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BA Fleet Renewal Not Imminent - Willie Walsh  
User currently offlineVV701 From United Kingdom, joined Aug 2005, 7531 posts, RR: 17
Posted (8 years 9 months 3 weeks 6 days 7 hours ago) and read 6795 times:

In his first address to shareholders as CEO of BA, Willie Walsh says 'Fleet is a critical issue, but renewal is not imminent'.

Other Walsh statements in BA's shareholders' newsletter that included results for the half year to 30 September included:

'There is no change to the current business plan priorities and these are, first and foremost, preparing for the move to Terminal 5 in March 2008.'

'Looking beyond some oif the business plaqn priorities, industry consolidation is high on the agenda but contrary to media speculation, we are not active at this time. In the meantime we will continue to develop commercial relationships with other airlines.'

'In the current round of negotiations [between the EU and US] however, Washington's failure to offer any substantive concessions on lifting foreign ownership control of US airlines is a missed opportunity.'

'On other key matters, after a recent shorthaul review, we have decided to retain a two class operation at Heathrow and at Gatwick but we will make targeted changes in the three shorthaul segments. At Heathrow, we will do so through the Fit for 5 programme, at Gatwick, we have set challenging cost and revenue targets. Our regional operations will be resstructured and details will be announced in the New Year.'

Martin Broughton, BA's Chairman, made the following amongst other comments:

'Group pre-tax profit for the six months ended September 30 was £365 million, a fall of £3 million over the corresponding period of 2004.'

[Note that 2004 first half results included £81M profit on asset disposals (including 20% od the shares of Qantas) while 2005 disposals showed a loss of £2M.]

'Operating profit . . . amounted to £437 million, an increas of £63 million.'

'It is an interesting time to be renewing [EU / US] negotiations - just as Delta and Northwest joinn United . . . in Chapter 11 and take advantage oif all the subsidies available, so that they can compete more strongly on routes the US gfovernment opens up for them. The EU wouldn't allow such subsidies but don't seem to object to externally subsidised airlines.'

'At the time of going to press we are awaiting the US proposals on foreign ownership restrictions with greatr interest . . . We believe, however, that it is better to seek a good deal than a quick deal . . .'

'It is not widely recognised that there is already more competition on the North Atlantic between London and the US than any other major European gateway. There are four major airlines who compete out of London Heathrow on all major routes on the North Atlantic with an average of 23 flights from London Heathrow and New York. The comparable number from Frankfurt is six and for Paris 12. With thw advent of niche all-premium airlines such as EOS and MAX Jet . . . we face even more competition.'

'We have been leading the industry in pushing for aviation to be included in emissions trading. We have reduced carbon emissions from our aircraft by eight per cent since 2000.'

'. . . revenue is now expected to grow by between six - seven per cent [in 2005-06], up 0.5 points from our previous guidance.'

'. . . some yield improvement is now expected for this financial year.'

Other highlights from the report are:

Passengers carried (000) 18,944 (-0.9%)
Revenue passenger kilometers (M) 57,580 (+3.1%)
Available seat kilometers (M) 74,158 (+1.9%)
Passenger load factor (%) 77.6 (+0.9 pts)
Revenue per Revenue Passenger Kilometer (£) 0.0605 (+1.5%)
Tonnes of cargo carried (000) 382 (-11.0%)
Aircraft in service (as at 30 Sep) 288 (+1)

26 replies: All unread, showing first 25:
 
User currently offlineAerofan From United States of America, joined Aug 2004, 1517 posts, RR: 2
Reply 1, posted (8 years 9 months 3 weeks 6 days 7 hours ago) and read 6776 times:

so do i smell more staff cuts from this address?

User currently offlineVV701 From United Kingdom, joined Aug 2005, 7531 posts, RR: 17
Reply 2, posted (8 years 9 months 3 weeks 6 days 1 hour ago) and read 6520 times:

Quoting Aerofan (Reply 1):
so do i smell more staff cuts from this address?

Walsh said that BA's priority is 'first and foremost preparing for the move to Terminal 5 in March 2008. The second priority is investing in our services and people.' He went to say 'We will make sensible investments in training staff and in ground and inflight services . . .' But he also said 'Our third priority is to build a competitive cost base. This is a critical issue and our current cost performance is not good enough . . . Simplification is the key to driving out cost.'

Interestingly one of two new BA non-executive board members is Baroness Liz Symons. Interesting because this is her first Board of Directors appointment and her background is Trade Unions. She was first active within the Inland Revenue Staff Federation and more recently in the top civil servants trade union, First Division Association where she was General Secretary. More recently she has been active in politics holding various ministerial positions since 1997 most recently being Deputy Leader of the House of Lords. So one would expect her to make sure that staff had a voice on the board if staff reductions were to be on the agenda.


User currently offlineA360 From Portugal, joined Jun 2005, 434 posts, RR: 8
Reply 3, posted (8 years 9 months 3 weeks 6 days 1 hour ago) and read 6447 times:

I guess we won't see an order from BA in 2006...

User currently offlineFlyCaledonian From United Kingdom, joined Dec 2003, 2089 posts, RR: 3
Reply 4, posted (8 years 9 months 3 weeks 6 days 1 hour ago) and read 6427 times:

Staff reductons will be on the Board as BA prepares to move to T5. Currently aircraft arriving at T1 are subject to different ground handling procedures to those ariving at T4 due to trade agreements. Part of the Fit for Five programme is to draw up a single ground handling process, simplifying operations and removing duplication of roles. Almost envitable this will lead to job cuts.

Interest point in Willie Walsh's statement is that LGW shorthaul is to remain two class like LHR, though nothing about CitiExpress. With an announcement due in the New Year abbout that I wonder if we'll see CitiExpress go one class to simply operations? Hopefully won't be buy on board but a single EuroTraveller operation. Be interesting to see what is planned.



Let's Go British Caledonian!
User currently offlineIkramerica From United States of America, joined May 2005, 21526 posts, RR: 59
Reply 5, posted (8 years 9 months 3 weeks 6 days ago) and read 6392 times:

Quoting VV701 (Thread starter):
In his first address to shareholders as CEO of BA, Willie Walsh says 'Fleet is a critical issue, but renewal is not imminent'.



Quoting A360 (Reply 3):
I guess we won't see an order from BA in 2006...

Why not?

All this statement means is that they won't be receiving plains before 2009 in any order. They seem to want to deal with T5 first in 2008.

How this precludes BA from ordering 748, 788/9 or 773ER jets in 2006 to secure slots and pricing, or ordering Airbus equivalents, for delivery beginning post 2008 is beyond me. Currently their fleet works for them as is. But there is no doubt that to reduce costs in the future, and to deal with the intense competition he is crowing about in order to justify Bermuda 2 restrictions, the fleet needs to be updated.



Of all the things to worry about... the Wookie has no pants.
User currently offlineCol From Malaysia, joined Nov 2003, 2116 posts, RR: 22
Reply 6, posted (8 years 9 months 3 weeks 5 days 20 hours ago) and read 6241 times:

LHR has no growth this year. BA has little growth this year. EK, CO and others are taking their regional feed. They pin their hopes on T5, well good luck, hope the pax come back, meanwhile the LCC's and more proactive carriers grow. BA once the world's favorite airline!

User currently offlineVV701 From United Kingdom, joined Aug 2005, 7531 posts, RR: 17
Reply 7, posted (8 years 9 months 3 weeks 5 days 19 hours ago) and read 6190 times:

Quoting Col (Reply 6):
BA has little growth this year. EK, CO and others are taking their regional feed. They pin their hopes on T5, well good luck, hope the pax come back, meanwhile the LCC's and more proactive carriers grow. BA once the world's favorite airline!

Growth is no good if you loose money. BA's objective is not to carry more and more passengers and loose more and more money. Their prime objective is to achieve an operating margin of 10 per cent. They seem to be making good progress towards this.

As I see it the problems faced by many other airlines including all the US legacy airlines that are or have recently been in Chapter 11 protection and even those that have not is that the have gone for volume and forgotten profit. As we have seen this is a recipe for disaster. What matters to BA's management, shareholders and staff is that the airline has just reported a 16.8 per cent increase in its six month operating profit that is now up to US $750 million not that it carried 0.9 per cent fewer passengers in the same period.


User currently offlineScotron11 From United Kingdom, joined Feb 2004, 1178 posts, RR: 3
Reply 8, posted (8 years 9 months 3 weeks 5 days 18 hours ago) and read 6141 times:

Quoting Ikramerica (Reply 5):

Why not?

All this statement means is that they won't be receiving plains before 2009 in any order. They seem to want to deal with T5 first in 2008.

This is true. Their 9 month fleet review should be completed by Spring 2006, so we could very well see some orders just to secure delivery slots.


User currently offlineGDB From United Kingdom, joined May 2001, 13206 posts, RR: 77
Reply 9, posted (8 years 9 months 3 weeks 5 days 7 hours ago) and read 5015 times:

Ikramerica, what makes you so sure BA would order only the Boeing choices you outlined?
We've had so much 'expert' opinion (Air Net translation; pure speculation based on the poster's particular national preferences), that BA were about to order, despite the few insiders on here emphasizing that was not our understanding.
Now it's from the CEO's mouth.
Maybe the aircraft you mentioned will eventually be ordered, but I've no idea that they, or Airbus, or a combination of both will win out, neither has anyone on this site, nor I suspect even the BA Board right now.


User currently offlinePixuk From United Kingdom, joined Dec 2003, 322 posts, RR: 3
Reply 10, posted (8 years 9 months 3 weeks 5 days 6 hours ago) and read 4936 times:

Only on a.net can a direct quote from BA's CEO stating there weren't any plans to renew the fleet be turned into a large order just next year.

I'm amazed at the insight some folk have.  Yeah sure


User currently offlineGDB From United Kingdom, joined May 2001, 13206 posts, RR: 77
Reply 11, posted (8 years 9 months 3 weeks 5 days 5 hours ago) and read 4880 times:

Right, though I understand the interest in a long awaited BA order, (also that Ikramerica mentioned Airbus too, though not individual models!), it really is not a good idea to rely on the general press for insights into when and what BA will order.
They'll twist and exaggerate, as always.


User currently offlineVV701 From United Kingdom, joined Aug 2005, 7531 posts, RR: 17
Reply 12, posted (8 years 9 months 3 weeks 5 days 2 hours ago) and read 4762 times:

Quoting GDB (Reply 11):
it really is not a good idea to rely on the general press for insights into when and what BA will order.
They'll twist and exaggerate, as always.

Sorry. When I said:

Quoting VV701 (Thread starter):
In his first address to shareholders as CEO of BA, Willie Walsh says

I obviously should have made it clearer that these were Willie Walsh precise, written words in a BA communication to each and every BA shareholder. Unless you believe that BA are breaking the regulations on disclosures to shareholders and potential investors these comments have to be 100 per cent taken at face value. Because of this you may be absolutely - repeat, absolutely - certain that each and every word within quotation marks was not only carefully considered but also vetted before being published as it is illegal for a company to provide investors or potential investors with information that is wrong or misleading.

Therefore the only possible debate about BA's fleet renewal plans or the lack of them is the meaning of Willie Walsh's words 'not imminent'.


User currently offlineGDB From United Kingdom, joined May 2001, 13206 posts, RR: 77
Reply 13, posted (8 years 9 months 3 weeks 4 days 23 hours ago) and read 4674 times:

Don't worry VV701 (your username referring to the Vickers Viscount?), I got the gist first time, if nothing else, the statement you quoted of course chimes with what I understood anyway.

User currently offlineScotron11 From United Kingdom, joined Feb 2004, 1178 posts, RR: 3
Reply 14, posted (8 years 9 months 3 weeks 4 days 17 hours ago) and read 4597 times:

I guess you also have to look at what your competitors are doing. AirFrance, Lufthansa, Emirates, Singapore, Qantas & Virgin have all ordered the A380 and will begin operations next year. Emirates just ordered a ton of T7's and expectations are high that QF, CX & SQ will announce additional orders soon.

Why start a fleet review? As an exercise to produce a "wish-list" of aircraft you cannot afford or to see where you are lacking? I happen to think the BA product in F & J are second to none. But when you see Forbes publish a list of the airlines with the best F Class and BA are not on it, but Qatar and Gulf Air are, you must scratch your head and wonder.

So, yes, there are lots of folk who would like to see a BA order, sooner than later. You may include me in!


User currently offlineCol From Malaysia, joined Nov 2003, 2116 posts, RR: 22
Reply 15, posted (8 years 9 months 3 weeks 4 days 11 hours ago) and read 4505 times:

VV701,

Nobody can argue against the results so far. But they are the only European major which do not seem to be growing. There seems no other vision other than T5 at LHR. Meanwhile EK, CO, DL are now picking up a lot of regional traffic that would normally transit in LHR. Our own UK company have used BA once this year via LHR from MAN, used to be a lot more. With no additional slots out of LHR, where will BA go without new larger aircraft on some of their major routes. The USA is not so bad, as our carriers are not in a good position to order anything, but they will be attacked from the Asian/Middle East carriers and their more efficient 380/773's.


User currently offlineAtmx2000 From United States of America, joined Oct 2004, 4576 posts, RR: 37
Reply 16, posted (8 years 9 months 3 weeks 4 days 11 hours ago) and read 4485 times:

Quoting GDB (Reply 9):
Ikramerica, what makes you so sure BA would order only the Boeing choices you outlined?



Quoting GDB (Reply 11):
(also that Ikramerica mentioned Airbus too, though not individual models!),

He did say Airbus equivalents. And I don't see a major order for any other Boeing types in that timeframe other than the ones he mentioned because Boeing isn't offering much else besides the rest of the 777 family, of which only the 772LR is new (and I don't think BA has a major need for it, unless Boeing can make it fly nonstop to SYD nonstop), and the 737NG, which wouldn't make sense as BA has gone for A320s for its shorthaul acquitions.



ConcordeBoy is a twin supremacist!! He supports quadicide!!
User currently offlineVV701 From United Kingdom, joined Aug 2005, 7531 posts, RR: 17
Reply 17, posted (8 years 9 months 3 weeks 4 days 8 hours ago) and read 4369 times:

Quoting GDB (Reply 13):
(your username referring to the Vickers Viscount?),

Yes! I am afraid I am that ancient. My first flight was in a BEA Viscount 701 back in 1958!

Quoting Col (Reply 15):
they are the only European major which do not seem to be growing

I asses the background to this is history. Back in the days following privatisation in the mid to late 1980s BA used to fill up their short and long haul flights with transfer passengers. Let me give an example. They offer the same level of frequency on the LHR-JFK route on each weekday but clearly there was a day-to-day change in demand from point to point passengers. The same applied to their European routes. So they did a mix and match after forecasting probable demand for individual flights. So let us say that they forecast that their would be ten unsold Y tickets on the Tuesday flight from OSL to LHR that was scheduled to arrive two hours before a LHR-JFK flight departed that also had a shortfall in demand of ten seats. Solution: offer a Norwegian travel agent ten tickets for OSL-LHR-JFK for Tuesday morning and charge a knock down price (lower than the LHR-JFK lowest fare). The result was bottoms of fare paying passengers on seats.

Other airlines soon followed. Swissair went so strongly for this system that they were soon carrying several times the Swiss population each year - that is they expanded their capacity to carry this sort of low yield passenger and, as we know, that ended in tears.

BA, however, only filled seats on aircraft not creating extra capacity. But two things happened. First everyone else started to do it. Second the then Minister of Trade in the British Government, Steven Byers, discovered you could fly OSL-LHR-JFK with BA cheaper than you could fly LHR-JFK with BA. Without talking to them he accused them of being 'part of rip off Britain'.

So BA changed their policy and this has resulted in a slow decline in passengers carried, a steady increase in yields and good profitability. Of course it is one of the probable reasons why so far BA have shown little interest in the A380 because, while many other full cost airlines with inherently higher cost bases are trying to fight the LCCs, BA's strategy is different. Time will tell if they are right but so far I would rather have my eggs in BA's basket that a lot of other airlines, especially that of the US legacy carriers.


User currently offlineRayChuang From United States of America, joined Jun 2000, 8016 posts, RR: 5
Reply 18, posted (8 years 9 months 3 weeks 4 days 8 hours ago) and read 4348 times:

I think people forget that because BA controls a large fraction of the landing slots at LHR, they are not in desperate need of new airliners to get more passengers per plane. Given the size of BA's 747-400 and 777-200ER fleet, they have the enormous flexibility to readjust their schedules to use the right plane and the number of flights per day for a particular destination from LHR.

For example, BA could easily fly two flights per day to SFO from LHR using their Bermuda II agreement authority. They could easily reduce it to one flight a day using a 744, or do two flights a day (one 744 and one 772ER), or during high season do two flights a day (both 744's).


User currently offlineCol From Malaysia, joined Nov 2003, 2116 posts, RR: 22
Reply 19, posted (8 years 9 months 3 weeks 3 days 20 hours ago) and read 4213 times:

VV701,

Again no arguments, but you hit the nail on the head when only the future will see if this is the correct way to go. But, being stuck at a slot constrained airport while your competitors stock up on more efficient and flexible aircraft would worry me somewhat.

Please stop bringing up our legacy carriers, we live with them everyday, so reminding us of how poor they are cuts us deep  white 


User currently offlineIkramerica From United States of America, joined May 2005, 21526 posts, RR: 59
Reply 20, posted (8 years 9 months 3 weeks 3 days 20 hours ago) and read 4186 times:

Quoting GDB (Reply 9):
Ikramerica, what makes you so sure BA would order only the Boeing choices you outlined?

What makes you unable to read carefully before criticizing me?

Quoting Ikramerica (Reply 5):
or ordering Airbus equivalents

And frankly, BA has shown a like for Boeing widebodies so far, but prefer Airbus A320s for the narrowbody renewal/growth. I believe they would go Boeing, but I never state I was "so sure" of anything.

Why do you see the Boeing preference changing? What does the A340 offer a large 777 operator that the 773 lacks? With a large 772 fleet that still has plenty of years left, what does the A359 offer them in the short term? What does the A358 offer them over the 789 that would lead to them using two types, when there is no 788 Airbus equivalent and BA will need to replace 767s in the future with SOMETHING? And with less limitations at Heathrow than other carriers and with so many routes where frequency trumps capacity, why would the A380 be their choice over a 748, which is more flexible, more interchangeable with the 773, and offers an 'alternatve' to VS's A380s?



Of all the things to worry about... the Wookie has no pants.
User currently offlineStarGoldLHR From Heard and McDonald Islands, joined Feb 2004, 1529 posts, RR: 1
Reply 21, posted (8 years 9 months 3 weeks 3 days 12 hours ago) and read 4095 times:

I think BA will go out of business by 2008 anyway

-just jumping to an excessive A.net conclusion  Smile



So far in 2008 45 flights and Gold already. JFK, IAD, LGA, SIN, HKG, NRT, AKL, PPT, LAX still to book ! Home Airport LCY
User currently offlineMonkeyboi From United Kingdom, joined Oct 2004, 457 posts, RR: 3
Reply 22, posted (8 years 9 months 3 weeks 3 days 12 hours ago) and read 4082 times:

BA are interested in more First/Club seats, not seats in general.

User currently offlineAirEuropeUK733 From United Kingdom, joined Apr 2004, 978 posts, RR: 10
Reply 23, posted (8 years 9 months 3 weeks 3 days 11 hours ago) and read 4014 times:

Quoting Col (Reply 15):
But they are the only European major which do not seem to be growing.

As opposed to those that went out, or a slowly going out, of business (ie Swissair, SABENA, Alitalia, Olympic)!

AE733



It's nice to fly with friends
User currently offlineCol From Malaysia, joined Nov 2003, 2116 posts, RR: 22
Reply 24, posted (8 years 9 months 3 weeks 3 days 4 hours ago) and read 3854 times:

AE733,

Good point again, but my comment is regarding the Major European Airlines, the likes of AF and LH. These two are performing well, with new aircraft entering the fleet (773's, 330's, 346 and 380's). This will improve their efficiency going forward.

Don't get me wrong, BA have done a tremendous job getting to where they are now, but isn't it time they looked into the future, what is their five/ten year plan?

Col


25 CHRISBA777ER : My two cents. BA know they have a competitive product in all classes, and the finest, most consistant and popular business class product in the market
26 Charliecossie : Here's the list:- 1:er 2:um 3:We put Mobil Jet 2 in both of 'em! Seriously, they're different engines. 747/767 - no sweat. 757/767 - no chance.
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