So will the Easter getaway herald the resurrection of British Airways and its owner International Airlines Group (IAG), or will the computer say no? The first big holiday break of the year and the start of the summer season should, according to IAG forecasts, bring a bumper crop of passengers after the grim first two years of the pandemic.
The flag carrier expects to fly at full capacity on its most lucrative transatlantic services this summer, and last week returned to some outposts it had deserted at the height of the pandemic: Sydney in Australia, and London’s Gatwick and City airports.
But if the fear of Covid – if not the actual rate of infection – is receding, it has become clear that BA has yet to rid its systems of bugs. Customer service has been a recurrent complaint – shedding thousands of staff can’t have helped – and was again put to the test in recent weeks. A series of IT failures led to the airline suffering ripples of apparently self-inflicted cancellations.
BA has history with IT problems. Even if Covid has overshadowed any previous nightmares, the reappearance of this particular problem will have agitated investors as well as infuriating passengers. A pandemic is a decent excuse, but BA and IAG have had years to sort out these dodgy tech issues.
The biggest failure, in days when such disruptions were front-page news, came five years ago, with thousands of passengers stranded at Heathrow and around the world. The response to the crisis of the then relatively new BA boss Álex Cruz, criticised – fairly or not – as sluggish, appeared to spell the beginning of the end for the Spaniard.
The current leadership has seen bigger problems, but solving this one could prove a headache for IAG boss Luis Gallego, who once worked under Cruz in Spain. His predecessor, Willie Walsh, angrily rejected claims that outsourcing the IT had been the problem; a single worker had accidentally tripped the power.
With Walsh gone, the hapless engineer who pulled the plug in 2017 is presumably no longer quivering in the toilets. Eighteen months into his tenure, Gallego, obviously less combative and markedly less public, has yet to win over industry observers. But the change at the top underlines that Spain is now officially where the IAG action is, especially since Brexit. IAG insists this issue has long been put to bed, but prominent voices disagree. HSBC analyst Andrew Lobbenberg has not budged from his view that EU ownership and control rules could come back to bite the group, even though IAG wearily repeats that it has done everything necessary to satisfy regulators.
Regulators may not be the issue, though. Ryanair chief executive Michael O’Leary, wickedly stirring the pot last month, said that state-owned rivals Air France-KLM and Lufthansa were still “gunning for the breakup” of IAG, adding: “At European level, whatever the French and Germans want, they get. I think it is inevitable that BA will be forced out of IAG.”
An IAG without BA might seem like the Beatles without Lennon and McCartney, but the group’s latest talks have been about bolstering its Madrid hub, with a deal that keeps options open for bid target Air Europa. Madrid is certainly cheaper, as Gallego has noted, than Heathrow, which has pitilessly raised charges. Both Heathrow and IAG have strong links with Qatar, which owns 20% of both, and Qatar Airways has been forging closer operational partnerships with BA.
Meanwhile, the backdrop of war in Ukraine and rising jet fuel prices have clouded a summer revival: the Russian invasion sent IAG’s share price to its lowest since 2020.
The good news for IAG appears to be that customers are defying predictions that global uncertainty and the spiralling cost of living would dampen demand.
This summer, at least, BA planes look set to be filled by Brits who really can’t take it any longer and would rather spend their dwindling pounds on flying abroad than on insane energy bills. With luck, they and IAG will get there.
