It may be a well-worn maxim, but the airline business is still, above all, a "people business". Doubters may like to consider the recent exit of Bob Ayling after only four years as chief executive of British Airways. There may have been other reasons that combined to force his resignation in early March, but chief among them was a detached, occasionally arrogant, leadership style which did more to alienate staff and even the public than to endear them. A cautionary tale to bear in mind as BA searches for a successor.
Much ink has been spilled over the precise causes of his sudden departure. The immediate culprit was, of course, the state of BA's financial performance. Once the world's most envied profit-maker, the group had just announced a sizeable quarterly deficit and is on its way to the first annual losses since the bad old days. The share price had again plumbed depths that Ayling had himself earlier rashly promised that the airline would never see again. Investors lost confidence and so did the main board.
But a year of losses alone is hardly sufficient cause to jettison a chief executive. Many have faced worse catastrophes and survived. Neither was Ayling to blame for many of the external factors that lie behind those losses. A transatlantic price war, fuel and currency fluctuations all played their part. Financial analysts had already been tipping BA as a hot recovery stock, detecting that the worst was over and looking for an upturn this summer.
So while the losses may finally have triggered his resignation, the doubts were already there. For the best part of two years, rumours circulated about his likely departure. That had become a frenzy of speculation by the turn of the year, with some bold head hunters, officially or otherwise, already making discreet inquiries around the industry over possible successors. The smart money says that the die was already cast at least a couple of months or so before the announcement finally came. The fact that the BA share price rose on news of Ayling's resignation seems to have come in large part due to a sense of relief that the speculation was over.
Then, of course, there had been the apparent management blunders. A favourite was the decision to remove the flag from BA's tails in favour of modern design. Not only did it enrage a section of the airline's more conservative customers but dented pride among sections of the staff. Few were prepared to forgive him. More recently, came BA's plans to concentrate on premium traffic out of London Heathrow. By the time it appeared in the media, it was being written up as BA dumping its long-suffering economy passengers.
In reality, neither of these examples necessarily reveal strategic mistakes. This magazine has itself long preached the virtues of a global airline marketplace, free of national flags, and praised those carriers brave enough to forego the lure of market share to concentrate on profitable business. Presented in other ways, such strategies could have looked visionary. Instead they were viewed as arrogant proclamations. A similar stance on issues such as the American Airlines alliance, and accompanying open skies, appeared only to encourage regulators to sharpen their knives, rather than to give way. As on the tails issue, it was BA that eventually had to back down.
Ultimately, the problem was not with the lack of strategic direction. There was perhaps too much strategy but too little attempt to sell it to staff, customers and ultimately investors. Many of the initiatives had the appearance of coming straight from a management flip-chart and into a memo, without the attempt to build a consensus among those that would have to put them into action. Talk of "the virtual airline" or "hotdesking" in the futuristic new Waterside headquarters risked ridicule rather than acclaim.
It was significant, perhaps, that despite his relatively long service at BA, Ayling never shook off the tag of being a "lawyer" rather than an "airline man". His predecessor, Lord Marshall, now back caretaking the airline, managed that transition and convinced staff that he cared about them and the company.
Ayling had run into bitter staff disputes from the start. First it was the pilots. Then there were nasty spats with the catering staff and a damaging dispute with the cabin crew. Those relations were never mended. They have festered ever since, leaving a trail of bad feeling and bad publicity. A final tribute were the newspaper diary items about staff celebrating on news of his departure. That may be a difficult atmosphere in which to run any business. For the self-styled "world's favourite airline" it became positively damaging. Even more so once the profits disappeared.
Marshall is now looking for a new chief executive. He needs to find someone capable of making a clean start and reuniting the company with some straightforward leadership skills, like his own. Strategic thinking and administrative ability are worthy indeed but they are not enough.
Source: Airline Business
