BA likely to lose over €80 million after weekend IT catastrophe

British Airways (BA), the UK’s flag-carrying airline has been left to lick its wounds after a backup generator failed to kick-in immediately following a power surge and which knocked out its whole of the carrier’s computer system on Saturday. This left the airline having to cancel all weekend flights from both Heathrow, Europe’s busiest airport, and Gatwick, which are estimated to be around 800 in number. Problems continued through Monday, but on Tuesday the carrier reported that everything was now working properly. The residual fallout from the catastrophic event now concerns the volume of baggage that has yet to be reunited with its owners.
Estimates put a figure of 75,000 as the number of passengers affected and, including compensation claims to be settled, it is believed the cost to the airline could approach €80 million. Shares in the parent company IAG, which also owns carriers Iberia, Aer Lingus and Vueling, fell 4.5 percent first thing today (Tuesday) when trading opened for the first time after the incident – Monday was a public holiday in the UK. Share price rallied a little to a drop of 2.9 percent by 1100 GMT, and settling at 1.3% down in the afternoon.
In the first interview since the system’s failure, BA’s chief executive Alex Cruz said: “There was a power surge and there was a back-up system, which did not work at that particular point in time.”
In spite of the effects of the incident lasting three days, Mr Cruz made it clear the hardware problem was restored “after a few hours”, promising the company would “make sure that it doesn’t happen again”. He also pointed out that the system crash had affected “all the operating of our systems – baggage, operations, power processing.”
The GMB union has blamed the problem on technical staff recently being outsourced from the UK to India, but Mr Cruz said there had been no redundancies or outsourcing in this particular area, indicating that there had been “locally hired” staff who were attending to the maintenance and running of the infrastructure. (€1.00 = US$1.12 at time of publication.)