Business Travel Show Europe Kick Off, 23 February,
Global Travel Risk Summit Europe, May 2023,
3rd Annual Sustainable Business Travel Summit
As the curtain opens on another busy year, British Airways chief executive Rod Eddington looks at the prospects for 2005.
”This year has got off to a terrible start with the devastating earthquake and tsunami in south east Asia. Our thoughts are with all those who have lost loved ones and whose lives have been torn apart by this disaster.
At British Airways we have tried to help wherever we can. Our staff have been fantastic especially in south east Asia and southern India helping customers who have lost their tickets and passports. At a corporate level BA is donating ”1m to UNICEF”s humanitarian action in tsunami affected countries. Half of this donation, ”500,000, will be cash with the other half comprising gifts in kind such as tickets and cargo space during the coming months.
Our customers have also been incredibly generous and we hope that our Change for Good programme, which collects customers” spare change and currency onboard our aircraft on behalf of UNICEF, could also raise up to a ”1m during January ” up to eight times what it would normally raise in a month. Our employees are also giving up their own time to help organise charity collections and we have also set up a payroll scheme where staff can donate straight from their wages.
I would like to thank all of our staff and customers for their help and hope this money will go towards helping the region and in particular all the children affected to recover as quickly as possible.
In terms of the aviation industry, many of the issues we faced in 2004 remain just as high on the agenda over the coming 12 months.
FUEL COSTS: Fuel costs remain a major issue. All the indications are that the price will remain high for all airlines ” hopefully not at the US$50 a barrel levels we saw during some of 2004 but still significantly higher than the US$25 a barrel or so that the industry has been used to during the past few years. Some airlines have got a lot of hedging in place, others less so. Our fuel bill is hedged at 75% to March 2005 at US$32 per barrel and then we have 47% of our fuel hedged at US$35 for the remainder of the 2005 calendar year. But hedging only flattens the spikes in any airline”s fuel bill payments. Ultimately we all pay roughly the same for fuel. All this means that our focus on our controllable costs has to be even sharper if we are to make a regular and healthy profit. As well as eliminating costs we will continue to focus on reducing our own debt in 2005. We have cut down our net debt by some ”3bn since its peak at the end of 2001 but we need to do more and we will continue to pay off our debt in a sensible and structured manner.
HEATHROW: The day-to-day challenges of working out of Heathrow will remain in 2005 just as they did in 2004. Being the largest operator at the world”s busiest international airport brings many benefits and challenges. We will do all we can to maximize the plus points and improve the customer”s experience wherever possible. Customers who use Heathrow on a regular basis cannot have failed to notice the incredible progress being made on the Terminal 5 project. It seems like only yesterday that I was saying that T5 was still five years away ” suddenly it”s down to just over three years, and work in many different areas will continue at full tilt as we prepare to enter a new era for British Airways at our home base of Heathrow. We have to ensure that the move to Terminal 5 is carried out in as smooth a way as possible so that our customers notice all the benefits it will bring as quickly as possible. This will require a huge amount of planning and preparation ” the next 12 months will be critical in making sure we are ready for Terminal 5.
NO FRILLS CARRIERS: I believe that the shorthaul European battleground will remain as fierce as ever in 2005 with continued pressure on yields. There will be more failures in this area, as Europe just can”t support up to 50 so called ”no frills” airlines. The market will decide who wins and loses but the shape and number of European airlines, as we look to the rest of 2005, is currently unsustainable. For British Airways, like all major full service carriers, the European market remains tough ” the size of the premium market has halved in the past four years. Some full service carriers have abandoned business class while others have reduced their service levels. We remain committed to a two class product in Europe but have got to ensure that the product fits the market. We know that people will pay some level of premium for flying British Airways but we have got to ensure that we charge the right levels of premium which keep both our customers and ourselves from a financial perspective happy.
OWNERSHIP LAWS AND ALLIANCES: The media is often speculating as to who may take over who in the coming months. I don”t see huge changes in the way in which our industry is run and governed in the next 12 months ” these things take time as many want to preserve the status quo for as long as possible. But changes will have to come if this industry is to deliver real returns for its shareholders and investors”.
Rod Eddington ” January 2005