Saturday 6th February 2010
British Airways' chief executive, Willie Walsh, has expressed cautious optimism that a cabin crew strike can be averted after the airline surprised investors with its first operating profit in more than a year.
Walsh said he was "sure" that an agreement would be reached with the Unite union over a cost-cutting drive including cuts in staffing levels on flights. The BA boss said the airline appeared to have turned the corner after it reported an operating profit of £25m in the three months to 31 December – its first in 15 months.
"We will reach an agreement at some point," said Walsh. BA confirmed this morning that it was on track for a record full-year loss after recording a nine-month pre-tax deficit of £342m in the nine months up to 31 December, bringing it close to last year's record annual loss of £401m with the least profitable quarter of BA's financial year still to come.
However, there was better news at the operating level, where revenues exceeded operating costs by £25m in the third quarter. The profit is modest compared with recent years – the same period in 2007 yielded an operating profit of £178m – and at the pre-tax level the third-quarter result was a loss of £50m once interest charges and pension costs were added in.
Nonetheless, Walsh noted the symbolism of a result that stunned analysts expecting a third-quarter operating loss of up to £120m. "Saying it all points to turning a corner is a fair comment," said Walsh.
Len McCluskey, assistant general secretary of the Unite trade union, which represents the majority of BA cabin crew, said the results augured well for a peace deal. A strike ballot of more than 12,000 cabin crew closes on 22 February and a walkout could begin on 1 March.
"This ought to make it more flexible in reaching a negotiated settlement with its cabin crew," said McCluskey.
However, Walsh tempered the optimism with warnings that BA's recovery would be slow and that he remained determined to push ahead with potentially inflammatory cost-cutting. The BA chief executive said he would not repeal the unilateral decision to remove at least one cabin crew member from flights – part of a cost-cutting drive that yielded higher than expected savings of £300m in the nine months to Christmas.
"We have been in talks for a year now and we have not made any progress that I would consider to be significant. We are prepared to talk with them for as long as it takes but that does not mean we will stand back from making changes," he said.
Unite has demanded that the staffing cuts are repealed but when asked if he would consider such a move, Walsh said: "Absolutely not." Walsh's refusal to reverse the changes, and Unite's insistence that they are a line in the sand, indicates the distance between both sides.
BA has presented two proposals to Unite. The first, which dominated the BA negotiating team's presentation, is dubbed "new fleet" and involves putting new recruits on lower pay and different work practices on to a separate fleet. While the proposal is anathema to Unite, the union refuses to discuss it publicly because BA can put an injunction against any strike over the plan following a court ruling that blocked a strike by the pilots' union, Balpa, over a similar issue in 2008.
The second proposal, to which BA devoted less time during discussions, is dubbed "integrated/flexi approach" and echoes Unite's negotiating document, Way Forward. Sources close to the talks say these proposals could be the basis for a deal, but Unite negotiators believe that significant differences remain.
Both approaches envisage lower paid crew, with different working practices and conditions, working alongside existing crew. However, BA is insistent that such a move would involve significant changes to working practices for existing crew, including shorter gaps between outbound and inbound trips for cabin crew.
guardian.co.uk © Guardian News and Media 2010
