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 are expected to bring a bumper crop of passengers after the first two dismal years of the pandemic, according to IAG.
The flag carrier plans 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 airports in Gatwick and City in London.
But while 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 the bugs. Customer service has been a recurring complaint – cutting thousands of staff hasn’t helped – and has been tested again in recent weeks. A series of computer failures led the airline to suffer waves of seemingly self-inflicted cancellations.
BA has a history of computer problems. Even though Covid has eclipsed all previous nightmares, the reappearance of this particular issue will have riled investors and infuriated passengers. A pandemic is a good excuse, but BA and IAG have had years to sort out these dodgy technical issues.
The biggest failure, at a time when such disruptions were in the headlines, came five years ago, with thousands of passengers stranded at Heathrow and around the world. The response to the crisis from then-relatively new BA boss Álex Cruz, criticized – fairly or not – as slow, seemed to spell the beginning of the end for the Spaniard.
There have been bigger problems with the current management, but solving this one could prove a headache for IAG boss Luis Gallego, who previously worked under Cruz in Spain. His predecessor, Willie Walsh, angrily dismissed claims that IT outsourcing had been the problem; only one worker had accidentally tripped the power.
With Walsh gone, the hapless engineer who pulled the plug in 2017 probably isn’t shaking in the toilet anymore. Eighteen months after taking office, Gallego, visibly less combative and much less public, has not yet convinced industry observers. But the change at the top underscores that Spain is now officially where the IAG stock is, especially since Brexit. IAG insists this issue has been put to bed for a long time, 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 as IAG wearily repeats that it has done everything necessary to satisfy regulators.
Regulators may not be the problem, however. Ryanair chief executive Michael O’Leary nastily stirred the pot last month, saying state rivals Air France-KLM and Lufthansa were still “aiming for the dissolution” of IAG, adding: “At the European level, regardless of the French and the Germans. want, they get. I think it’s inevitable that BA will be kicked out of IAG.
An IAG without BA might look like the Beatles without Lennon and McCartney, but the group’s latest talks have focused on bolstering its Madrid hub, with a deal that keeps options open for the Air Europa bid target. Madrid are certainly cheaper, as Gallego noted, than Heathrow, which has ruthlessly increased charges. Heathrow and IAG have close ties with Qatar, which owns 20% of both, and Qatar Airways has forged closer operational partnerships with BA.
Meanwhile, the backdrop of war in Ukraine and rising jet fuel prices clouded a summer rally: The Russian invasion sent IAG stock price crashing to its lowest since 2020.
The good news for IAG appears to be that customers are defying predictions that global uncertainty and the spiraling cost of living will dampen demand.
This summer, at least, BA’s planes look set to be filled with Brits who really can’t take it anymore and would rather spend their dwindling pounds on flying abroad than on insane energy bills. With luck, they’ll get there with IAG.
