Yahoo Finance British Airways owner loses £500m in value after IT meltdown
Half a billion pounds has been wiped off the market value of the British Airways owner, IAG, after computer system outages grounded hundreds of flights over the weekend.
IAG shares fell more than 4% to 588p in London on Tuesday after the flight cancellations left 75,000 passengers stranded over the bank holiday weekend.
The airline had to cancel flights at London’s Heathrow and Gatwick airports on Saturday when a power surge knocked out messaging across its IT systems. Flights on Sunday and Monday were also affected, although BA said on Tuesday it was back to running a full flight schedule.
BA admitted that a “significant” number of customers who travelled on the limited number of flights taking off from the UK still did not have their luggage, but said it was working hard to resolve this.
The carrier came under fire for pointing some affected customers to premium phone lines costing up to 62p a minute. The airline said it had a freephone number – 0800 727 800 – for people affected by the IT failure. And a spokeswoman said customers could add phone charges to any claims they submitted for consideration.
According to reports, some passengers had to spend up to £800 for spare seats in premium economy cabins to reach their destinations, while customers who travelled with other airlines incurred extra costs of up to £1,600.
BA is facing a large compensation bill, with some estimates putting it at up to £150m.
The chief executive, Alex Cruz, who has faced calls to resign, apologised to customers and promised a full investigation into the IT disaster. He said there was no evidence there had been a cyber-attack.
Cruz gave his first interviews on the failure on Monday, telling Sky News: “On Saturday morning at around 9.30am there was indeed a power surge that had a catastrophic effect over some communications hardware which eventually affected all the messaging across our systems.”
Our Chairman and CEO, Alex Cruz, apologises for the disruption caused by the recent IT system issues and... https://t.co/DRqwuM3SvF
— British Airways (@British_Airways) May 29, 2017
The Spanish businessman insisted that outsourcing of jobs was not to blame for the “catastrophic” IT failure, after the GMB union suggested the chaos could have been prevented if the airline had not cut “hundreds of dedicated and loyal” IT staff and contracted the work to Indian staff in 2016.
The airline said in a statement: “We are extremely sorry for the frustration and inconvenience customers experienced over the bank holiday weekend and thank them for their patience and understanding. We are continuing to work to get delayed bags to customers as quickly as possible and information on how to track a bag can be found on ba.com.”
George Salmon, an equity analyst at Hargreaves Lansdown, said: “While the costs of passenger compensation and refunds could well run into the tens of millions, the whole sorry episode has undeniably put a dent in BA’s reputation for delivering a premium service, and the worry for shareholders is that this unquantifiable impact could have longer-term consequences.”
