Alex Cruz Appears Before Transport Select Committee

British Airways CEO Alex Cruz has answered MPs on the impact of COVID-19 on the airline and its plans for recovery.

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Alex Cruz, British Airways CEO & Chairman, June 2020
Alex Cruz, British Airways CEO & Chairman, June 2020 (Image Credit: British Airways)

British Airways CEO & Chairman appeared before the House of Commons Transport Select Committee today, Wednesday 16 September.

Alex’s former boss Willie Walsh appeared before the Select Committee in May. IAG formally rejected the findings of the committee which criticised the airline for planning large scale redundancies and proposing changes to staff terms and conditions. Willie Walsh later branded their views “completely irrelevant” to The Sunday Times.  Alex Cruz also criticised their report as based on rumours and emotions and not fact.

Alex was the sole witness in the hearing. Those who are familiar with Select Committee hearings will know that there can be a fair amount of grandstanding by MPs. Today was no exception.

Alex was clearly well prepared for the hearing. This was, perhaps, in the knowledge that not only MPs, but also his new boss Luis Gallego, would be watching. At times it seemed like he was venturing from answering MP’s questions into advocacy. At the start of the hearing he was clearly trying to get ahead of their questions and criticisms. Alex was also far more politically attuned, with references to the airline’s role in a post-Brexit UK.

If you were to sum up the differences between the performances of Willie Walsh and Alex Cruz, Willie sounded like he had been briefed by IAG’s lawyers whereas Alex sounded like he had been briefed by BA’s PR team.

In terms of some of the main points:

Staff Redundancies

Alex criticised the decision by the GMB and Unite trade unions to wait some 73 days before engaging with the airline on negotiations on redundancies and changes to terms and conditions.

Alex was keen to emphasise the airline has gone far beyond the minimum statutory consultation in order to secure an agreement with the unions.

As of last Friday, 7,200 staff have already left the airline. The total number of redundancies is expected to be approximately 10,000. Unsurprisingly, the threat to “fire and rehire” has been lifted, which Alex maintained was there as a legal technicality to cover all possible outcomes.

Quarantine and COVID-19 Testing

Lack of passenger confidence in flying is considered a serious impediment to the recovery of flying.

Last week, BA flew 187,000 passengers compared to nearly a million in the same week of 2019. The airline is currently burning through £20 million of cash a day.

Alex criticised the government’s approach to imposing mandatory 14 day quarantine on arriving passengers from high risk countries at short notice without taking into account regional considerations. This is not only disrupting passengers’ plans but also its own operations.

BA has called for a trial of different COVID-19 testing regimes on the London – New York corridor to reduce the mandatory quarantine period to the minimum possible.

Return To Flying

The decision by the European Commission to grant a slot waiver for the winter season was welcomed.

Alex hinted that BA may want this to be extended to the summer 2021 season. Alex would not give a breakdown of how BA’s operations would be split between City, Gatwick and Heathrow in the medium term, but hinted that Gatwick would have a very quiet winter season.

It seems likely that the current situation of limited visibility of flight schedules beyond a couple of weeks is likely to continue for some time.

It appears that the summer 2021 schedule will be influenced heavily by what measures are taken to restore flights and stimulate demand in particular markets in the coming months. Alex called for multi-lateral talks between the UK and other governments in Europe and the US.

Alex, as Willie Walsh has long done, also criticised the Air Passenger Duty regime which disproportionately affects UK domestic routes compared to other short-haul routes. Alex called for APD to be waived for some years.

Refunds

Turning to refunds, as of last Friday, BA has processed 2.1 million refunds and 1.6 million vouchers.

Around 35,000 refunds are due to be processed. When asked why the facility to secure a refund is not available through ba.com Alex insisted this was for technical reasons, which many will not be convinced by.

All in all, whilst the Select Committee itself is unlikely to have much influence over government policy, this was a creditable performance by Alex that should go some way to repair relations.

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