Willie Walsh, the CEO of British Airways, listened politely. Consumer confidence is up, two months in a row, I said. And people will be creative and entrepreneurial in response to the recession in ways that economists can't predict.
We were sitting together at a BA analyst lunch in New York last week. Between us was a document summarizing BA's preliminary results for the 12 months. It was titled, "Results Reflect Bleak Trading Environment."
The document had been handed to me by a BA public relations man with the words, "Here's the grim news." In a few minutes, the company's treasurer would open his formal presentation by characterizing the impact of the economic crisis on the airline as "brutal."
Bleak, grim and brutal. In my conversation with Walsh, I wasn't exactly trying to cheer him up; I was probing to see if anything might change his famously bearish outlook. I finally just asked, "Do you see any hopeful signs?"
"No," he replied. "I'm not seeing anything positive. The question is, once we get to the bottom, how long will we ride along the bottom? We might be there quite some time. I was looking at IATA data for the last four downturns, going back to 1979. The post-crisis environment is never as good as the precrisis environment. I don't see anything to make me feel differently."
It can serve a CEO's interest to be pessimistic. If things continue to go badly, he'll seem prophetic. If things turn out better, he has set expectations so low that he can look heroic. Did he recognize he might be considered a pessimist?
"I just think there are too many unknowns," he said. "Not pessimistic, but realistic."
Indeed, perhaps this is reality to the head of any company that just announced a pre-tax loss of $634 million. Later, listening to his presentation, what I found most disturbing was that these disappointing earnings are occurring despite significant improvements in operating efficiency and customer satisfaction ratings which are, in fact, at an all-time high.
One of the things that saddens me most about this recession is that it seems to punish efforts toward quality while rewarding retrenchment and product degradation. It worries me that an entire generation of managers might surmise that there's a negative relationship between profitability and customer satisfaction.
As I left the meeting, I checked my handheld and saw that at least one company known for customer service was doing OK, though it won't bring much joy to Willie Walsh. The subject line on an email read: "Virgin Atlantic Unveils Strong Rise in Annual Results Amid Toughest Ever Trading Conditions."
The bottom line: Virgin Atlantic's pretax profits rose $108.2 million.
These two British carriers are in very different phases of their corporate life cycle. Perhaps that difference might best be summed up by the words that each uses to describe trading conditions: toughest vs. bleak.
While I truly have sympathy for what BA is going through, I was glad to receive the Virgin release when I did. Perhaps creativity, efficiency and customer service can still, in the midst of this deep recession, be rewarded.
Contact Arnie Weissmann at [email protected], or follow him on Twitter at twitter.com/awtravelweekly.