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On Sunday, 27 July 2003, Breakfast with Frost featured an interview with Rod Eddington, Chief Executive, British Airways.
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PETER SISSONS: Now, British Airways used to call itself the world's favourite airline. But it's not very popular at the moment.
Just one day of industrial action last weekend led to the cancellation of 500 flights.
It affected a hundred thousand passengers and has cost BA at least £30 million.
The dispute is over a new system of clocking on for check-in staff. But it's the customers who seem to be feeling the pain.
Well the chief executive of British Airways, Rod Eddington, is with us now. Rod, thanks for coming in. I should imagine it's been a week you'd rather forget?
ROD EDDINGTON: It's been a terrible week Peter. Firstly for our customers and I apologise reservedly to them for the chaos in the terminal. But also for our many staff both on the ground and in the air who worked so hard to put the operation back on an even keel.
PETER SISSONS: Where were the management when these walk-outs happened?
ROD EDDINGTON: Well we were working. It was a wild-cat strike, a lightning strike and in that sense we were taken completely unawares.
PETER SISSONS: But there was no management presence in those terminals, apparently. I remember once ...
ROD EDDINGTON: There was Peter, but they weren't wearing tabards. We made the mistake on the first day of having managers there dressed in suits and of course the customers weren't able to recognise them. What we did subsequently was to put them in tabards so our customers could actually see who the managers were.
PETER SISSONS: I remember once when Virgin had a - nothing on this scale - but lots and lots of passengers delayed at Gatwick and Richard Branson personally went down there in the middle of the night to buy people drinks and say we're doing our best for you. Why didn't you do that?
ROD EDDINGTON: I was at the airport on Friday night and all through the weekend and I was there to ensure that firstly our customers were being taken care of, that we had a team in negotiating with the representatives of the workforce to try and resolve it. And that the emergency centre which coordinated the activities was running well.
PETER SISSONS: But basically a year's work undone in an afternoon. There has to be a management failure?
ROD EDDINGTON: Well it's two years' work undone in some ways. Not completely undone, we've made some enormous progress over the last two years. But clearly it's a real setback for us, yes.
PETER SISSONS: Is it really about who manages the airline?
ROD EDDINGTON: Well, I think it's about modernisation and, so it's a joint effort. I manage the airline, I'm the chief executive, but I recognise that we can only make progress as a business if everyone who works for the company moves together. And we've done that pretty much over the last two years and we've made terrific progress in modernising British Airways. But we still have some way to go.
PETER SISSONS: You've talked yourself of a legacy of Spanish practises at British Airways. Is the existing system, basically the non-swipe card system, basically a scam, a way of working that enables employees to fit their work around their private lives and which they expect to be able to go on doing, regardless of management demands?
ROD EDDINGTON: Well there's no doubt that the electronic system puts more discipline into the process. But as a company we've always worked hard to give our staff the right mix of their private life and their working life.
And we give them that flexibility - we have many people who work for us part-time, a lot of working women on our team and they do a terrific job. We recognise there are particular challenges for them. So, whether the system is a pen and paper system or an electronic system, for me makes no difference. It's about how we help them balance work and their private life.
PETER SISSONS: You're meeting the unions tomorrow. Is it now Rod Eddington running these negotiations? Are you going to lead?
ROD EDDINGTON: Well I think it's critical that I'm in the centre of it and that Sir Bill Morris has asked that I be personally involved. I know he's tried to find a sensible resolution to this crisis.
PETER SISSONS: Have you got anything new to say to the unions?
ROD EDDINGTON: Well, I'll be talking to them tomorrow. I meet the General Secretaries tomorrow and the discussions resume on Tuesday. And clearly it's important for all of us that we find a sensible and rapid conclusion.
PETER SISSONS: You're not meeting the GMB though. They seem to be making the running with the militancy.
ROD EDDINGTON: They haven't asked for a meeting as I understand it today. But I think it's essential that we do meet the GMB, just as we meet the other key unions.
PETER SISSONS: A GMB union leader speaking anonymously to the Sunday Express is quoted as saying "we're not backing down, BA must withdraw the swipe-card system or face a series of very damaging strikes. If we wipe out the company's profits as a result it will have to face that". How do you respond to that sort of language?
ROD EDDINGTON: Well, at the end of the day British Airways is a key British company. We have no god-given right to survive and we will only move forward, will only be a strong airline in five or ten years' time if we are prepared to modernise.
So we have to sit down and find a way to alleviate the concerns some of our people have about the electronic swipe-in, swipe-out system.
PETER SISSONS: But if you were starting an airline from scratch, as it's possible to do these days, you've seen it. Would you recognise the unions?
ROD EDDINGTON: Yes I would. Because at the end of the day we have under 50,000 people working for us and we can't negotiate with 50,000 people individually.
We've got to work through the unions and I have to say that in the broad, the unions have been extremely sensible and supportive through the changes we've made over the last two years. So yes, I would.
PETER SISSONS: Can we just look at some of the figures. There's a lot of speculation in the papers that you'll announce next week, a first quarter deficit of £70 million. Presumably you can't talk about that. But when, if and when you announce a figure, will that exclude the impact of the strike?
ROD EDDINGTON: Yes, the first quarter's results which are announced next week, to the quarter ending the end of June, so clearly that doesn't include the strike.
PETER SISSONS: And what top weight is the impact of the strike in millions? 60 million, 30 million, 20 million, compensation on top of that?
ROD EDDINGTON: It'll be a little while before we're absolutely sure because we don't know what the compensation figure is. It's tens of millions of pounds but we hope to be able to give the market a guestimate of that in a more accurate sense in a few days' time.
PETER SISSONS: We've seen PanAm go, TWA go, other big airlines collapse. How much would it take to put BA out of business?
ROD EDDINGTON: Well the industry's fragile, everyone knows that. We've seen closer to home Swiss Air and Sabina fail in the last 18 months and I know there will be other failures in the next 12 months.
We're all having a very tough time. BA won't fail, we'll succeed but we have no god-given right to succeed. We have to manage our business with our people, in a sensible way. We've got to move forward, we've got to modernise.
PETER SISSONS: But next week is the future of BA in the hands of the unions?
ROD EDDINGTON: Next week the future of BA is in the hands of the negotiators, including me, of the unions and the management.
PETER SISSONS: And the unions have it in their power as the anonymous GMB man said, to shut the place down.
ROD EDDINGTON: That's true. That's true in many industries, but particularly in the airline industry. We can't allow that to happen. We've got to find and negotiate a settlement.
PETER SISSONS: The figures in yesterday's Independent which you've probably seen. But comparing BA with Ryan Air. BA 54,000 employees. 54,000 employees! Ryan Air 1900 employees. BA profits £135 million. Ryan Air's profits £187 million (£50 million more). Market value of BA £1.8 billion. Market value of Ryan Air £3.2 billion. Can BA have a future on figures like those?
ROD EDDINGTON: It can, but only if it moves forward. Only if it recognises that to compete with the well-run short-haul, no frills carries like Ryan Air, we've got to change what we do and how we do it. As you said earlier, there are new entrants in the market who've done a terrific job and have made the lives of the BAs and the Air Frances and the Lufthansas and the Swiss Airs.
PETER SISSONS: But perhaps theirs is the only way to do it. Perhaps the only way forward now is the EasyJet and Ryan Air way because you can't sustain the great cost base to run a different sort of airline.
ROD EDDINGTON: I don't believe that's true. We run a full service network carrier. There are some intrinsic differences between what we do and what Ryan Air does. But in order to compete with the EasyJets and the Ryan Airs, we need a competitive cost base and we have to get there.
PETER SISSONS: Why should anyone contemplate flying BA at the moment, booking BA?
ROD EDDINGTON: Because we're going to resolve this sensibly during the course of the next week, I hope.
PETER SISSONS: You did apologise I know, but do you and your colleagues realise, I mean accept, that no apology carries any weight when holidays are ruined, honeymoons are left at the airport, family gatherings or even family funerals are missed. People just resent it. I mean they just blame you and they won't have anything to do with you after that.
ROD EDDINGTON: Well we've been speaking to many of those people and they are very angry with us for all the reasons you've articulated. But many of them have travelled with us for many years. They know what happened last weekend was an aberration, they know that we know we're in the customer service business. I'm confident that many of them will come back, it's up to us to win them back.
PETER SISSONS: What are you offering them if the passengers are wavering about booking with you? You have a contingency plan, you must be able to handle another wild-cat strike. You must put managers on the check-ins, you must, you can't let the customers down again.
ROD EDDINGTON: That's right. There's a joint responsibility here though. Wild-cat strikes were outlawed precisely because they cause the sort of chaos we saw last weekend and we can't allow that to happen again.
PETER SISSONS: So what's the new advertising slogan for BA?
ROD EDDINGTON: We're in the customer service business. We're not focused on an advertising slogan. We're focused on restoring our operation, winning back the support of the customers who we let down and ensuring that we find a sensible, balanced, measured solution with our workforce.
PETER SISSONS: It's hardly a slogan, ...
ROD EDDINGTON: It's not a time for slogans. It's time to get the organisation back on an even keel.
PETER SISSONS: Do you accept you're not the world's favourite airline anymore?
ROD EDDINGTON: Well, British Airways had that slogan based on the fact that we carry more international passengers than anyone else, sadly we were overtaken in that regard some time ago..
PETER SISSONS: So, by the end of the week do you reckon you'll get it sorted out?
ROD EDDINGTON: I'm confident we will. We must. We've got to do it for our customers, we've got to do it for our own staff and we've got to do it for our business.
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