View from the top: Tough times for Eddington

BA's CEO talks to Kate Nicholas about crisis comms plans in the midst of conflict

Times don't get much tougher than this for the airline industry.

War, threat of terrorism, rising aviation fuel prices, weakening economies - in not only the US and UK but also key markets such as Japan and Germany - come as landing charges rise and proposed Government environmental legislation threatens efforts to price for a weakened market.

'Have you got any more good news for me?' laughs British Airways chief executive Rod Eddington as I enumrate this list of his woes during a recent interview, proving that even in today's climate of crisis this Antipodean remains characteristically unfazed.

'Our pilots would describe this as flying into a stiff headwind,' Eddington explains breezily as we talk high up in the glass plated 'hub' of the BA Waterside headquarters. The brilliant blue skies clearly visible through the acres of glass ceiling are likely to be slightly less crowded over the coming weeks. And BA's share price continues to dive following its relegation from the FTSE 100 last month.'It has fallen to me to be on the bridge of BA when these things happen,' muses Eddington. 'There is no point in feeling sorry for yourself'.

Not that Eddington will have had much time to feel sorry for himself over the past two weeks. Since the onset of hostilities in Iraq he has been spearheading what can only be described as a 'campaign of reassurance' aimed at customers, investors and staff, undertaking carefully placed interviews with The Sunday Telegraph and The Sunday Times, providing management briefings to 300-odd managers, talking to trade unions and holding face-to-face meetings with cabin crews and pilots - including a tub-thumping briefing to managers last Wednesday on the power of communications.

Around eight times a day, he also wanders into the nearby communications office to watch the wires and talk through the unfolding pre-planned communications strategy with comms head Iain Burns.

'One thing I would say about being a CEO is that I am also the chief communications officer. It is an important part of my job,' he says.

The current crisis comes as little surprise to Eddington, and he argues that many of the business problems associated with war hit the airline business long before the onset of hostilities on 20 March: 'If you are running an airline and there is a war on, your revenue diminishes because people stay at home, and aviation fuel prices go up, particularly if the war is in the Middle East. We were there already, we didn't need a war to deliver that outcome.'

In essence, Eddington has been preparing for this current crisis for over two years, having kick-started the restructuring of the company only months after he replaced Bob Ayling in May 2000.

Then in February 2002, he launched the Future Size and Shape restructuring programme and in 12 months succeeded in wiping £1bn off the company's costs, taking 10,000 staff off its payroll, not to mention notching up £1.8bn in cash reserves which will act as a critical buffer in the coming months. Every area of the business came under scrutiny, even communications.

Iain Burns's first task after taking up the head of comms post was to axe 21 staff and, while Brunswick managed to retain the BA account, its fees were slashed from £1m to £250,000.

Not surprisingly, the comms plan to deal with the impact of war has also been in place for some time.

BA's management are working to a New Labour-style grid, which examines every single scenario from the view of every department, including operational, investor relations, sales and, of course, the reputation management angles.

In October a communications steering group was formed, which includes BA heads for investor relations, government affairs and internal comms, as well as senior representatives from other departments.

This group has been meeting daily to plan BA's strategy for communicating with customers, investors and staff, addressing issues arising out of the current crisis and the outcome of more long-term problems related to the terrorist threat and economic downturn.

Early last week, Eddington announced that, apart from suspending flights to Kuwait, BA will be cutting four per cent of its flights to the Middle East and its transatlantic routes, in addition to moving forward 3,000 job cuts from March 2005 to September this year. This came only weeks after the launch of BA's new business plan, which called for a further £450m savings on top of the £650m Future Size and Shape target. No one doubts Eddington's willingness to bite the bullet.

'What the City wants to hear, is also what our people ultimately want to hear: that we are managing those things that are in our gift to manage.

Everyone accepts that the war has an impact on people's desire to travel, and on fuel prices, these are things we can't control,' says Eddington.

At the moment, it is inevitable that the media will look to Britain's flagship airline as a barometer of the industry, so does he think that journalists have played fair with BA? 'In the broad. I don't have any real criticism about the way the media treats us, but I do think that, doing my job, you have to have a reasonably thick skin,' he says, adding: 'It is a very comprehensive media. You only need to look at the newsstand to see how many there are, and they all have people who follow aviation, and a lot of them are very well informed.'

In terms of customers, Eddington and the comms team's main task has been to reassure them that it is safe to fly with BA, and to underline the fact that BA would not be flying into unsafe territories. However, according to Eddington, these security issues have been with the airline for some time.

'Terrorism against commercial aviation is not something new, sadly, but it was taken to another level on September 11. That, I would argue, has permanently changed the world we live in,' he says.

'If you track back to 9/11, we spent a lot of time working with customers about security. We went along to our major corporate customers and, in some cases where they were particularly concerned about security, we took along our security people.

'Different customers in different parts of the world are worried about different things. The concern about terrorism and its threat to commercial aviation is greatest in the US. For many Americans, their confidence in travel was shattered, and in some cases that confidence hasn't recovered.

'The British were horrified, but we live in a world where security and aviation were more natural bedfellows. When I was a student, there were bombs going off in pubs. The British have learnt to live in a world where acts of terrorism sometimes occur.'

Eddington evidently has his reservations about some of the measures the Government has proposed for airline security. On the positioning of tanks outside Heathrow, he provides an off-the-record example of Australian wit, but he is more willing to express his concern about the appropriateness of armed sky marshals on aircraft, which he says he is discussing with the Government.

Current crisis aside, Eddington is also focusing on communicating his Customer Enabled BA proposition, which aims to convert 50 per cent of check-ins to self-service by March 2005 and conduct 80 per cent of customer transactions online by 2004. The admin cost reductions will help to ameliorate some of the price hikes that will inevitably have to be passed on to passengers as a result of security charges, aviation fuel price hikes and the proposed 50 per cent increase in airport operator BAA's landing charges.

However, it is when talking about internal communication with BA's 49,000 staff that Eddington becomes most animated. He says you can never communicate too much with your managers, staff and unions.

'Because we are in the customer service game, we are used to asking customers about how they feel about this and that, but we don't always ask our staff.

If you walk around the business, you will pick up some insights. You should never assume, particularly if you are the chief executive, that that alone is enough to tell you what your people think. You need to have some more formal mechanisms to find out what your people think, and I think BA is good at that.'

The British Airways CEO also sees consistency of message as core to survival of, and recovery from, this current crisis: 'In my view there is very little room for slant in what I do. You have to be absolutely clear what the position is and articulate it accurately and honestly to your staff, managers and unions.

'Human nature being what it is, very senior executives naturally want to say to the media, "gee, we are in great shape, everything is going well", and then say to staff, "gee, things are tough, we need to tighten our belts". We have a lot of extremely capable, hard-working and bright people working for British Airways and, if they ever sense that you are not giving them the truth, you lose them.'

Eddington is well aware that even without the impact of war, the Future Size and Shape cost-cutting programme has put staff in many areas of the business under pressure, while the drive towards e-enabled customer service and administration is necessitating a fundamental shift in the way in which staff think about their day-to-day work.

What Eddington is keen to get over to staff, however, is that 'we are not into changing because we think it is a great idea, we are changing because there is no alternative'.

The war and the potential for a terrorist backlash will also undoubtedly generate concerns among staff that need to be addressed. 'Remember, when a 747 takes off from here to New York, it hasn't just got customers on it, it has close to 20 of our people on board as well. But then, our staff will naturally be concerned about what the war will mean for our business,' says Eddington.

On this issue, he remains characteristically bullish and, having set out BA's operational and business strategy to ensure that the company will come through the current turbulance intact, if not unscathed, he has now scaled down media interviews and is concentrating on 'surviving, making sure we deliver the business plan and coping with whatever sits in front of us.'

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