The benefits of privatising BA seem to have worn off so why not do it again?
MARTIN VANDER WEYER 1 t is exactly 20 years next week since British Airways was privatised. Arguably, it was the most successful of all the Thatcher-era privatisations. Under the redoubtable Lord King and his marketing-wizard sidekick Colin (now also Lord) Marshall, a demoralised, loss-making state enterprise had been turned by five years of vigorous, not to say brutal, leadership into `the world's favourite airline'. The share offer in February 1987 was 32 times oversubscribed, and almost 10 per cent of it was set aside for the airline's staff, many of whom became proud owners of a stake in a business which seemed to have been miraculously transformed.
But that was then, and this is now. Despite two decades of shareholder ownership — and the relatively brutal style of chief executive Willie Walsh, who previously turned Aer Lingus's fortunes around by sacking 2,000 staff — BA today seems to have slipped backwards to become the nearest thing we have to an ailing 'state enterprise'. Like the privatised water companies, it is vilified by many of its customers. Like British Telecom in an earlier phase, it is hobbled by its lingering status as a national carrier. Like Royal Mail, it is buffeted by competition from more entrepreneurial rivals in profitable areas of its business. Worst of all, its employee relations have deteriorated into trench warfare with trade unions that see BA as one of the few remaining soft targets for high-profile disruptive action. A pay deal cobbled together after 120 hours of angry negotiation averted a strike this week — and another that would have hit half-term travel — but thousands of irritated passengers had already re-booked on other airlines only to find their original BA flights re-offered at reduced fares. Significantly, a key issue in the dispute was the astonishingly high rate of sickness absences among cabin crew, at one point averaging 22 days a year — a sure sign of demoralisation, and almost twice the `sickie' rate of depressed parts of the public sector, such as the Prison Service.
So what can be done to pull BA out of the debilitated, self-destructive state to which it has reverted? The radical solution might be another privatisation — but in 21st-century form, combining ownership by private-equity investors with a management and employee buy-out that gives a new generation of staff the opportunity to stop being disgruntled cannon-fodder for headline-seeking union leaders and become genuine stakeholders in the business: that way, the airline might recapture the evaporated spirit of 1987.
Big brother to watch The headline-seeking union leader to watch is Tony Woodley of the Transport and General Workers, the former Vauxhall shop steward whose big agenda is to promote a merger of the T&G with Amicus, Britain's largest private-sector union — and no doubt he sees himself as its potential boss. Members of the two unions will vote on the proposal in May. Meanwhile, expect lots more grandstanding from Woodley, who is on a mission to stop the wider airline sector achieving the levels of competitiveness set by the likes of Ryanair: it was he who encouraged BAs Heathrow ground staff to strike in sympathy with sacked Gate Gourmet catering workers in 2005. But perhaps his most notorious contribution to British industrial decline was his championing in 2000 of the Phoenix Four bid for MG Rover. The 'Phoenix gang of Midlands businessmen, you may remember, were allowed to buy the Longbridge car company for £10, enrich themselves from it, and finally bankrupt it — at which point Woodley popped up again, calling for government money to save it. He's a dangerous man: keep your eye on him when the brothers come back to Downing Street for beer and sandwiches with Gordon Brown.
Adoption issues I don't think it's the role of Any Other Business to take to the pulpit on the topic of gay adoption, but I can tell you where I stand on early adoption: I'm absolutely hopeless at it. An 'early adopter', in marketing-speak, is someone who embraces new technology ahead of the general mass of consumers. Well, I've never thought of myself as a technophobe, and one of my aims in these pages is to keep readers abreast of all the fashionable electronic gadgetry they may find themselves having to talk about at dinner parties. What's more, I'm secretly proud of my ability to fulfil my weekly editorial duties — rather in the manner of Top Cat evading Officer Dibble — from any hotel lobby, airport lounge or low dive that offers a free internet connection for my laptop. In case you're interested, it's an Apple iBook G4, and I've been a dedicated Apple Mac user since 1990, which must give me a modest slice of early-adopter street cred. But here's an embarrassing list of things I don't own: a SatNav, an iPod, an X-Box, a BlackBerry, a Bluetooth earpiece, a high-definition-ready flat-screen television, a Digibox and a digital radio. Come to think of it, I don't even have a DVD player, though I have plenty of free DVDs; I use my mobile phone to talk to people rather than receive porn or football highlights, and I've no idea how to take photographs with it; I don't have a Skype connection, a MySpace page or a Second Life avatar; I've never bought a ringtone, found a girlfriend on the internet, or sold Napoli salvage on eBay. There's me thinking I'm a modern man: but to anyone under 30, I must sound like Cardinal Murphy-O'Connor.
A vote for India No one invited me to the World Economic Forum in Davos, so that's another cuttingedge experience of modern life I've missed out on. But I'm right up there on the breaking wave of the zeitgeist in one respect: I also use my mobile phone to vote on reality television shows, and I voted for Shilpa on Celebrity Big Brother. I didn't do so as a gesture of anti-racist solidarity or because she's a bootylicious Bollywood babe, but because I'm convinced that India is now the world's most up-and-coming economic power, capable of engaging and integrating with Western capitalism far more effectively than the Chinese. That's what I would have been saying at Davos if anyone had asked me, and it's a theme which Spectator business writers will explore over the coming months. Mind you, if he hadn't walked out early, I'd probably have voted for dear old Ken Russell.
Previous page
