Will BA's Boss Fight or Fold?

Last Updated Mar 18, 2010 5:19 AM EDT

If BA's Willie Walsh is going to give in at the end of his battle with the cabin crews, he might as well give in now. At least he'd avoid inconveniencing some 75,000 passengers wanting to fly British Airways each day. But if the chief executive has the determination to win this dispute -- in which the government has now become involved -- he can change forever the structure of the airline.

Business is littered with bosses who talked tough but capitulated to secure a short-term solution rather than solve the long-term problem. The recent Royal Mail settlement buys-off employees with a three-year pay deal that guarantees no ensuing efficiencies.

But Walsh's own industry offers an example to follow. The US government fired its air-traffic controllers and recruited new staff to overcome their restrictive practices. BA has Spanish practices that will shock its merger partner, Iberia, dating from the days when HR was still called personnel and successive managements talked tough then went soft.

The cabin-crew confrontation follows disputes with check-in staff, the Gate Gourmet caterers and baggage handlers plus strikes over clocking-in and a threatened Easter pilots' strike. Add in the management failures of cancellations caused by staff shortages and the Terminal 5 fiasco and it's hard to see why this is anyone's favourite airline.

The current dispute could upset 500,000 travellers' plans but will discourage far more from flying BA. Why book with an airline that might not get you there -- or might not get you back?

So a company that is already making huge losses is losing real revenues as well as its reputation because of industrial relations rows. If Walsh fights but loses, he simply adds to the losses by reducing his top-line while doing nothing to cut costs.

If he has a hidden agenda, as the cabin-crew leaders suggest, then it must be to break the union stranglehold permanently, not simply on this one issue. Walsh has the cash in his balance sheet to sustain a fight but he must also find the resolve that failed his predecessors.

This is not class war, like past industrial relations battles with miners or dockers: the cabin crews come from much the same social backgrounds as BA's customers. But thanks partly to good PR, the clients sympathise with the company rather than the crews. Walsh's tactic is to divide and rule, recruiting other BA workers to do cabin jobs.

Walsh has won a small victory to make staff contribute more to close BA's pension fund deficit. If he wins the cabin-crew dispute he can rescue British Airways. But if he backs down he will join the other BA bosses who failed to solve its structural problem, and if he's going to do that, do it now.

(Photo: BriYYZ, CC2.0)