Alex Cruz is no longer the CEO of British Airways, but will remain on as non-executive Chairman for the interim. In his place, Aer Lingus CEO Sean Doyle will become British Airways new CEO. It’s a massive shuffle with interesting dynamics, all spurred on by the covid-19 pandemic and recent retirement of mercurial parent company boss Willie Walsh, of IAG.
Alex Cruz Steps Aside As British Airways CEO
For months, many expected Alex Cruz to step down as British Airways CEO. Now, he has. Willie Walsh, former head of International Airline Group (IAG) passed Cruz over for the top job at IAG, despite excellent share performance at British Airways leading up to the pandemic. Instead, Luis Gallego, formerly of Iberia is in the drivers seat at IAG.
Cruz’ legacy at British Airways all depends upon who you ask.
As a serial technologist in his career, and one of the first to adapt online booking systems decades ago, Cruz drove British Airways down a road most middle managers couldn’t understand: an airline which would compete purely on price in economy, an airline which would introduce a top standard business class seat, and an airline aiming to cut the fat in other areas, via technology. All at the same time.
For holiday makers, British Airways once again became a choice for vacations, often matching EasyJet or Ryanair, but with the benefit of a loyalty program and better flying via Terminal 5. For business travelers British Airways returned to a global airline with a leading business class seat, improved catering and lounges. Not everyone was a fan.
The old guard of flying, who valued complimentary gin and tonics and checked bags in economy chastised Cruz for cost cutting maneuvers, failed to realize that 99% of the market buy on price, and price was changing. In reality, £99 for a gin and tonic isn’t as fun as £30 for a round trip flight to Europe, and many eventually came around.
Introducing the ‘First Wing’ at Heathrow Terminal 5, state of the art new Airbus A350’s and adding Club Suite business class with privacy doors will be lasting legacies left by Cruz, but the good things are often overlooked by major IT struggles which plagued the airline.
There’s some irony in the fact that one of the airline industries greatest technology adapters was plagued by decades old check in systems used by most airlines, which eventually became an achilles heel of sorts. Nonetheless, the good – from outstanding lounge upgrades to new seats and prices people can get behind was very good.
Is British Airways in a better place now, than before Cruz started?
It’d be quite hard to argue a counter point, at least up until circa 8 months ago as covid-19 began to decimate the airline industry.
British Airways is more widely accepted and chosen in the market today than it has been in decades. It’s accessible to more leisure travelers, it’s got a younger fleet and the experience in terminal at Heathrow, and on board around the world is better than when Alex Cruz took over. Recent labor disputes however appear to be the straw that broke the balance.
In his final days at the helm, IAG boss Willie Walsh became increasingly hellbent on brutal staff cut negotiations, including potentially deceiving parliament in regards to staff cut actions in the process. Fire and rehire under weaker terms was the name of the Walsh game, and many believed while cuts were absolutely 100% necessary, the malice went too far.
The labor disputes bruised both sides, and are said internally to have soured relations with CEO Alex Cruz, who was left by Walsh with a fractured workforce in the airline’s greatest time of need. Now, Sean Doyle, a former BA finance analyst and veteran of the company who emerged to lead Aer Lingus will step into the job.
Doyle leaves Aer Lingus in a tricky position, with an improved flying experience, but huge debt via massive aircraft orders, and now, hardly any passengers to fly them. It’s unclear what the future will hold for Alex Cruz once he relinquishes the Chairman title in the transition.
For British Airways, no change in leadership solves any of the problems being faced today, though perhaps a fresh target for labor issues and new public face may buy some reprieve. As a previous director of routes and alliances for BA, Doyle knows how to change things up, which may be just what BA needs.
British Airways further tailored its business in recent years to become a corporate contract dream, and no corporate travelers are flying. Fundamentally, the airline is in serious trouble, after expanding business class cabin sizes in recent years to cater to the billion dollar revenues found from shuffling bankers, pharmaceutical executives and tech gurus around the globe, none of which exist right now.
Business travel is expected to be the last air travel sector to recover. A prediction GSTP made at the start of the global pandemic, among 56 others.
For now, visits to family, friends and relatives is leading the air travel recovery, and British Airways strategy to compete on price, under Cruz’ guidance has been a lifeline in this sector. Perhaps he wasn’t so wrong after all?
In response to the crisis, British Airways has launched a variety of leisure routes and continued its trend of slashing prices to record lows. Without the lucrative margins from business travel up front, the most profitable areas of their business model will remain hard hit.
In other words, further reductions are likely to be needed and the road ahead will likely get worse before it gets better. Sean Doyle is now British Airways CEO, and will take over as Chairman after a transition period. What will Doyle bring to the table? Hopefully a lot. There’s never been a greater crisis in the airline industry, and British Airways is in a precarious position with more slots than flights.