Facing challenges of change at British Airways
Airline business is a difficult company. It has been well-known in the direction of being the mainly economical company in all over the world. Marketing executive must also be ready for action on the way to manage through the challenges of this variety of business. British Airways is one of the market influential within the airlines industry in U.K. The corporation has it huge opportunity. The airline is dedicated towards quality-service. In count, it has its aggressive advantages. British Airways has enormous opportunity of increasing and getting better of its services. In this we discuss about the various challenges of change faced by the British Airways and in what way it is approaching the procedure of change. Introduction:
British Airways is one of the leading airlines in the world. This case traces the airline's history and discusses the process of turnaround during the 1980s under the leadership of Lord King and Colin Marshall. The case also discusses the subsequent turbulent period under CEO Bob Ayling and the challenges faced, including recession, competition, terrorism and the Gulf war. The case closes with an outline of the tasks ahead of the incumbent CEO Rod Eddington. The case can be used to illustrate the importance of leadership in bringing about cultural change. Challenges faced by British Airways:
The economic conditions that prevailed throughout 2009/10 were the most severe they have ever encountered. As a result of the worst recession for 60 years, their industry has faced a series of permanent structural changes that have drastically reduced their revenues in the short term and have permanently changed the economics of running a premium airline. These problems are in themselves formidable. But, in addition, British Airways faced a list of daunting challenges of its own. These included the need to: • Raise finance at a time of continuing crisis in the debt markets; • Radically reduce their historic cost base;
• Change working practices;
• Complete their planned merger with Iberia;
• Win an acceptable anti-trust agreement to cooperate with American Airlines and Iberia on North Atlantic routes; and • Tackle their £3.7 billion pensions deficit successfully. Twelve months on, they can feel satisfied that on every one of these issues, they have either tackled or made significant progress in overcoming the challenges they faced.
They entered the recession financially strong and with their fleet replacement plans fully financed to 2013. In August 2009, they successfully raised £350 million through a convertible bond issue, providing them with the finance to keep investing in their business and maintain their focthem on excellent service as the recession runs its course. Over the year they reduced their unit costs by 6.5 per cent. Their fuel bill fell by nearly £600 million, accounting for a large element of this decrease. Unit costs excluding fuel also fell by 1.8 per cent. This was truly a remarkable achievement. It is hard enough to cut costs when capacity is rising; to do so when capacity is in sharp decline is very difficult indeed. Their cost base is now far more competitive, meaning they are well placed to achieve more profitable growth in the future. They successfully carried the majority of their workforce with them in making changes to working practices, including their pilots and engineers. A number of staff have left the Company on voluntary terms. They have succeeded in introducing permanent cost reductions across the airline, including reductions in crew complements. Regrettably, these changes were met by unjustified strike action by Unite’s cabin crew branch. BASSA misrepresented the Company’s position to its members, failed to represent the views of the majority of cabin crew and has been intent on a confrontation with the airline. The vast majority of their employees recognise the need for permanent change and have shown...
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