Reputational Damage
Friday, 28 May 2010
Mahmudur Rahman
There were understandable reasons for Martin Broughton to be drafted in as Chairman of British Airways (BA). The hard-nosed former top boss of British American Tobacco had made his mark as a successful leader who, having grown through the ranks of a controversial product manufacturing company appeared to be the right choice. British Airways had to learn that the days of certain monopolistic advantages were over and that service, access and convenience was what the flying passengers to this age were looking for.
For a while it appeared that there really was very little that British Airways could not do and that included elbowing out Virgin Airlines. Chairman Richard Branson wasted little breath in coming out in public moaning over the protection that the airline was getting. When this didn't work Branson went about building the reputation of the airline in the service area, with the famous additions to business travel and suggesting that economy class was better than the business facilities in most airlines. Whatever he did worked and British Airways began to see a slow decline.
Broughton did his best in getting BA to abandon most of its stiff-necked attitudes but when it came to airline staff he seemed to come up against a brick wall. The strong Union wanted to have its way in spite of the fact that its members were one of the highest paid, perked in the aviation industry. The inevitable happened and strikes , first by the cabin crew and then pilots, followed by the cabin crew led to flight disruptions, passenger frustration and a major dent to the British Airways image.
The results are clear. A just announced $ 776 loss has sent shares plunging and analysts groping around for answers. It isn't quite clear whether this is due to the threat of further industrial strike or a permanent reflection of the battered image of the airline. But the passengers may well be thinking twice before making advanced plans for holidays and such given the uncertainty that looms for the airline in the wake of such recurring disruptions in operations. Last year the CEO of BA announced that he would be foregoing his bonus as a gesture of his concern about the company's health. One wonders what will happen this year.
Broughton now has a major job on his hands. Not only does he need to turn matters around including the union issues and profitability, he also needs to do major repairs to the airline's image. The coincidence might be strange but it is the same Broughton that has been hired by Liverpool Football Club to gauge how to beef up the club's coffer by preparing for a sell out to new investors. One only wonders if the acknowledgement of his expertise has changed and whether BA might be looking at something similar.
(The writer is a former Head of Corporate & Regulatory Affairs of British American Tobacco Bangladesh, former Chief Executive Officer of Bangladesh Cricket Board and specializes in corporate affairs, communications and corporate social responsibility. He can be reached at e-mail: mahmudrahman@gmail.com)
There were understandable reasons for Martin Broughton to be drafted in as Chairman of British Airways (BA). The hard-nosed former top boss of British American Tobacco had made his mark as a successful leader who, having grown through the ranks of a controversial product manufacturing company appeared to be the right choice. British Airways had to learn that the days of certain monopolistic advantages were over and that service, access and convenience was what the flying passengers to this age were looking for.
For a while it appeared that there really was very little that British Airways could not do and that included elbowing out Virgin Airlines. Chairman Richard Branson wasted little breath in coming out in public moaning over the protection that the airline was getting. When this didn't work Branson went about building the reputation of the airline in the service area, with the famous additions to business travel and suggesting that economy class was better than the business facilities in most airlines. Whatever he did worked and British Airways began to see a slow decline.
Broughton did his best in getting BA to abandon most of its stiff-necked attitudes but when it came to airline staff he seemed to come up against a brick wall. The strong Union wanted to have its way in spite of the fact that its members were one of the highest paid, perked in the aviation industry. The inevitable happened and strikes , first by the cabin crew and then pilots, followed by the cabin crew led to flight disruptions, passenger frustration and a major dent to the British Airways image.
The results are clear. A just announced $ 776 loss has sent shares plunging and analysts groping around for answers. It isn't quite clear whether this is due to the threat of further industrial strike or a permanent reflection of the battered image of the airline. But the passengers may well be thinking twice before making advanced plans for holidays and such given the uncertainty that looms for the airline in the wake of such recurring disruptions in operations. Last year the CEO of BA announced that he would be foregoing his bonus as a gesture of his concern about the company's health. One wonders what will happen this year.
Broughton now has a major job on his hands. Not only does he need to turn matters around including the union issues and profitability, he also needs to do major repairs to the airline's image. The coincidence might be strange but it is the same Broughton that has been hired by Liverpool Football Club to gauge how to beef up the club's coffer by preparing for a sell out to new investors. One only wonders if the acknowledgement of his expertise has changed and whether BA might be looking at something similar.
(The writer is a former Head of Corporate & Regulatory Affairs of British American Tobacco Bangladesh, former Chief Executive Officer of Bangladesh Cricket Board and specializes in corporate affairs, communications and corporate social responsibility. He can be reached at e-mail: mahmudrahman@gmail.com)