British Airways Strike Enters Third Day With No Deal In Sight

British Airways Strike Enters Third Day With No Deal In Sight


March 22 (Bloomberg) -- British Airways Plc and the union representing its 12,000 cabin crew are no closer to resolving a dispute on pay and staffing levels as a strike at the airline enters its third day.

BA said it flew almost 100,000 passengers over the weekend even after grounding hundreds of flights at its Heathrow main hub. The Unite union that represents cabin crew said only a “small minority” of cabin crew broke the walkout.

Unite General Secretary Tony Woodley, in an open letter to flight attendants, appealed to British Airways Chairman Martin Broughton to step in and help resolve the dispute. The weekend strike, the first for London-based BA since 1997, took place after Woodley’s talks with Chief Executive Officer Willie Walsh collapsed March 19.

“I’d be very surprised if they hadn’t as a board talked about what would happen if things got rough and ready,” John Strickland, a director of aviation specialist JLS Consulting Ltd., said in a telephone interview yesterday. “People have spoken in the past that Walsh and Broughton are different animals, but there’s no reason they can’t be singing off the same hymn sheet.”

Woodley will address striking cabin crew at a rally near London’s Heathrow airport today, the last of the three-day walkout. Unite plans a further four-day strike from March 27.

British Airways is still “considering a response,” to his call to resume talks, spokeswoman Tehreem Ashraf said in a phone interview.

Discount Carriers

The negotiations broke down last week after three days when Walsh presented a proposal he acknowledged was less attractive than previous offers, saying it had been modified to take account of expenses during the strike. The plan was still “fair and sensible,” he said.

The carrier is seeking to cut costs as competition on its short-haul European routes from discount carriers such as EasyJet Plc intensifies, and revenues from its more lucrative long-haul business traffic have been hurt by the recession.

BA aims to fly about 65 percent of customers with bookings during the strike, helped by 6,000 volunteers from other parts of the company, including 1,000 stand-in flight attendants.

More flight attendants turned up to work than anticipated during the weekend, allowing the carrier to reinstate flights to destinations such as Los Angeles and Mumbai, BA said.

Loss Forecast

The airline estimates that sales will fall by 1 billion pounds ($1.5 billion) this fiscal year ending March 31, and Chief Financial Officer Keith Williams predicted a pre-tax loss of about 600 million pounds in the company’s internal newspaper March 11. BA declined to give an estimate for the cost of the strike.

“British Airways seems resigned to facing the short-term losses in order to secure changes in working practices and cost savings in the longer term,” said Jonathan Wober, an analyst at Societe Generale SA in London with a “hold” recommendation on the stock. “Shareholders seem to be regarding this as a one-off cost, as long as the results that are realized are in BA management’s favor.”

British Airways has gained 17 percent on the London exchange since Feb. 22, when Unite first announced that its members had voted to strike. BA agreed in November to merge with Iberia Lineas Aereas de Espana SA. The stock has jumped 30 percent this year, and Iberia is up 37 percent in Madrid. The two carriers were the best performers in the Bloomberg European Airlines Index, which climbed 4 percent.

BMI, the second-largest operator at Heathrow, said March 19 that it was adding a further 5,000 seats for the duration of the strike.

Cost Savings

BA’s stoppages may cost 105 million pounds, according to Citigroup Inc. analyst Andrew Light. That’s more than the 63 million-pound saving Walsh was seeking in a deal.

Virgin Atlantic Airways Ltd., the carrier founded by U.K. billionaire Richard Branson, said last week that bookings have increased as a result of the strife at BA.

“The flight is normally half full on Swissair but today it was chaos,” Stephen MacDonnell, who works at a property developer and flies regularly be between Geneva to London, said March 20 at Heathrow airport. Swiss International Airlines Ltd. is owned by Deutsche Lufthansa AG. “I’d say a lot of people have given up on BA and gone to other airlines.”

source: bloomberg.com