for JAL's passengers.

Arpey said that AA has applied to launch service between Chicago O'Hare International Airport and Haneda International Airport, the convenient in-city airport in Tokyo. That possibility was opened up by an Open Skies pact signed early this year by the U.S. and Japan. "If we are awarded those routes, we'll start them right away,'' Arpey told me.

British Airways and Spain's Iberia, both members of oneworld - the style-minded alliance likes to lower-case its name - announced Thursday that they plan to conclude an outright merger late this year, subject to regulatory approval. Each airline will keep its name, livery and identity, acccording to BA's CEO, Willie Walsh, who attended the meeting here.

While talk was dominated by the courtship dance between JAL and American - a matter of intense preoccupation to the big contingent of Japanese reporters who winged across the Pacific to cover this meeting - other matters of interest to travel-biz types came up, too.

I chatted on the sidelines with Cathay Pacific Airways CEO Tony Tyler. He told me that the Hong Kong carrier's lucrative premium business-class traffic is finally beginning to recover after a frightening freefall brought on by the Great Recession.

"It started to rise late last year, and it has continued into this year,'' Tyler said. "It seems the bankers have started to travel to China again.''

When inquisitive journos asked American's Arpey about what AA will do if rivals United Airlines and US Airways merge - as many media reports say they want to do - he declined "to speculate about something that may or may not happen.''

Arpey did allow that "There will inevitably be consolidation around the world in the airline industry.'' But he downplayed the signifcance of mergers, as opposed to airline alliances and the kind of joint venture deals that oneworld partners are crafting.

"I don't necessarily think that consolidation is the answer to all of the economic challenges that the industry faces,'' Arpey attested. "I don't think that is the silver bullet for solving some of the industry's financial challenges.''

Absolutely Nothing About Michael Jackson

Famous people - or, as we reflexively call them now, icons - entertain and comfort us. They dazzle in the good times and lift our spirits in bad times, like the old Busby Berkeley musicals did during the Great Depression.

But life goes on outside the spotlight, and sometimes ordinary people have to do extraordinary things just to get by. Consider this week's news that some 7,000 workers at British Airways - which lost $600 million in its most recent fiscal year - have agreed to voluntary paycuts. A reported 800 BA employes even agreed to work for free next month.

One of the latter is the carrier's CEO, Willie Walsh, who said he will work for free in July. Walsh makes a reported $1.2 million a year, so this will not be a hardship for him, but it does help set an example. The 20 percent fall-off in lucrative trans-Atlantic business travel has hit BA especially hard. BA is one of the world's more accomplished airlines, so when a carrier of this quality has to struggle, we are in tough times, indeed.

Things didn't get any easier last weekend for BA - the former UK flag carrier, now privately run - when Richard Branson, CEO of Virgin Atlantic Airways, a much smaller but nimble rival, suggested in media interviews that BA may not survive the recession. Whether or not this is true, it seemed a comment designed to rattle BA's investors. Mind you, I like Branson. I've interviewed him thrice and believe he has a great sense of fun often absent from commercial aviation, but his remarks were hardly cricket.

I thought about all this as I sat in the passenger lounge at Kuala Lumpur International Airport recently, where a compact, still-boyish looking fellow with short cropped hair sat reading the sports section of the Daily Mail across from me. It was Walsh. I was tempted to attempt an interview, but the lounge seemed basically off-limits. And, besides, the man has troubles enough to contend with. Silently, I went back to my book.

Those of us who fly a lot and write about travel understand that the pain is widespread, not limited to any one carrier. Air India delayed paying some workers for two weeks because of liquidity problems. Qantas, the fine Australian airline, said this week it will defer delivery of 15 previously booked Boeing 787 Dreamliners, also for money reasons. Falling consumer demand and the steadily climbing price of fuel are squeezing airlines around the world.

And the pain, of course, goes well beyond the travel business. Ordinary people, far removed from the spotlight of fame and media frenzies, will build heartfelt, impromptu shrines on the sidewalk, and light guttering candles, even as they lose their jobs.