With shares in International Consolidated Airlines Group (IAG) “bumping along at all-time lows”, IAG’s new boss Luis Gallego has decided to shake things up, say Robert Lea and Martin Strydom in The Times. He has forced out Álex Cruz, the controversial head of British Airways, which IAG owns. Cruz, who has been replaced with Sean Doyle of Aer Lingus, earned notoriety for scrapping complimentary food and drink for short-haul economy passengers and overseeing IT disasters that left passengers stranded. BA was branded a “national disgrace” under his management for its job-cutting strategy.
Many BA workers will see the departure of Cruz as “the first good news for cabin crew in months”, says Jim Armitage in the Evening Standard. But while his cuts “may not have been popular”, his overhaul has left airline in “better shape than most” to face Covid-19. Similarly, his decision to stop “chucking money away on rubbish freebies” on short-haul flights made sense given that BA faces tough competition from budget airlines. Most importantly, his success in increasing profit margins to 16% was a “big win” for shareholders and may have helped convince them to back IAG’s emergency fundraiser.
Hired as an enforcer
Cruz is entitled to “feel hard done by”, as his departure is more to do with internal company politics than lack of merit, says Oliver Gill in The Daily Telegraph. Hired as IAG boss Willie Walsh’s “enforcer”, with strict orders to cut costs, his policies were always going to lead to “collateral damage”, destroying any chance of him succeeding Walsh. So after Walsh was replaced by Luis Gallego from Iberia, a much smaller and less profitable part of IAG, it was clear that Cruz was on a “hiding to nothing” and it was only a matter of time before he would be forced out. It looks as though Sean Doyle’s task will be delivering a slightly more palatable version of his predecessor’s policies, says Nils Pratley in The Guardian. This is a pity because while Cruz managed to deliver “fat profit margins” before the pandemic struck, his penny-pinching alienated both staff and customers, and left BA “as little more than an upmarket version of easyJet on European routes”. It also made it look “as if the airline didn’t care about how it is regarded on its home patch”, which is a big mistake given that BA currently needs all the goodwill that it can get.
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Doyle may be “well-respected” and considered a “fantastic people manager”, say Philip Georgiadis and Arthur Beesley in the Financial Times. But his task is made harder by the fact that his appointment comes just as the second wave of Covid-19 has “snuffed out” hopes that the industry “might be through the worst of the pandemic”. Airlines “are not forecast to recover until 2024 at the earliest”. And BA is “badly exposed” thanks to its reliance on corporate travel – a part of the market that has been “completely gutted” – and the “near-closure” of the transatlantic market.
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