British Airways and Gate Gourmet (2005)
In August 2005, Gate Gourmet, to whom British Airways had outsourced its in-flight catering in 1997, sacked 650 staff who had stopped work to hold a canteen meeting in protest at a restructuring. With that, 1000 British Airways staff at Heathrow, including baggage handlers and other ground staff, came out on strike in sympathy. It then transpired that many of them, as well as being in the same trade union, were related to the Gate Gourmet workers. The strike forced BA to ground all its aircrafts at Heathrow for over 24 hours. As a result it lost 700 flights and over £30m.
Blunden, T. and Thirlwell, J. ‘Mastering Operational Risk’. Pearson. Second edition.
2.1 Detail the risk sources that could have contributed to the “sacking of 650 employees” in the in-flight catering industry.
2.2 Discuss the various incidental speculative risks that could affect an international airline like British Airways.
2.3 Operational risk is a continual cyclical process in risk management. Discuss the people component that should be assessed by the risk management unit.
2.4 The outsourcing of catering services posed an operational and reputational risk that should have been evaluated by management to allow the development of mitigating controls. The risks should have been financed appropriately to avoid the loss of £30m. Discuss the risk management dangers/risks that were neglected in the assessment process.