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?
(Image credit: British Airways Boeing 747's at London Heathrow airport © NewsCast)

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".

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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".

Dr Matthew Partridge

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri