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Strike could destroy British Airways, analysts warn

By Phil Han, for CNN
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Travel agents fear BA strike
STORY HIGHLIGHTS
  • British Airways could lose up to $50 million a day in possible strike by cabin crews
  • Airline announced pre-tax loss this year of more than $655 million
  • Experts warn that passengers won't forgive the airline easily
  • Airline has long history of strike action by workers

London, England (CNN) -- British Airways stands to lose up to $50 million a day during the course of a 12-day strike that threatens to cripple the already flagging airline, according to some airline analysts.

The possible $600 million loss in revenue for the airline would compound the public's adverse reaction to a strike over the holiday season that could affect up to 1 million travelers.

"People won't take kindly when people say that it was the brand that stopped me from visiting my Dad at Christmas," Simon Middleton, a brand consultant who has worked with British Airways, told CNN.

"It's almost suicidal and it might well destroy them."

All this is a far cry for the airline that in the 1990s called itself the "world's favorite airline."

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Since then, the airline has consistently lost passengers each year and in March 2009 announced a pre-tax loss of more than $655 million. This year looks like being even worse with losses of almost $1 billion expected.

The airline also lost the crown of the United Kingdom's largest airline in terms of passenger numbers for the first time in 2008 to low cost rival EasyJet.

"As a brand BA is one of the most admired airlines in the world, but they have really started to lose it," Middleton said.

"They got out-maneuvered by smarter airlines which were far lighter on their feet -- other airlines have simply caught up."

One of the biggest problems, industry analysts say, is that BA is trying to do too much for too many people.

"The fundamental problem is that historically, the airline has done everything for everyone, from long-haul travel to having a massive and very extensive European network," flight analyst Kieran Daly said.

"They need to face a future that Europe is a continent that is serviced by the low-cost airlines and the only way they will make any money is to focus on one of two things they are especially good at, like long-haul flights."

And drastic changes must be made if the airline is to survive, said Howard Wheeldon, a senior strategist at London-based consultancy BCG Partners.

"British Airways needs to cut short-haul flights and really start to lose the unprofitable routes," Wheeldon said. "The airline really needs to start standing on its own two feet."

Another problem is the tumultuous relationship that management has with unions.

The planned walkout by 12,500 cabin crews is far from being the first strike to have crippled the airline.

In summer 2005, airline staff walked out over sackings by Gate Gourmet, which provides in-flight food.

It could really set the airline back a decade
--Simon Middleton
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And in 2004, staff striked over pay disputes and in summer 2003, baggage handlers walked out over new check-in procedures.

Experts say serial strikes are a sign that BA has a problem that won't easily go away.

"This tricky relationship with management and the unions is not industry wide and it's a very unique problem to BA which is contributing to the strike action," Wheeldon said.

"These guys and girls are actually paid pretty well when you compare it to EasyJet or Ryanair, but it's also not just them because staff at BA are paid much more than staff at other national airlines like Air France, Lufthansa and even American Airlines."

The biggest risk though, according to many experts, is that the strike could destroy the trust that passengers have in BA. "I think it could really set the airline back a decade: it may take that long for people to forgive it," Middleton said.