I’ve not been particularly subtle in expressing my skepticism over British Airways CEO Alex Cruz.
Since ascending to the helm of British Airways in early 2016, Cruz has treated British Airways like the low-cost Vueling carrier he previously ran. Small problem: a regional low-cost carrier is not the same thing as a large international legacy airline.
In what I called British Airways’ Curious Strategy for Growth, I questioned Cruz’s approach to profitability. I’ve never seen an airline cut its way to growth and BA’s odd focus on cutting the small things that made it competitive never made sense to me.
A few examples:
British Airways Passengers Angry at Lack of Food and Toilet Paper
More British Airways First Class Cuts
British Airways Will Have Less Seat Pitch Than Ryanair!
The Death of the English Breakfast on British Airways’ Domestic Flights
Now comes the great IT Meltdown. In what may become the most expensive mistake in company history (based upon projected compensation), CEO Cruz seems tone deaf in his response.
Wearing a yellow safety jacket in BA’s (hazardous?) operations control center, he fails to offer the most logical solution: book passengers on other carriers. Being penny wise, pound foolish emanates from the top down and BA missed a huge opportunity. Already, press outlets are attacking British Airways for being so stingy. There are few things more aggravating than a British Airways agent telling you that he cannot get you to Frankfurt when Lufthansa has dozens of seats for sale on a flight departing in two hours.
Is BA’s IT Outsourcing to Blame?
Cruz embarked on a massive cost-cutting mission early in his tenure. One of the changes was moving approximately 1,000 IT jobs from Great Britain to India. Indian workers are paid far less than their British counterparts. Could that have led to the weekend IT meltdown?
CEO Cruz empathically says no–
I can confirm that all the parties involved around this particular event have not been involved in any type of outsourcing in any foreign country. They have all been local issues around a local data center who has been managed and fixed by local resources.
What does local mean? British Airways staff in the UK? Or cheaper, outsourced staff that let something occur that never should have occurred? Outsourcing doesn’t have to mean India or the Philippines: often it can just mean cheaper domestic labor.
I am confident the truth will come out and if the IT meltdown was caused by contractor sloppiness, I hope BA will learn once and for all that outsourcing may look good on paper, but increases risk of these sorts of catastrophes.
Why Cruz Should Go
Cruz is the face of British Airways and the leader behind it. The “buck stops with him” and I’ve never seen a leader who seems as disconnected with the nuances of customer service and loyalty than Cruz. He has vowed not to resign but hopefully shareholders express different wishes. If he does stay onboard, I hope he will at least use this as a learning opportunity: something is not working. BA has had 12 IT outages in the last year. Who knows how bad the next one might be…