Labour relations issues must be resolved quickly, industry analysts warn flag carrier

Analysts are warning that British Airways must resolve quickly and decisively the labour relations issues that came to a head with its London Heathrow hub grinding to a halt last week, or risk more employee unrest and a longer-term commercial backlash.

Talks broke up without agreement on 25 July, following the wildcat strike by BA ground staff at Heathrow over the weekend of 19-20 July, although Amicus, one of the unions involved, says negotiations have been "constructive". Maintenance engineers are already threatening to join the strike over the new swipe card timesheet system, and airline consultant Edmund Rose of GCW believes that even if this issue is resolved, there could be more bad news on the way. "The question is: is this symptomatic of other problems between management and staff?" he says. "Has the company sent mixed signals to the staff about the real situation BA is in? The staff can see that the traffic figures are doing well, but they may not understand that yields are still down."

Amicus says: "We are not surprised this happened. Morale is very low there - industrial relations have been unhappy for the last three or four years. The workforce registered a failure to agree with the swipe cards on 4 July, but the company went ahead anyway. They could really improve morale by not talking to people like that."

But BA rules out any pause in its Future Size and Shape restructuring plan. "There will be no slowdown...the [card] system was introduced on Wednesday; Future Size and Shape is 18 months in and it will continue," says the airline.

BA chief executive Rod Eddington last week emphasised the importance of further cost-cutting, saying: "If we don't continue to modernise, we won't be around in two years."

Independent aviation analyst Chris Tarry says: "It's impossible to say what the extent of the direct losses as a result of the stoppage will be," adding that the airline will also suffer indirect losses as passengers lose confidence in the airline. "Restoring confidence comes down to avoiding this in the future - the higher the perceived risk of disruption, the more passengers will stay away." As long as further strikes can be avoided, Rose concurs that confidence should return quickly - "unless this leads to a long stand-off with ground staff".

Tarry says that cost cuts must continue despite the risk of further strikes. "This is fundamental. The revenue structure will have to change, and the changes will fall on labour."

Source: Flight International