Death Wish?

The second planned strike by Unite has gone ahead and BA reckon that 75% of their scheduled flights will go ahead.

The two statements within that one sentence should be the most terrible things a world class airline could possibly imagine but for Willie Walsh, the CEO of what was once 'The World's Favourite Airline', it seems to be music. He has been described recently as being 'macho' in the face of an unreasonable Union but the reality is that the fight with Unite over changes to Cabin Staff contracts is only one area of failure amidst a whole plethora for the CEO. In fact, about a year before the recession, he was voted one of the Executives of the Decade, right now he is about the biggest chump. Having lost the hearts and minds of some of the best and most loyal staff a business could have, it seems that the Board of BA are 100% behind his absurd actions but this cannot be good for shareholders.

In the grip of the first strike, I had to travel to Germany. Our agency got quotes for the required travel times and BA came out at £800 for the planned journey vs Lufthansa's £237 - standard economy fares on a standard route. OK, so that was in the middle of the strike, but last week I flew to Milan and Lufthansa again came in at around £325 to the similar flight of BA's at over £700.

All along, it has never been about the cost cutting for me - it's been Walsh' abject lack of strategy and business acumen. How can you have a business that is going to succeed when it is charging such prices at recessionary times against its main rivals? Lufthansa is cleaning up - full planes each trip, efficiently run, on time and with decent service with real technological advantages like Boarding Cards via SMS. BA is lost in the wilderness between premium class and low cost. So what does it do with the cash injection it got? It buys the second largest loss making airline in Europe, Iberia, who is similarly placed and tries to combine them. Iberia is perhaps worse off - all its old premium roots into Malaga, Valencia and other cities are dominated by low cost airlines who fly customers in waves - supposedly cheaper - for no frills. BA inherits few new profitable roots, a heavy cost based business and a management equally defunct of ideas from an airline that does not yet lose as much money as BA.

But that's not all - less than a year after two decent airlines flying all business class service to New York went bust (and both were excellent), BA launches one from City Airport which flies just 32 people via Shannon for around £5,000 each. The target customers are City Bankers, the most hated part of society since the recession and credit crunch - Walsh could not have made a bigger PR and business blunder.

Yet he survives. The lack of strategy is almost childlike, the tackling of Unite is pathetic. You can feel it happening again as the whizz kids at Royal Mail found out when capitulating to the Unions for a cost much higher than originally asked for, that modern businesses cannot take prolonged industrial actions and Walsh will have to relent or let his business die. Why would you do that?

BA is basically ruined. It will never rise again to be the airline it was but maybe the world wants something different. The trust and belief that the loyal staff had prior to all this has been ruptured and will never be regained. Walsh has put a sword through the heart of what was one of Britain's best companies.

It takes some skill to be that incompetent; to make a once loyal and much loved staff strike to kill their own company. When BA was the world's favourite airline, it was all about the staff.

He simply does not get it, does he?

Working Nine To One

Willie Walsh, CEO of BA, is a perennial target of mine but, in fairness, he makes that easy.

I have described BA as a strategically lost company before and there has never been a worse moment for what was once the 'World's Favourite Airline'. It is being squeezed by low budget airlines at one end who consistently out perform expectations in terms of profit and by higher service airlines at the other end who focus on their niche market and make enough to survive. BA's two major 'strategic' moves in the last year have been to make a series of reactionary, 'knee jerk' slashes of its costs, with no real impact or direction, and then make arguably its biggest blunder, to buy another airline in the same strategic 'no man's land', Iberian.

In all of this, the backbone of the company has stuck with Walsh until yesterday when the staff who man the airlines voted nine to one in favour of a strike action, to leave the course of action in the hands of the union, Unite. Walsh seemed to suicidally want to fight his staff, having asked them to make sacrifice after sacrifice to the point when they finally made their stand over the 'dumbing down' of their roles. The company now faces a 12 day period of strike action over one of the busiest travel times of the year - Christmas. It could not have been a worse result for BA - it could not have been a more stupid move by management.

The recent BA history is a litany of business cock ups. Terminal 5's opening was about as inspiring as it got as a superb terminal was project managed in a schoolboy fashion, stress testing the unprepared systems with hordes of real passengers. Then we had the series of staff cost cuts that played with the fantastic loyalty of the staff only to shaft them by trashing their worth in the latest move. In between were two attempts to buy a dying airline in Spain, the first ending in farce as BA's market worth fell below that of their target at the crucial moment, and the launch of a business class only airline out of the City Airport with a capacity of just 32 seats which pandered to the whims of rich bankers when two similar services to the US had failed less than a year earlier.

The message in that service alone could not have been worse to staff, the shareholders and the public - BA was prepared to service rich bankers ahead of paying its staff with a service already proven to be unprofitable by two other companies.

I don't know what the shareholders think of Walsh as they seem to support him grimly, but we now know what the stakeholders think. The once highly vaunted air crews of the once great airline have voted categorically to fight him - and you know instinctively that he has lost his best weapon to survive because he has undervalued and disrespected it.

It's not as if you could not see this coming. It has been a quick process of losing the confidence of the staff and laying a scene for the battle. Walsh calls the action of the union 'cynical' but that's what you get when you lose the support of your staff. From a union's point of view there is no point striking when the airline does not fly - their tactics are generally to hit you were it hurts most as it quickly sparks negotiation, at a battlefield very much with the terrain in their favour. There are no surprises that this is exactly what has happened and it was about as obvious as the cock up at Terminal 5 as it all unravelled.

BA seems to be managed by fools. The strike action is not at all helpful. We can see the Royal Mail happening all over again with the one tragic ingredient for Walsh - the customers do have a choice. There are other airlines to fly - in fact, to Walsh's edification, the skies and airports are full of them. His strategic plan has been a series of schoolboy responses to a business game exercise.

I would say that BA needs a rapid change at the top to survive.

Stoic Britain in 2009?

I think we all need a pat on the back. 2009 has to be one of the worst years in terms of crises for many a long time, yet the average person in the street, young or old, took it all with a traditional British stiff upper lip.

We have endured 6 successive quarters of GDP contraction. We have endured 4 years (and more) of serious decline in household income, with 2009 being by far the worst. We have added well over 1m to the dole queue and there are still more to come on that. We have seen major companies try to impose draconian cuts on staff at banks, the Royal Mail and BA as good examples; we have seen the loss of major household names like Woolworths, MFI, Threshers, Borders. We have seen the near collapse of the financial system, with 5 household named high street institutions falling largely or wholly into public hands. We have seen the exposure of long term, systematic abuse of the taxpayer by MPs on their expense claims with some stepping way beyond the point of common decency and into the world of crime. We have seen more deaths in Afghanistan in one year than all the previous years of that engagement added together - and totalling now as many as those lost in the Falklands conflict. Even as we watch with horror as that seemingly pointless engagement continues, that still our troops are not being given the right support, numbers and equipment to do the job they are asked to do. As the official inquiry into Iraq starts, it is already clear that the public were grossly misled into supporting a war that had no legal grounding - making Britain no better than a rogue state intent on imposing its will on others because it wants their assets.

Why have we put up with it all? Even in the Glasgow East by-election, the status quo was endorsed. During the year there was much talk of discontent amongst workers and potential riots in the streets as Britain suffered from the depths of the recession. We have seen that wile private firms have suffered badly from the effects of the recession and the credit crunch, the public sector has enjoyed an unscathed path with hardly any job losses, no major cuts, good salaries and fantastic pension rights as more private firms close their final salary schemes.

For many we have seen our assets corrode at an acidic rate - the stock market has regained ground but most of us look at our pension and savings statements with fear and depression. Our homes have lost some 25% in value and although they are back on the rise, many people are now in the mire of negative equity or under the cloud of delayed payments. Many firms have deferred their tax under the government schemes and face a big cash call soon that may yet send more companies under. The VAT reduction to 15% will be reversed as of the end of this month and prices will rise sharply.

And perhaps most depressingly, we have been shielded from the true cost of the massive bank bail outs we have been party too. The National Audit office have now fixed the current running total as £850 bn and rising - a spend totally unanticipated by anyone and we are still worried about further liabilities as now the next wave may not be sub-prime mortgages but sub-prime national debt as whole states or countries like Greece and Dubai start to falter on debt repayments. The result is that we are likely to be paying for the huge borrowing on all this until 2032 although Government calculations seem to be wrong each month as the borrowing requirement keeps exceeding estimates.

In amongst all this bad news - terrible news - the population seems to be unfazed and carries on regardless. Even terrible disasters like the Cockermouth floods seem to move us little anymore as we become numb to the pain around us. Perhaps we are in denial - all this bad news is being locked out so that we can focus on existing in our way. After all, there are no food shortages, we still have credit and we still have means of getting what we need. Indeed, the travel industry, with the exception of BA, reports that holidays have not fallen off at all - for most of us, life goes on.

One theory why we have not been up in arms and rioting in the streets is that we have a focus for our fury. The one benefit of the bizarre banking drama has been that we can collectively and unreservedly hate the people who caused the mess we are in - the bankers. The issue just won't go away. Even as the money still pours in from the taxpayer creating an artificial market condition where every bank in the world can make vast profits quickly with little investment and cost, they are demanding bonuses for effectively just pocketing our cash. They are not even demanding it - they are blackmailing us for it.

At one point in the year, I advocated that we do not pay our tax as enough was enough - why should we give our money and see the direct result as being MPs cheating us for cash and bankers queuing to buy shiny new sports cars? Why can't we see more care homes for the wounded returning from Afghanistan or better equipment and transport for them so that they can be protected against the unseen enemy? If money was so easy to be handed out, why did we have to pay so much tax before, if debt was so good for us?

I can only put it all down to the old spirit of survival and stoicism by the British people. At the direst moments we had the surreal moment of an open racist on prime time TV telling us that Hitler had a point in so many words. And still we carried on.

I think as the year closes, we should all pat ourselves on the back for our courage, fortitude and downright ignorance of what is going on around us. By putting our heads in the sand, young kids in Afghanistan will continue to die and rich people in the City will continue to earn a fortune off the back of our mindless handouts and behave as if they earned and deserved it. Why, when history is rewritten, we will find that the likes of Goldman Sachs, RBS and the other banks saved us, not we them.

And we will believe every word of it, just as we did of the rewritten history in the TV program, 'The Blair Years'. The one thing that Mandelson and Brown got right in the last year is that the public was stupid - the rest they got totally wrong.

Anthony Holmes - Management Idiot?

According to his biography in today's Sunday Times Appointments Section on page 6, Anthony Holmes describes himself as an international corporate turnaround specialist and transitional leadership expert. Sounds good.

His article is about the Postal Strike and situation at the Royal Mail asserts how a leader is required and not a manager. It is his opinion that Winston Churchill would be the ideal man for the job to solve the current stand off between Union and management as his wartime 'quintessential leadership' would help take the situation by the scruff of its neck.

Anthony Holmes is no doubt an intelligent man but Churchill, while indisputably a fantastic wartime leader who led Britain to survival and victory at our direst hour, had previous form when it came to strikes.

Churchill solved the General Strike by sending in troops - an action that arguably strengthened the resolve of workers and unions in Britain for the best part of 90 years. His actions were despised so greatly that someone as mild as my grandmother could not speak his name without invoking the dire days of his methods to solve the strikes which profoundly affected the people in South Wales in particular. It even tarnished his undoubted genius of wartime leadership in her humble eyes.

If Holmes had bothered to look into Churchill's past, he would have realised that Churchill would have had only one method of solving the stand off - to send in troops to break the strike and force the workers to accept whatever their fate was deemed to be by a truly incompetent and overpaid management. What a super idea that would be.

Perhaps those employing Mr. Holmes for his specialism and expertise aren't actually too worried about his experience, qualifications, knowledge of his subject or historical characters. Like Ron Sandler, his price is reassuringly expensive enough to not ask questions.

Thatcherite Britain Returns

Stubborn, suicidal union versus clueless, stoic management, backed by a Thatcherite Government.

Sounds like the 1980s? Nope, welcome to Britain 2009. In the face of multiple strikes which to be frank have seemed to have made no difference to an already sporadic service, Royal Mail's Golden Boy multi-million pound management team came up with a brilliant idea which will really solve the problem. Hire 30,000 temporary staff.

Well no doubt the Government are happy on two counts - 1) their stoic Thatcherite stance in the face of leftie Unionism is holding steady and 2) 30,000 off the dole queue will do no end of good to the tragic unemployment figures. It could have been a plan from the Iron Lady herself. But it is her deputy - Lord Mandelson who plays this Iron Lady. Calling the strike suicidal, he wears the mantle of free market capitalist well, even down to saying he has agreed to arbitration when the Union says he hasn't. Perhaps the letter telling them so was in in the post.

It's a really pathetic situation. All across Europe, the old public owned postal behemoths have largely carried on functioning, but for us we have a combination of bright ideas to sell off the profitable bit and leave the millstone around the ever welcoming taxpayers' necks. As Sir Howard Davies said of us all recently, we have no idea of how bad our crisis is and sure enough, as our ever generous cheque book keeps on paying up, we have no idea how much such stupidity will cost us in the future.

Mandelson loves playing God. He loves sucking up to rich Adonis's in the vain hope he can be one. But this has been rank stupidity after daft management. It stems simply from appointing management who have nothing to lose, because when matched with Union leaders who equally have nothing to lose, it is a game of chicken where neither party will turn as neither have a vested interest. In between stands a large workforce who are going to get royally shafted because they think everyone has their best interest at heart.

It's Thatcher's 80s all over again. Substitute Leighton and Crozier for Ian McGregor and Mandelson for Thatcher and you wouldn't know the difference but for the hairstyles. Meanwhile, unlike a homegrown steel and coal industry, every single person depends on the postal service. This is not suicidal, it's downright needless and stupid.

Cutting Off Your Nose

The whole Royal Mail story has been a pretty poor fiasco. From high profile new management, to daft name change to partial privatisation and now a strike, it has lurched from crisis to crisis. But is the bastion of the communications industry about to commit suicide?

It's pointless trying to mull over the past as we all know the issues underlying at Royal Mail. It is an industry under threat from modern communications and the sight of nicely kitted out post -'people' delivering letters of a particular size to our doorstep could well be a thing of the past. Email, social networking and the whole growth in mobile and other forms of communication has effectively put plain old 'snail-mail' into a long decline. As the need for hard copy post and the worry of depletion of resources like trees for paper, one of the most amazing forms of communication is really a dinosaur. The whole industry needs to be refocused and revamped. Whether the current management know what they are doing remains to be seen and whether people like Peter Mandelson understands the ramifications either is debatable.

The first rule of privatisation seems to be to sell the good bits cheaply and then let the public cop the bill for the bad bits - usually some astronomic sum. For the Royal Mail it is the massive pension deficit which hangs around its neck like the Colossus of Rhodes that will cost us all £billions. In a time when a £billion is trivialised and has been liberally handed out to save the necks of bankers, it really does make you wonder why we don't save the workers at the Royal Mail but let's be honest, Mandelson et al can't see a future as a Non Executive Director at the Post Office - banks are where it is at when it comes to lining your pockets for the future - Tony Blair has shown that particular path.

Meanwhile, the Unions and posties themselves are set to make a bad position worse. A threatened strike in the lead up to peak business at Christmas will almost certainly see corporate business switch. Late cash collections, invoicing and non-delivery is simply not an option for business while we all would like to see our cards and gifts get to people on time. A strike at that time will not just be a stand for the workers, it will be the death knell for the company. It is as simple as that.

There is now a Mexican stand off. The highly paid management of Crozier and Leighton have taken a leaf out of Thatcher's book and decided they have run out of ideas and so will stare out the Unions. After all, what have they to lose? They will always get another highly paid job somewhere else and they don't have a stake in the business, so it's easy to kill it. It will be a case of 'I told you so' when it all occurs. This perhaps is the union's possible flaw in the plan. If they think the Government will step in - think again. They only act when their rich friends need them - common workers, they couldn't give a stuff about.

The Golden Boy management team will allow the business to die. There will always be a core profitable bit they can sell as a last ditch effort. The rest can be given to the taxpayer to sort out as we are stupid enough to stand by and pay whatever we are told to pay.

I would start making alternative arrangements for Christmas folks - bah, humbug, from Crozier, Leighton, Mandelson and all.