Compensation for delays & canx

BA have settled the legal action that could eventually lead to multi-million claims against them.

It could affect all airlines not just BA, removing that get-out of 'extra-ordinary circumstances' covering technical faults and staff shortage.

About time too !

I was delayed 14 hours by Zoom 2 years ago and they just trotted out the extraordinary circs excuse

Plane broke - extraordinary circs
Part took 6 hours to get from Montreal to Toronto - extraordinary circs
Crew Hours - extraordinary circs

If the airlines acted honourably in the first place it would actually cost them a lot less than having to be forced into it.

They spent more fighting the EU directive than sorting out the problems !

It could certainly make a difference to airline liabilities on their balance sheets.

Very interesting to compare VS current Assets & Liabilities to BA

Must be very nice to have £593million in the bank! (That's VS not BA!)
It will be interesting to see the assets/liabilities for VS for this year (due at the end of the month)

There was a feature in the Daily Telegraph's business section yesterday that BA's stock is now rated as 'junk' by one of the major rating agencies (Moody's - I think)

quote:Originally posted by PeterStansfield
There was a feature in the Daily Telegraph's business section yesterday that BA's stock is now rated as 'junk' by one of the major rating agencies (Moody's - I think)


If it is Moody's then that'll be the same company that rated Lehman's debt as A1 a couple of months before it crashed!

Don't forget, the cash in the bank is mostly fares received for future bookings.

I quite agree it's about time! I remember being delayed once, as operating cabin crew, and being told it was due to a technical problem, the flight eventually cancelled and the ground staff were telling passengers they were not entitled to any compensation as it was extrodinary circumstances outside their control.


Now a tech problem in my book IS within the airlines control!

Time to play devil's advocate.

I'm not sure whether I agree this is such a great victory for air travelers. Where to start though....

In this economic climate, airlines are under enough pressure to stay in business, and customers are demanding lower and lower fares, or are simply not flying. So, how will the possibility that they may now face thousands of claims for flight cancellations dating back 6 years affect the already rocky balance sheets of airlines. Not brilliantly, I imagine.

Add that to the fact that they will now have to allow for payments for future delays/cancellations, and we're talking a pretty large new expense item on their income statements, at a time when they are looking to cut costs and cut fares to keep passengers flying.

Something will have to give. Higher fares, or costs will be cut elsewhere. Maybe VS will offer only a cookie for breakfast, and save 8p on each muffin (surely they can't cost more than that). Or maybe they will have to look at more serious cutbacks which will have loyal customers up in arms (as opposed to celebrating at the loss of muffins).

I am not a fan of the whole compensation culture. Not one bit. Stuff happens, life isn't perfect. If I'm booked on a flight which is canceled when I get to the airport, if they can't fly me out until the next day, put me up in a hotel overnight. That's all I ask. It annoys the hell out of me that an increasing number of people seem to expect money for nothing. This is the number one reason the world's economies are tanking right now, greed.

I've had my fair share of cancellations and delays, I just deal with it and move on. Last year one of my business trips took me from Philly to middle of nowhere Kansas via Chicago. We were about to push back from the gate at Philly when they opened the doors again, and the captain came on to tell us the rear toilet had clogged, overflowed, and leaked everywhere. Lovely. We sat on the plane for a few hours while it was fixed, mopped up and all the surrounding electrics/wiring was examined to make sure nothing had shorted. Arrived in ORD 3 hours late, and missed my connecting flight. It was the last one of the evening, so they put me up in a hotel and put me on the next flight in the very early morning. I arrived in KS late, and tired, but I was there. I don't blame US Air for that, please excuse the pun, but s*** happens.

I know I know, 'It's not money for nothing, they ruined my holiday/business trip, I lost a day of my life because they canceled my flight etc etc.' Believe me, I know all the reasons why it's annoying to have a flight canceled, but is money really a substitute?

If your flight is canceled and the airline can't fly you out the same day, then they should put you up in a hotel overnight until the next flight. If they can't fly you out within 25 hours of your original departure time, thennnnnn maybe some form of compensation.

Basically, it boils down to the fact that every single customer will now have to pay extra, or suffer a cutback in services, or flight options, or more staff cutbacks will be made - in order to pay compensation to people who are delayed or have their flight canceled. I disagree with this. If a part on an aircraft randomly breaks a couple of hours before scheduled departure, I don't blame the airline one bit for canceling the flight (if it can't be fixed in time).

Anyway, rant over. Don't be too harsh with me! [:w]

Oh, I got so tied up in my prior post I forgot to mention, that Balance Sheet comparison was pretty interesting. Out of the 593m that VS has in the bank, 427m of that is from revenue for tickets bought in advance. Compare that to BA who has 433m in the bank and an 891m liability from tickets paid for in advance.

More telling though, is the current ratio of the 2 companies. Basically, a quick indicator of the liquidity of a company, it is current assets divided by current liabilities. It measures whether a firm can pay its debts over the next 12 months. BA - 0.46 and VS - 1.29

It varies from industry to industry, but generally over 1.0 is preferable. If you were given no other information about the 2 companies, and just told company X has a current ratio of 0.46 and company Y has 1.29 then you would be more worried about company X.

As it is, if I'd seen that BA had more than twice as much money that needed paying out in the next 12 months than it could get its hands on at that moment, I'd be worried. If all its customers demanded a refund, and all the companies that it owed money to wanted immediate payment, they couldn't afford to. VS could.

Actually Virgin's BS looks pretty healthy (for yr ended 02-08 anyway). It'll be interesting to see how the events of the past 12 months have had an effect, and as much as we bitch and moan about various cost cutting initiatives they have undertaken, I can live with them temporarily so long as it keeps VS in the air.

Finally, I echo the sentiments about the stock rating by Moody. I tend to ignore them. I follow several stocks, and a bunch of them have wildly differing ratings by the different rating companies. Congress recently released Standard & Poor internal emails dated in 2006, one which said along the lines of 'rating agencies continue to create a monster in the CDO market - lets hope we're all wealthy and retired before this house of cards comes falling down'.

Interesting & useful posts, Andrew.
In many ways I agree with your comments about the compensation culture but some airlines have been far too free with their use of the 'extraordinary circs.' get-out imho.

It is the comparison of financials that is interesting; and the year on year changes.
The previous year shows that BA are not improving while VS are.

One item to remember is the seasonal nature of the figures. VS reporting (BA similar) at the end of the low income quarter distorts comparison with such as Easyjet which reports end Sept.

The subsequent June '08 VS figuresare also interesting - cash balance increased to £838m - and sales increasing 16% year on year. That quarter's 16% increase gives an interesting perspective to the 7% decrease (the current 2009 cuts). A downturn of less than half of that previous increase.

The conservative financial figures for VS are certainly encouraging during the current climate - in comparison I would not want to be holding BA at the moment.

When SRB set up VS 25 years ago by the time the first flight took off he had more cash in the bank than he had spent.