| Journal: TWUK | Section: |
| Title: | Issue Date: 01/05/00 |
| Author: | Page Number: 8 |
| Copyright: Other |
Will Eddington lift the storm clouds over BA?
Will the new British Airways chief build bridges between the airline and agents?Paul Norris reports
AGENTS have only three weeks to wait before they find out what policies new British Airways chief executive Rod Eddington has in store for them.On May 23, he will hold court over one of the worst days in the airline’s privatised history.
He will reveal that BA has lost approximately £200m in the last financial year
Eddington’s future strategy to turn around the fortunes of previously one of the world’s most profitable airlines will accompany the announcement.
City aviation analysts predict he will not have too many comforting words for struggling agents as he outlines how BA will continue to cut costs.
Commerzbank’s analyst Chris Tarry said: “It is obvious Eddington is a cost-cutter. This was clear at Cathay Pacific and at Ansett.
“It is important in the airline industry to keep costs down and the current BA strategy is right.”
Over the past few years, BA has chopped more than £1bn out of its operating costs. Agents have borne a large part of this with commission cuts and a move by BA to sell products directly.
Next year is expected to see the scrapping of commission altogether and even greater emphasis on direct and Web sales.
If agents thought Eddington would reverse these strategies, City analysts agree they should think again.
Damien Horth of ABNAmro said: “He is very much a shareholder value man but he does recognise people as well. BA has got the best of both worlds.
“I cannot see a major change to BA’s strategies. Agents are a very important distribution channel but airlines are competitive and have to keep costs down. This is something he will focus on.”
The 50-year-old Australian proved in his 18 years at Cathay Pacific and three years at Ansett Australia that he is not shy of wielding the axe when it comes to costs.
Ironically, a major competitor in both Cathay’s and Ansett’s markets was his new employer BA.
But at Cathay he turned the airline into one of the world’s most respected for its service and network, while in Australia, Ansett managed to take on Qantas to good effect. Ansett too has acquired a reputation for excellent service.
Trade chiefs welcomed Eddington’s appointment but reserved judgement until he had been in the job for a few weeks.
Both ABTA and the Guild of Business Travel Agents intend to meet Eddington soon to put forward trade concerns.
But neither ABTA chief executive Ian Reynolds or the GBTA chairman’s committee member Tony Hughes held out much hope of agents getting an improved deal from the airline.
Reynolds pointed out that BA had unveiled a lot of new strategies recently and it was unlikely Eddington would backtrack on them.
Only last month the airline spelled out its payment scheme for agents when it axes commissions next year.
“ABTA will seek a meeting with Eddington. From what we know, he has a good track record,” said Reynolds.
Hughes said the relationship with BA could not get much worse and appeared hopeful Eddington may improve matters. “We will meet him at the first opportunity after he has got his feet under the table,” he said.
Eddington has made comments about taking a fresh look at BA’s emphasis on premium traffic and looks certain to woo staff with a friendlier attitude than his forerunner Bob Ayling.
But one thing seems certain. He will do everything to improve his shareholders’ lot – meaning more cost cutting, with targets bound to include hard-pressed agents.
Analysis
Take-off: Eddington is tipped as one to keep shareholders happyTake-off: Eddington is tipped as one to keep shareholders happy
Rod Eddington’s CV
Born: 1950, in Perth, Western Australia.