BA's additional allowances can force it into bankruptcy

One of the concerns that has arisen from the government bailouts for the banking, auto and industrial sectors is the inevitable quid pro quo that comes from such a financial arrangement. Governments that inject billions of dollars into companies to keep them alive are unlikely to stand aside as the managers of those businesses axe jobs and close factories. With state aid comes an implicit command to keep people working, which is laudable but not necessarily what a struggling company should be doing. General Motors, for example, got into trouble partly because it had become a vast social programme providing healthcare and pensions to hundreds of thousands of workers. But will the United States Government allow GM to jettison these obligations now that the carmaker has entered Chapter 11 bankruptcy protection – no chance, would be my guess. But unless GM gets rid of the problems that forced it under, how can it hope to resurface? British Airways has a similar problem, although it has not yet been forced to seek government aid. The airline is paying its cabin crew on average twice what Virgin Atlantic pays its. Crew can get up to £1000 (Dh6,000) extra on a nine-day journey from London to Sydney because their union has managed to force the company into paying numerous additional allowances on top of the basic salary. These contributed to British Airways' £401 million loss last year and unless BA gets a grip on these extras, it could become GM with wings.