Pilots' strike grounds British Airways

The British Airways pilots' strike is the latest mishap in a series of PR disasters for the national flag-carrier. Where does it go from here? Matthew Partridge reports.

British Airways Boeing 747's at London Heathrow airport © NewsCast

Can BA maintain altitude?

British Airways' pilots this week embarked on the "first walkout by flight crew in the carrier's history", says Graeme Paton in The Sunday Times. The strikes came after its 4,300 pilots rejected a pay offer that the airline claims "would cost it £50m over three years, on top of the 11.5% pay deal already offered". The union insists that a settlement will cost British Airways (BA) less than the £100m sales the airline stands to lose in the strike.

This is "a textbook example of industrial-relations hubris", says Simon Calder in The Independent. A union "representing a relatively well-paid group of workers" agrees to an above-inflation deal, "then backtracks and demands more". At the same time, you have a "highly profitable employer" deciding to ground "virtually all" its flights rather than concede "a few million pounds a year extra on its wage bill". This dispute "between well-heeled foes who really should have the same direction of travel" does neither side any credit.

Who's to blame?

Whatever the rights and wrongs of the action, the company should win in the end, says City AM. The strike, and the subsequent damage to both BA's share price and its "battered brand", is likely to prove a "necessary blip on the radar in the long-haul" if it helps keep a lid on pilots' pay. Indeed, every little helps "when you're competing with the like of Emirates on long-haul and Ryanair and EasyJet on short-haul routes". In any case, BA has several tangible advantages that are "more permanent than a few PR disasters", such as 55% of slots at Heathrow airport, still the "airport of choice" for "high-value travellers".

I'm not so sure, says Chris Bryant on Bloomberg. The pilots may be hoping "that the airline will blink first to spare further damage to its image" and they could be vindicated. They are "still indispensable if you want to take off or land a plane" and "can take advantage of BA's public image being tainted recently by various IT and... data snafus". While the strike might not be a big problem if BA remains in the black, things could rapidly get worse if Britain enters a recession and the pound gets even weaker. Parent company IAG is trading at just four times earnings, perhaps indicating that a profit collapse is "on the horizon".

Recommended

Stockmarkets shrug off turbulence
Stockmarkets

Stockmarkets shrug off turbulence

Stockmarkets have hit their first bout of turbulence of the year, but most are clinging onto January’s gains.
4 Feb 2021
The MoneyWeek Podcast: how to not lose money to inflation and financial repression
Investment strategy

The MoneyWeek Podcast: how to not lose money to inflation and financial repression

Merryn talks to Peter Spiller of the Capital Gearing Trust about how he navigated the last extraordinary year; what he's buying now; and how he plans …
16 Apr 2021
UK mid-cap stocks look forward to life after lockdown
UK stockmarkets

UK mid-cap stocks look forward to life after lockdown

The FTSE 250 hit an all-time high at the end of last week, as investors look to a post-lockdown recovery.
16 Apr 2021
Why you should expect another stockmarket crash
Stockmarkets

Why you should expect another stockmarket crash

Many fear inflation, but a deflationary debt collapse is a more likely scenario in the near term, says Tim Lee
16 Apr 2021

Most Popular

The bitcoin bubble will burst: here’s how to play it
Bitcoin

The bitcoin bubble will burst: here’s how to play it

The cryptocurrency’s price has soared far beyond its fundamentals, says Matthew Partridge. Here, he looks at how to short bitcoin.
12 Apr 2021
What does the Coinbase listing mean for bitcoin and other cryptocurrencies?
Bitcoin

What does the Coinbase listing mean for bitcoin and other cryptocurrencies?

As the bitcoin price hit new highs, the world's biggest cryptocurrency exchange, Coinbase, listed on the stockmarket. John Stepek looks at what that m…
15 Apr 2021
Lab-grown meat: the new agricultural revolution
Soft commodities

Lab-grown meat: the new agricultural revolution

Vegan alternatives are taking off, but the future of food technology lies in lab-grown meat – cultivating steaks and burgers from animal cells, says A…
16 Apr 2021