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British Airways schedule normalising as cost cuts scrutinised

Monday, May 29, 2017 - 16:24

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British Airways' flight schedule is slowly recovering as the carrier digs out of a massive computer failure that stranded thousands of passengers worldwide over the weekend and cast doubts on chief executive officer Alex Cruz's aggressive cost-cutting strategy.

[FRANKURT] British Airways' flight schedule is slowly recovering as the carrier digs out of a massive computer failure that stranded thousands of passengers worldwide over the weekend and cast doubts on chief executive officer Alex Cruz's aggressive cost-cutting strategy.

The UK carrier cancelled 50 flights, or about six per cent of the total 852 scheduled, to and from its main London Heathrow hub on Monday, according to the British Airways website. An additional 66 routes were delayed. That brings the total of flights scrapped at Heathrow and Gatwick airports since Saturday to 583, according to Bloomberg calculations. British Airways has declined to specify figures for flights or customers affected.

"We continue to make good progress in rebuilding our operation, following Saturday's major IT systems failure which severely affected our operations worldwide," the company said in a statement on Monday.

On Sunday, a visibly concerned CEO Cruz apologised to customers in a video, saying "I know this has been a horrible time".

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British Airways cancelled all Saturday afternoon and evening departures from Heathrow and Gatwick following what it called a "very severe disruption" worldwide to computer systems handling check-in, baggage sorting and reservations. The disruption coincides with the start of the annual end-of-May Bank Holiday weekend in the UK, as well as the three-day Memorial Day weekend regarded as the unofficial start of summer in the US.

The airline's shares fell as much as 3.8 per cent and were down 2.9 per cent at 6.81 euros at 9.40am in Madrid trading.

The operational collapse comes a year after Mr Cruz was appointed CEO of British Airways, a unit of International Consolidated Airlines Group SA, with a mission to slash costs and improve profitability.

Measures in his four-year program to boost margins include cutting almost 700 back-office jobs, as well as maintenance posts, outsourcing some technology operations and switching to paid-for food on short-haul flights.

Mr Cruz said that British Airways believed the cause of the computer disruption was a power supply issue and that there was "no evidence of any cyber attack".

Last September, a computer network failure brought down British Airways' check-in system, causing worldwide service delays, while earlier this month, London Gatwick airport reported problems with its baggage-sorting system.

The breakdown, which also affected call centres, prevented passengers from rebooking or from retrieving luggage that had already been loaded onto their planes, and some travellers reported having to wait on grounded aircraft for several hours before they could go back into the terminals.

Stranded passengers who were waiting at gates were eventually ordered to leave the airports, and faced massive lines at passport desks before they could re-enter the UK.

Customers who were sent away from Heathrow and Gatwick on Saturday were told to find hotels on their own for reimbursement later by British Airways. Payments will include £200 (S$354.335) per night for lodging, £50 round trip between the airport and the hotel, and as much as £25 for refreshments, according to leaflets from the company.

The airline said it will return the "significant" number of bags stranded at Heathrow to customers via courier, free of charge, as soon as possible.

Hotels surrounding the airports were charging as much as £1,000 to £2,500 for rooms for a night, according to the Sunday Telegraph.

"Considering the reimbursements for canceled flights and the costs of lodging stranded passengers, this will have an impact on revenue and the magnitude of the cost will depend on how long the outage lasts and how long it takes to resolve," said John Strickland, director of aviation at analysts JLS Consulting.

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