BA battles the turbulent air ahead of AGM
INVESTORS in British Airways (BA) are psyching themselves up for another dose of doom and gloom ahead of the ailing airline’s annual meeting tomorrow, as worries about its pension deficit, record losses, tie-up woes and the worldwide downturn weigh on the company.
Chief executive Willie Walsh, who has said the carrier is in a “fight for survival”, is under fire from workers and unions as he asks staff to take pay cuts to help the company survive.
The airline has said that 800 management staff at the company have agreed to work for free for up to four weeks, while a further 6,200 volunteered either to take unpaid leave or switch from full-time to working part-time shifts.
But a summer of discontent looms, as 2,000 cabin crew and ground staff rejected cost cutting plans put to them by BA last week, leaving the unions to negotiate new terms.
So dire was the situation that BA even called in conciliation service Acas to help reach a deal.
Other big worries for investors include BA’s pension deficit – which could hit £3bn, or more than double the company’s value, by the end of the year – and news that the fund manager who runs the pension fund got a pay rise of nearly £200,000 last year will do little to ease tensions among shareholders.
Another problem for the company is that BA’s potential tie-up with Spanish carrier Iberia is now starting to look less likely under the latter’s new chairman Antonio Vazquez, who is understood to have demanded “make or break talks” over the deal.
BA needs to complete a tie-up with Iberia, the talks for which have been stuttering along for a year, to remain competitive against rival airline giant AirFrance KLM. But worries over its pension deficit have hindered a final deal being struck.
Shareholders will be looking to Walsh to steer the company through the downturn, solve the pension deficit and avoid strike action.