Christmas strikes on British Airways horizon

Picture an unlikely scene: British Airways (BA) boss Willie Walsh standing next to the leader of his airline's biggest union and announcing a new dawn in industrial relations.

"The central thing is we have two sides that are more focused on the future than ever before," says Walsh. "We will have a more positive and constructive relationship."

A dream scenario for hundreds of thousands of passengers hoping to avoid crippling strikes this Christmas, but that was two years ago. Fast forward to December 2009 and the relationship between BA, its 14,000 cabin crew and the Unite union is on the cusp of breakdown once again.

Walsh hailed a new era on the steps of a west London hotel in January 2007 after agreeing to an 11th-hour pay deal with Tony Woodley, the general secretary of Unite's predecessor, the TG.

Underlining the lack of progress since then, it is likely that the build up to a possible strike this month will shadow the events of 2007.

This time the atmosphere is undoubtedly worse. BA has avoided antagonising Unite publicly thus far but in this week's British Airways News it accuses the union of "threatening" passengers over a strike that would "cost the company millions of pounds."

A spokesman says the airline has made it "absolutely clear" that it wants to continue talks. But when pressed on whether a date has been set, he adds: "I am not aware that a date has been agreed as yet." It all appears choreographed for a resounding "yes" to a strike and a frantic seven days of talks after December 14.

Serious issues at stake

Given the deep-seated frostiness between BA management and Unite, passengers could be excused for being indifferent towards both sides' grievances. However, there are serious issues at stake.

BA is facing a pretax loss of about £600 million (Dh3.6 billion) in 2010, on top of a loss of £401 million in 2009, and argues that a leaner cost base is crucial to its long-term survival as its losses top £1.6 million per day.

Unite is fiercely resisting BA's cost-saving proposals which, in saving £140 million per year, will see one fewer crew member on long-haul fleets, a two-year pay freeze and, most controversially, the introduction of fresh crew members on new contracts. Unite sees the latter as a Trojan horse for a separate, low-paid and de-unionised workforce — something BA denies vehemently.

A former BA executive who had a 20-year career at the airline has sympathies for both sides. Some union representatives at BA can be "malicious trouble-makers" and cabin crew can be guilty of displaying a "precious attitude," he says.

However, according to discussions the former senior employee has held with colleagues still at the carrier, industrial relations have worsened to the extent that the schism between staff and management is wider than ever.

As is typical with industrial disputes, much of the resentment is directed at the chief executive and the head of human resources, which in BA's case is Tony McCarthy, who performed a similar role at the equally strife-ridden Royal Mail.

"The issue is one of trust," says the former executive. "There is a sense that the cabin crew don't know what the company's intentions are. They read about mergers [with Spanish carrier Iberia], the need to save costs, the state of the industry, but no one tells them what it means for their job."

The cabin crew lifestyle is also a hindrance to forming a constructive relationship with bosses, because they are often out of the country and do not meet regularly with managers.

It all points towards history repeating itself over the coming weeks, at great financial cost to the airline and cabin crew. The last-ditch deal in 2007 came too late to lure back thousands of BA passengers, who by then had booked on to other flights.

Douglas McNeill, analyst at Astaire Securities, estimates that a two-day strike will cost BA £50 million. McNeill argues that, with access to nearly £2 billion in cash, BA can afford to absorb the blows from a trade union's biggest weapon.

"In financial terms a strike of limited duration would be manageable for BA," he says. "In a sense the timing is good because in a year in which the airline is already on course to incur substantial losses, the impact of a strike will be much less apparent than it might otherwise be."

Reassuring for investors, perhaps, but not for passengers.