British Airways chaos could cost $150 mln

British Airways, owned by International Airlines Group (IAG), faces a potential multi-million pound bill for the delayed passengers.

Three days of chaos caused by an IT glitch at Delta airlines last year was expected to cost the US carrier $150m in lost revenue. Many families have lost their holidays, while others have been forced to sleep on the floor of Britain’s two biggest airports since the computer crash on Saturday.

James Walker, chief executive of the Resolver claims website, said: ‘The average claim will be around £300. That’s £90 million – a monumental amount. But when you add in the cost of hotels the airline has to provide, the cost could top £150 million. It could be the biggest compensation payout ever.’
BA’s parent company IAG reported profits of £2.2 billion last year, and has said it expects an even higher figure this year.

And BA has been criticised by GMB Union for outsourcing IT to India last year. "This could have all been avoided," said GMB national officer for aviation Mick Rix. "BA in 2016 made hundreds of dedicated and loyal IT staff redundant and outsourced the work to India. BA have made substantial profits in for a number of years, and many viewed the company's actions as just plain greedy".

Meanwhile, Alex Cruz, who became BA’s chief executive a year ago, said the carrier believed the "root cause" of the crisis, which resulted in hundreds of cancellations and delays, was a “power supply issue” and not a cyber-attack.

Some US airlines suffered from similar computer outages caused by hardware problems. Damian Brewer, an analyst at RBC Capital Markets, said that if BA’s early diagnosis of the cause of the crisis is correct, bosses’ failure to prepare for such an incident in the the light of other carriers’ problems “suggests fundamental management and planning weakness”.

“It seems highly questionable why similar incidents with major US carriers in the last year have failed to see IAG move to ensure its airlines had plans in place to mitigate this risk, already seen elsewhere, and also to have contingency plans in place,” he said. “At present, it appears that BA management have seemingly not taken account of IT risk precedent already seen and already known at other carriers.”

Recent moves by BA to cut costs have already angered customers, including its decision to scrap free food on short-haul flights.