It’s been a month of contrasting fortunes in the airline industry as Virgin Atlantic announced a significant rise in profits, while British Airways (BA) announced the biggest loss since the company was privatised in 1987. In this scenario, it is Virgin’s story that is remarkable because BA’s results are largely reflective of a more general downward trend in the airline sector – driven by high fuel costs, the weak pound and lower traveller numbers.
In media terms, and in line with the personality of its famous President, Sir Richard Branson, Virgin is often portrayed as the major carrier that is professional, but fun: staff are happy and, in turn, they project that feeling to customers. And with these results nothing is set to change – Virgin’s workforce have just received their annual bonuses at a time when such things have all but disappeared in the private sector. You have to applaud what Virgin has achieved in these economic conditions – but it’s not luck or coincidence. Despite paying out to reward staff’s efforts and the results they have achieved during tough times, Virgin have put a freeze on pay for all staff this year (including senior management), successfully ‘hedged’ fuel by buying when it was cheap and stopped expanding their plane fleet in 2006 in anticipation of the economic slowdown. These kind of strategic decisions, many of which were taken before the economy collapsed, are what have safeguarded profits and jobs now.
Virgin is operating in the same market and economic conditions as other major airlines – but they have been successful by being proactive in terms of the business decisions they have made and the way that they have treated their staff. Imagine how different it must feel to be a member of the Virgin Atlantic workforce this week compared with working for their competitors. At Virgin, bosses are thanking staff financially for great results while Willy Walsh, the Chief Executive of BA reflected more accurately what working in the rest of the airline industry feels like right now when he publicly said that he sees “no signs of recovery anywhere”. This was in the same week that he grabbed the headlines by offering to work throughout July for free as a gesture to show that he is willing to share the pain with his staff, who have just been asked to consider the option of taking unpaid leave or working part-time in an effort to cut costs.
Virgin Atlantic is a perfect example of how bosses in the big companies can earn their money and protect the well-being and job security of their often huge workforces. The strategic decisions made by senior management in any company have to work for both the business and staff alike if success is to be sustained during good times or bad.
BA Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/1/hi/business/8062844.stm
Virgin Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/1/hi/business/8067640.stm
