British Airways has employed a clinical psychologist to help address the airline’s long-running dispute with cabin crews (The Observer/The Guardian, 10-Apr-2011). The psychologist, whose company specialises in “fragility of trust”, has met senior officials at BA and Unite to discuss the nature of their relationship. There is hope that there is a stronger chance of reaching a deal now that the two former leaders of each party, Willie Walsh from British Airways and Tony Woodley from Unite, have both left.
BA hires psychology consultancy to address Unite problems
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Europe summer 2017 airline capacity outlook: fifth successive summer of above trend seat growth
Airline seat growth from Europe in summer 2017 is set to stay at almost 6% for the third successive summer, according to data from OAG. This rate had not previously been reached since 2010, although this will be the fifth straight summer of growth ahead of its 10 year average rate. The summer 2017 season started on 26-Mar-2017 and, although always subject to further change, the data give a fairly clear picture.
Seat capacity on routes from Europe to Africa will grow the fastest, as the region recovers from a terrorism related drop in demand in North Africa. There will also be above trend growth in almost every other region from Europe (including intra Europe). The only exception is Europe-Middle East, where the newly cautious Gulf airlines' growth is slowing this summer.
On the North Atlantic, always important for the profitability of Europe's leading legacy airlines, growth will be faster than its 10 year trend, but it will at least be a little slower than in the past summer. The loss of market share from the immunised North Atlantic JVs to newer and smaller competitors, including LCCs, is set to continue. As ever, the OAG capacity data provide a window into the changing structure of the airline markets from Europe.
IAG faces challenge to maintain momentum in financial performance
IAG is arguably the most financially focused European airline group in terms of the way it motivates and monitors its own performance. It is no coincidence, then, that its financial performance is now consistently stronger than that of the Lufthansa Group and Air France-KLM (although none are as profitable as the leading LCCs, such as Ryanair). IAG's financial discipline is helping to rehabilitate the airline sector's reputation with professional investors.
In 2016 IAG achieved an operating margin and return on invested capital that were, once more, its best ever. This marked its strong recovery in the years since the global financial crisis (which hit it hard), and consolidated its leadership among Europe's big three legacy airline groups. Only Vueling among the group's constituent airlines suffered from falling returns. IAG shareholders are to be rewarded with a share buyback (IAG's first, and still rare among European airlines) and an increased dividend.
However, by its own standards of success, IAG has more to do. It is not yet meeting its own margin and return on capital targets –partly because it likes to increase them when they come within reach. Its challenge will be to maintain its momentum as the airline cycle's upswing starts to fade.