Pilots' strike grounds British Airways

published 12 September 2019

British Airways Boeing 747's at London Heathrow airport &copy; 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".

MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

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".