Alex Cruz’s four-and-a-half-year term as chairman and CEO at British Airways was peppered with union head-to-heads, IT system failures that left thousands of passengers stranded, a high-profile data breach and a reduction in service levels that cost the company financially and reputationally.
The announcement today that Cruz is stepping down from BA’s top role, though remaining as non-executive chairman through a transition period, is not really the surprise. The shock is that the leadership change was so long in coming.
New International Airlines Group (IAG) CEO Luis Gallego is replacing Cruz with Sean Doyle, a former BA exec and currently CEO at Aer Lingus, another airline in the IAG family.
There’s likely a back story to Cruz’s departure that has as much to do with Gallego’s predecessor, Willie Walsh, as it has to do with Gallego.
Walsh promoted Cruz to the head of BA having seen the success of Spanish LCC Vueling, another IAG carrier, where Cruz was CEO. Walsh often made clear his view that new cost savings can always be found in a company, and he probably liked the idea that someone with a strong performance running an LCC could identify further cost cuts at BA.
But global, full-service legacy carriers with long-haul flights are inherently trickier to operate at the same unit costs as LCCs. Cruz inevitably came out as the “bad guy” with employees and customers alike as cuts were proposed and implemented. But all along, it was Walsh who sought those cuts and, by some accounts, Walsh who was still running the show. Cruz may have been squeezed into a CEO straitjacket; pressured to further lower BA’s costs, but without the freedom to make a deeply inflexible, unionized workforce more customer orientated.
However, by late 2019, Cruz appeared to have reached firmer ground and more independence. New, enhanced customer products were being rolled out—particularly for the premium passenger—and he seemed optimistic that 2020 would be a turnaround year for BA.
Walsh, meanwhile, announced his retirement in January, saying he would leave in March.
And then the COVID-19 crisis struck and Cruz’s luck ran out once more, this time in devastating fashion. The UK government showed no interest in supporting the flag carrier, even as European countries and the US put up significant financial aid and payroll support program for their airlines. Au contraire, parliamentarians hauled Cruz before a special transport committee to flay him for making redundancies even as the UK government mishandled the pandemic and issued confusing quarantine rules that drastically the international traffic on which BA is so dependent.
Walsh, who postponed his retirement to September because of the pandemic crisis, was largely spared the public criticism.
Gallego’s pick of Doyle, an Irishman like Walsh, may bring some much-needed luck to the company. But Doyle has a tough road ahead. For Cruz, handing over the wheel may be a relief.
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