When I met British Airways CEO Keith Williams earlier this year at the airline’s Waterside Headquarters near Heathrow, he was in buoyant mood. British Airways is certainly the resilient half of IAG. It has been through the pain of restructuring and come out the other side. Whilst the UK economy is still in the doldrums, the London market, on which the airline relies, is strong. The financial services sector, a source of much long haul premium traffic for BA, has not returned to its former strength but this has more than been made up by strong performance in other market segments.
To Keith’s natural delight, all the revenue indicators are pointing in the right direction and that’s not the only good news. At Heathrow, BA is beginning to enjoy the fruits of its acquisition of bmi, allowing it decent room for growth even though the airport itself remains capacity strapped. It is discovering some useful new traffic flows, for example from some ex bmi Middle Eastern markets. Chengdu services are kicking off.
At Gatwick, where BA has struggled for a long time, staff reductions of 500 and outsourcing of ground handling are now allowing it to compete more effectively with LCC’s (Low Cost Carriers). Nevertheless with easyJet’s coming acquisition of Flybe’s Gatwick slots taking it close to 65% of the airport’s capacity against BA’s 15%, this challenge will intensify. There is also still the outstanding question of replacement of the elderly Gatwick based Boeing 737-400’s.
Long haul performance remains strong and this summer saw the delivery of BA’s first Boeing 787 Dreamliners & Airbus A380’s. Although the 787 deliveries were delayed due to the recent grounding of the type, BA had originally expected them in 2010 so is almost used to re planning schedules. With hopefully no more glitches such as the Ethiopian fire, the Dreamliners are getting to work as planned on Toronto and Newark services this autumn. With Austin just announced, they can start to deliver the promise of future growth potential.
Meanwhile the A380’s also start to earn their keep, increasing seat capacity on LA and Hong Kong services and freeing up slots for use on other routes.
If all this goes to plan and revenues stay firm, then mellow autumn, traditionally strong for business traffic, should be ripe for harvesting for Keith and his team at British Airways.
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