Hicran
December 15, 2009

British Airways 13,500 cabin crew voted overwhelmingly in favour of strike action over the Christmas and New Year period could not have come at a worse time.

The company has also revealed a pension fund deficit which is conservatively estimated at a massive £3.7 billion against the company’s £2.3 billion market capitalisation. So where does British Airways go from here?

There is serious concern about the company’s planned merger with Iberia with the pension fund deficit an issue which needs to be resolved as soon as possible.

The situation is also further clouded by suggestions that the £3.7 billion deficit in the final salary pension scheme is a conservative one and could in fact be significantly more. British Airways chief executive Willie Walsh certainly has a massive job on his hands to turn around this ailing company, a company which for many years was amongst the strongest in the airline industry and a leader in the UK.

There is no doubt that a financial restructuring of the operation, prior to the merger with Iberia, is likely to be announced in the short to medium term as the Iberia merger will need to be rubberstamped by numerous regulators around the world. It seems obvious from the outside that British Airways management and the unions need to work together for the good of the company, rather than maintaining their own agendas.