CHOOSING to relocate so much of its operation in one go and at one of the busiest times of the year now looks like a serious double blunder. For British Airways, though, its problems may just be beginning.
Chief executive Willie Walsh has accepted the airline was to blame for last week's chaotic scenes during the opening of Heathrow's Terminal Five and that the buck stops with him. That does not go as far as resigning – and the City seems to be ready t
o forgive him this latest crisis – but his status may become an issue if the mess is not sorted quickly and he fouls up over the latest challenges he faces.
BA is due to transfer its lucrative North American services to the new terminal on April 30. In the light of last week's fiasco, it is no wonder Walsh is now reviewing that date.
More immediately, the company is facing a competitive threat: the Open Skies agreement, which allows any European airline to fly to any American city, marking an end to a restrictive cartel, and it comes into effect tomorrow. BA will have to compete with Continental, Delta US Airways and Air France for transatlantic services, and analysts are predicting a £250m fall in BA's profits.
For Walsh, these are desperately difficult and testing times. He erred in the run-up to T5's opening by telling staff: "We are ready", a seriously misjudged statement that he must now be regretting. Not only was he wrong, but his declaration suggests he was ill-informed about the training his staff had received and how poorly prepared they were for the switchover. Some, apparently, had warned him they were not ready.
Despite all this, and other crises, including a threatened strike last year that cost BA £80m and the price-fixing charge, which added another £350m to the airline's bill, Walsh enjoys the support of his shareholders and of the City. They have embraced his tough approach to reorganisation and to cost-cutting, but much attention was focused on those cuts by those who felt BA was simply under-resourced to handle the new facilities.
The airline is still threatened by strike action by its pilots and morale among staff is said to be low. As for its customers, the slogan "the world's favourite airline" ceased to have any resonance some time ago. "We are sorry for the inconvenience caused" would be more appropriate. Its reputation for lost luggage and for delays and cancellations meant last Thursday was, sadly, another day at the office for those all too familiar with its inconsistent performance. As a regular traveller to London, I for one deliberately avoided Heathrow last week and will do so for the next few weeks, as it seemed inevitable that something would go wrong. Such is the level of expectation.
This was also another blow to London's and Britain's image in the eyes of the world, following other fiascos such as the Millennium Dome (expensive white elephant), the Millennium Bridge (unstable), and – closer to home – the Holyrood Parliament building (over-budget), the "squinty" bridge over the Clyde (broken cable) and the Science Centre Tower (non-working lift).
We may get over them, but we are not necessarily forgiving. Can Walsh and BA recover? Well, yes, although both have blotted their copybooks and an advertising campaign for T5 has been pulled to avoid further embarrassment.
In their defence, it has to be said that other airports – including Denver and Hong Kong – suffered similar opening-day nightmares, and Chek Lap Kok in Hong Kong is now held up as one of the world's most popular.
The test for Walsh is the length of time it takes to put right all that went wrong at T5 and restore his and his airline's credibility, and that may require more humility and less bluster in the way he goes about it.
Wolfson risky after losing Apple contractTHE fragile support enjoyed by Wolfson Microelectronics, the Edinburgh University spin-out, was further undermined last week, following the loss of a contract with Apple, prompting a 25.5% one-day fall in the share price.
While there is scepticism about it achieving its targets, the future is not entirely bleak at Wolfson. It will no longer supply chips to the iPod Nano and iPod Touch, and prospects now rest on "other high-growth products", believed to be the next-generation iPhone. Sales are encouraging and attention is turning to the unexposed Chinese market. Wolfson needs good news when it reports Q1 figures next month.
It has a chequered trading record, but it has £45m in cash and is by no means on the ropes. The shares are risky, but worth holding.
The full article contains 799 words and appears in Scotland On Sunday newspaper.
