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British Airways Faces Outrage From Passengers Over Cost Cuts

Travelers Today       By    Staff Writer

Updated: Jun 05, 2017 06:31 AM EDT

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Public outrage on the British Airways heats more as the UK carrier had an epic meltdown over a busy holiday weekend due to its focused cost cuts on customer service. This leaves British Airways scrambling on explaining how a local computer outage could possibly lead to thousand of stranded passengers.

In an article published by the Strait Times, a brief power surge knocked out the communications systems of British Airways, grounding the carrier's entire operations in London. This led to days of chaos and putting the newly appointed chief executive officer in criticism.

It's estimated that nearly 600 flights were canceled and items of luggage were unable to be dispersed. The total damage of British Airways for rebooking and compensating customers is currently estimated at 100 million euros or $112 million. This is about three percent of the annual operating profit of parent company IAG SA.

In an article published in Bloomberg, CEO of British Airways Alec Cruz is currently doing damage control with all the heat that the company has been receiving. He also told Sky Television that a cyber attack is already ruled out as the fault of the problem.

"We're absolutely committed to finding out the root causes of this particular event," Cruz said.

Analyst Damian Brewer of RBC Capital Markets said that it's tempting but increasingly questionable to view this British Airways incident as a one-off.

"Coming after a spate of other issues, the bad PR and potential reputational aftermath will likely hit future revenues beyond the likely material impact," he said.

Even if 95 percent of flights of British Airways are currently running, thousand of customers of British Airways are still being re-routed. There are more than two-thirds of the 75,000 affected passengers scheduled to reach their final destination.

Analysts have already estimated that the number of people British Airways needs to compensate is around 170,000. This crisis puts Cruz, who took charge a year ago after running IAG's Spanish budget unit Vueling for more than nine years, in the spotlight.

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