British Airways (BA) is set to announce a strong financial rebound next month, with analysts forecasting annual earnings before interest and tax of over €4 billion (£3.4 billion) for 2024. The airline, a subsidiary of FTSE 100-listed International Airlines Group (IAG), is expected to have carried 45 million passengers this year, nearing its pre-pandemic peak of 47.7 million in 2019.
Despite this financial upswing, BA continues to face criticism over service standards, outdated technology, and recent changes to its loyalty programme. However, CEO Sean Doyle remains focused on transforming the airline through a £7 billion investment plan aimed at fleet expansion, IT upgrades, and premium service enhancements.
Major Investments in Fleet and Premium Travel
Doyle’s strategy places a strong emphasis on the high-end travel market. BA plans to increase premium economy seats by 20%, business class by 15%, and first class by 10%. The airline’s Airbus A380 fleet will also undergo refurbishments, boosting premium capacity from 60% to 72%.
A significant portion of BA’s investment—£3.5 billion—is allocated to acquiring new aircraft, including seven Boeing 787 Dreamliners and 18 777X jets. However, delivery of the 777X jets has been delayed due to production challenges. An additional €2.1 billion is being invested in IT improvements, while €1.4 billion will be used to upgrade premium cabins.
With London serving as a global hub for luxury air travel, BA’s premium strategy aligns with rising corporate travel demand, particularly from European business travelers attending conferences in the U.S.
Cost Cutting and Operational Overhaul
While focusing on expansion, BA is also tightening its budget. The airline has adopted “zero-based budgeting,” requiring all expenses to be justified annually. The goal is to save £500 million by 2027. However, this approach carries risks, as seen in other industries where aggressive cost-cutting has disrupted operations.
Doyle has also taken on the challenge of revamping BA’s IT infrastructure, a frequent source of passenger frustration. The airline is replacing outdated systems with a cloud-based platform developed in partnership with Amazon Web Services. A new website and mobile app, set to launch soon, aim to prevent service disruptions like the infamous 2017 IT meltdown.
Loyalty Programme Backlash and Customer Concerns
BA’s recent decision to change its loyalty programme—awarding points based on ticket cost rather than flight class and destination—has sparked controversy. Critics, including Great Western Railway boss Mark Hopwood, argue the move disregards customer loyalty and could alienate frequent fliers. Doyle, however, defends the changes as a necessary evolution of the programme.
BA’s reputation has also suffered from past underinvestment, particularly under former CEO Álex Cruz, whose cost-cutting measures impacted fleet upgrades, IT systems, and customer service. The airline’s recovery has been further complicated by staffing shortages following the UK’s handling of employment support during the pandemic.
Challenges Ahead Despite Financial Gains
While BA is on track to surpass its pre-pandemic performance, challenges remain. Geopolitical tensions, rising fuel costs, and supply chain disruptions could impact operations. Engine issues, particularly with Rolls-Royce’s Trent series, have already led to route suspensions, including BA’s long-standing Kuwait service.
Despite these obstacles, industry experts note gradual improvements in BA’s customer experience. Analyst Andrew Lobbenberg of Barclays reports rising net promoter scores, though BA still lags behind rivals in areas such as digital services. Former strategy director Robert Boyle highlights the need to modernize BA’s mobile app, once considered an industry leader.
A New Era for British Airways?
Doyle remains optimistic, emphasizing BA’s newfound agility in responding to industry challenges. “We are a much more adaptive and responsive organization than we were three or four years ago,” he said.
While complaints persist, BA’s financial performance suggests Doyle’s turnaround plan is gaining traction. The airline’s upcoming results will likely confirm its resurgence, but regaining customer trust may take longer than rebuilding its balance sheet.
