British Air Strike Fouls Global Air Passenger Traffic

It will be harder for tens of thousands of international travelers to get around this weekend as British Airways' (BAIRY) cabin crews began a three-day strike. The action has caused the UK carrier to cancel over 1,000 flights, but the airline said it would try to accommodate 49,000 passengers over the first weekend of spring.

The carrier posted a message on its global website: "Unite, the trade union that represents the majority of British Airways (BA) cabin crew, has announced its intention to take strike action from 20 to 22 March and 27 to 30 March 2010." Unite has about 12,000 members.

The airline's CEO, Willie Walsh, gave an update of the situation in a video posted on YouTube. He said that the airline would do its best to help travelers with the limited number of flights that it will continue to operate. BA was also furiously trying to move passengers to flights on other airlines. According to the AP, "Hoping to keep as many passengers happy as possible, BA scrambled to rebook some on other services, chartered planes from rival airlines."

The cause of the strike is the same as those at almost every airline that has tried to cut costs over the years. To combat the cost cutting, members of labor unions are trying to protect their jobs by showing carriers how much leverage they have to shut flights down. It is an ironic approach that often does not work. Airlines sometimes use bankruptcy to both clear their balance sheets and get judges to allow for layoffs. British Airways has been cutting workers since 2005.

Unfortunately, BA has very few choices other than to cut expenses. The global recession and high fuel costs have driven severe deficits at the carrier which lost $345 million in the six months which ended in September 2009. The airline suffered those losses even though it cut 5,000 people -- 13% of its staff -- the previous March. It has been unable to adequately fund its employee pensions which had a deficit of 3.7 billion pounds at the end of the first quarter of last year.

It is too early to say whether British Airways' management or the unions will come out ahead after the strike. Labor may still face wage and job cuts over time. BA may bleed money until it makes promises to unions about staff levels. But, as usual in these situations, the customers don't come out ahead.