British Airways' Willie Walsh: The New CEO's Challenges
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Code :LDS0009
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Region : UK |
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Introduction: British Airways (BA) was formed in 1974 by themerger of staterun British Overseas Airways Corporation (BOAC) that handled international routes and British European Airlines (BEA) that covered destinations in continental Europe. BOAC andBEAserved different categories of passengerswith different requirements and a differencewas observed in the cultures of the employees of both the organizations after themerger. In 1981, Lord JohnKing,was appointed the chairman of BAand in 1982, ColinMarshall was appointed as the CEOof the group. The task ahead for King andMarshall was to prepare BA for privatization,whichmeant increasing efficiency and improving customer service. In 1982, BA recorded an overall deficit of £544million,7 and launched its survival plan that included suspension of unprofitable routes, employee lay offs and disposal of surplus assets. In early 1983, BA was repositioned as the ‘World’s Favourite Airline’ by launching a new advertising campaign. BA also invested in modernizing its fleet of aircraft, ground facilities and IT infrastructure. It was estimated that the group reduced the number of its employees from 58,000 to 38,000 between 1981 and 1987. It was estimated that BA spent £150million8 during this period in granting voluntary retirement benefits. During this period the group’s employees underwentmanagement-training programmes likePutting People First9 and Managing People First.10 In 1987, when BA was privatized, the group’s employees received 95% of the company shares. In 1989, BA won the world’sbest airlineaward.11 In the 1990s, BA focused on customer service, which was considered as the key to the efficient operation of a private airline. In 1993, BAopened Fast Track, a channel for premiumpassengers at Heathrow Terminal 4, which ensured fast service fromcheck-in to the departure lounge. In 1994, BA launched ‘WorldOffers’ ticket fares tomore than 50 destinations, slashing prices to one third of the original fares. Around the same period, BA started selling its operations like baggage handling services, catering operations and its landing gear overhaul unit. It also transferred part of its accounting functions toMumbai, India, employing 200 people at salaries that were lesser than that in theUK. |
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