By: Lavinia Ding
Will widespread strikes take a toll on British Airways?
In early September, a strike involving over one hundred pilots resulted in 2,325 cancelled flights and around 30,000 inconvenienced passengers. British Airways pilots walked out for 48 consecutive hours in culmination of a long-running pay dispute, marking the first walk-out in roughly fifty years. The trade union responsible for the strike, British Airline Pilots Association (BALPA), had previously stated that British Airline’s management’s contemptuous treatment of its pilots and insufficient pay remuneration instigated the walkout.
The strike, which was supported by 93 percent of the airline’s pilots, came after the airline declined the union’s request for an 11.5 percent pay increase. In a statement, BALPA contended that the strike was a last-resort measure arising from “enormous frustration at the way the business is now being run.”
In a preventative measure to circumvent paying compensations to passengers under European air passengers’ rights rules, British Airways cancelled thousands of flights over two weeks in advance.
Although the strike was planned to continue until September 27, it was prematurely called off on September 18 in an effort to support bilateral negotiations on the part of BALPA pilots. BALPA released a statement that it “has tried to remain reasonable during this dispute and offered a compromise to [British Airways] on 4 September, and then on 18 September [they] called off the strike planned for the 27 [sic] September to allow for a period of reflection.” The company proceeded to reinstate roughly half of its flights.
These strikes could have a massive and unprecedented impact on the full-year profit of British Airways overall; 48 hours’ worth of strikes could mean a 6% decrease in profit. Additionally, the impact on IAG shares (International Consolidated Airlines Group), could adversely affect stock prices in the future.
British Airways pilots reportedly had a salary of an estimated £167,000 prior to the strike. In response, BALPA stated that pilots had taken pay cuts following previous financial crises to compensate for recessions and maintained that their request was “fair, reasonable, and affordable.”
BALPA claimed that an additional £5 million in salary would have been sufficient in preventing the strikes altogether. British Airways, however, contended that the demands would have actually cost the airline an additional £50 million.
Overall, strikes prove to be extremely damaging not just to airline profits, but to the overall economy and to customers as well – regardless of lenient cancellation policy.
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