Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

British Airways In Nose Dive

by Jeannette Di Louie, Assistant Editor, Mt. Vernon Research

You know a company is doing bad when:

A)                They ask their employees to work for free for a month

B)                 The CEO pledges to go without pay for a month

C)                They post an annual loss of £401m.

D)                All of the above

It doesn’t matter which one you answer. Because I don’t know about you, but I wouldn’t be too thrilled at the prospect of investing in a company that only posted such a monumental loss or only had to ask over 30,000 workers to take between a week and a month’s unpaid leave or unpaid work.

And all three at the same time? Well, forget it altogether. The company appears to be simply waiting for bankruptcy.

The company in question is British Airways, who along with the rest of the airline industry, has been flying less than friendly skies for some time now. Blame it on crazy oil prices or on the recession - and those do factor in big time - but no matter how you look at it, this company has hit what might turn out to be a deadly amount of turbulence.

Chief Executive Willie Walsh had this to say on that matter: “I am looking for every single part of the company to take part in some way in this cash-effective way of helping the company’s survival plan.”

Bluntly stating that this plan is part of a “fight for survival,” he isn’t painting lipstick on this pig either. Though really, I’m not sure how he could make the situation look any less bleak than it is.

The plan might seem original - and extremely stupid. After all, who wants to work for no pay? - but British Airways says that it isn’t the first to try it out, pointing out Cathay Pacific as one predecessor in making the drastic decision.

Drastic it may be, but not completely without hope though according to some analysts. Alistair Hatchett, who works for research organization Incomes Data Services, points out how, “In certain cases such as Honda, they shut down for several weeks.” In other words, this crazy plan just might work.

Jeannette Di Louie

Disclosure: No positions