Strike action could cost BA £30m

Strike action could cost BA £30m


British Airways' (BAY) planned strike action could cost the beleaguered airline up to £30 million a day, analysts have warned.


The 12-day strike, which potentially starts next week, threatens to ground flights and cause widespread disruption for up to one million passengers.


Analyst Andrew Fitchie of Collins Stewart says this could work in favour of other airlines - especially the budget carriers.


"You could reasonably expect BA's January bookings to be affected, as prospective travellers will perceive risk of further disruption. This is likely to lead to a significant windfall for easyJet (EZJ), its closest competitor, as well as other airlines who fly in and out of the UK, including Ryanair, Flybe, Lufthansa and Air France."


He is forecasting that easyJet could gain more than 400,000 additional passengers in December and January, each buying tickets at between £100 and £150 to give potential extra revenue of between £40 million and £60 million.


BA is today taking union Unite to court in a last-ditch effort to get the strike action ruled illegal.


It claims irregularities in the strike ballot invalidate the result which saw 92% of cabin crew voting in favour of industrial action. It will consequently seek an injunction to stop the strike in its tracks.


Around 13,000 staff are up in arms over plans to get three quarters of its crew to accept pay rises of between 2% and 7% this year and accept a pay freeze in 2010.


BA also wants 3,000 staff to switch to part-time working and cut onboard crewing levels from 15 to 14 on long-haul flights from Heathrow.


Earlier this week, BA revealed its merger with Spanish carrier Iberia could be under threat after its pension deficit swelled to £3.7 billion - above the £3 billion level at which Iberia can pull out.


An actuarial review had revealed a £1 billion deficit at its Airways Pension Scheme and a further £2.7 billion black hole at its New Airways Pension Scheme.


BA says it and trustees will now work together to develop a recovery plan, which will involve the company consulting with employees and their trade unions. The regulatory deadline for the valuation process, including agreement on future contributions required and the recovery plan, is 30 June 2010.


Shares in the group were flat at 197.3p.

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