Turbulent skies ahead for British Airways

British Airways is getting ready to buckle up for a potentially bumpy ride ahead, which will include major strikes, record high oil prices and a potential drop in business class passengers as the economic forecast becomes increasingly grim. Morgan Stanley has now downgraded BA’s value in light of these imminent problems and also warned the UK’s flag carrier that much more trouble was brewing, as a series of pilot strikes planned for the coming months would further tarnish the company’s already badly damaged image, following the Heathrow Terminal 5 debacle.

One of the major problems, according to Morgan Stanley, is that the number of lay-offs in the London area—especially in the corporate sector—are increasing, which is causing stagnation among business class travelers, at a time when competition is heating up and all airlines are trying to secure the loyalty of these lucrative passengers. With its sullied reputation, BA will have a difficult time trying to regain the confidence of passengers who had their luggage lost in the last months or those who saw their flights cancelled as T-5 descended into travel chaos earlier this month. If strikes organized by the airline’s pilots go ahead as expected in June, then BA will suffer another blow.

According to Morgan Stanley’s calculations, BA has already lost over £16 million due to the T-5 chaos, but Penelope Butcher, representing the firm, told journalists that the real problem would be the “large amount of reputational damage and potential for lost future business.” When these negative factors are added to the problems caused by high oil prices, BA looks likely to experience very challenging months ahead.