BRITISH Airways chief executive Willie Walsh has clearly been very busy studying his new charge during his first six months in the job.
The Irishman, who is credited with ruthlessly turning Aer Lingus” fortunes around before moving on to BA, has revealed his initial two-year plan to cut more waste from his new airline and save it £450 million in the next two years.
This is on top of already announced job cuts in middle and senior management and a fresh focus on efficiency within the airline.
The plan calls for £225 million in savings for both the next two financial years. This will be achieved by a big push on direct bookings with the airline cutting out the travel agent; improved punctuality; better baggage handling; wider use of self-service check-in; and a target of a 10% operating margin.
But it is not all savings. The airline is spending £200 million in a new Club World seat, on-demand films in all cabins and improvements in ba.com.
The Club World upgrade should tempt more premium passengers. Details are sketchy, but talk amongst staff points to the scrapping of the backward-facing seat and new more appealing herringbone formation.
All this takes the airline to March 2008 - when it moves into Terminal 5 at Heathrow.
As Walsh said, when unveiling the plan, "Better management of our costs and having an absolute focus on customer needs will give us a lasting platform for success”.
In the next financial year the airline sees a 4-5% growth, but it will be hit by a ”400 million increase in fuel bills ” almost its entire cost-saving plan.
BA is to be commended on its plans for future growth and it should be a source of some pride that our biggest airline has fought its way out of the problems post-911, first with Rod Eddington and now with Walsh.
Most other world carriers continue to struggle with costs, especially the US airlines, but BA has shown that ruthless cost-cutting can make it fit for the future.
Sure, there will be concerns raised from unions and staff over any more job cuts and contract renegotiations, but better to have a leaner, meaner, airline, than none at all or one that is kept afloat by state intervention, as happens elsewhere in Europe or across the Atlantic.
BA is also to be congratulated for putting much more emphasis on ba.com.
It will incur more wrath from travel agents - who have already seen commissions cut ” but surely its focus is on shifting tickets in the most profitable and cost-effective way.
You wouldn”t expect Tesco to sell its good via a third party and pay them, so why should BA. Tradition should mean nothing in these days of ever-tougher competition for all airlines and especially for BA, which has Europe”s most active low-cost carriers in its backyard and a public desperate for cheap deals to anywhere in the world.
BA wants half its seats bought direct in two years and most on ba.com. And why should it not succeed - Ryanair and Easyjet have never relied on agents.
Customers of BA just need to change their mindset and turn to their computer for a deal - and a few online incentives should do the trick.
The only disappointing announcement made by Walsh was concerning the shift of Australia and Spain flights to Heathrow”s Terminal 3 by March 2008, instead of bringing all the airline”s operations into Terminal 5. The move is to liaise with partners Qantas and Iberia.
This brings up the question of what is the point of Oneworld if all partners can't be in the same terminal together. The passenger will be inconvenienced and face the endless trudge from one terminal to another ” a long-time criticism from BA customers at the world”s busiest international airport.
But that is a small concern compared to the good things Walsh has in store for the next two years.
But don”t expect him to rest there.
Willie has shown his hand and be rest assured he has a few more aces tucked up his sleeve.