British Airways counts cost of major bank holiday IT system outage

Share price of British Airways' parent company plummets after power supply issue at "local" datacentre grounds flights at Heathrow and Gatwick over the bank holiday weekend

British Airways is counting the cost of a major two-day IT systems outage that grounded flights at Heathrow and Gatwick Airports, affecting the travel plans of more than 75,000 passengers.

The disruption has had a destabilising impact on the performance of the London Stock Exchange, which – ahead of the disruption at Heathrow and Gatwick – closed at a near-record high on Friday 26 May.

Shares in British Airways’ parent company, the International Consolidated Airlines Group (IAG) have since slumped in value by 4.3% since the market reopened on Tuesday 30 May, dragging down the performance of the wider UK stock market with it.

The BA outage began around 9.30am on Saturday 27 May, when British Airways began cancelling flights from Heathrow and Gatwick, before warning passengers not to travel to either airport until the issues were resolved.

In a video statement, published on the British Airways media centre on Saturday, company CEO Alex Cruz confirmed the IT underpinning the company’s check-in, baggage handling, booking, contact centres and other operational systems had been affected by a datacentre power supply problem.

In a follow-up interview with the BBC, he said the problem lasted just a few minutes, but a backup system had failed to kick in and pick up the slack as intended.

“We are extremely sorry for the huge inconvenience this is causing our customers and we understand how hugely frustrating this must be, especially for families looking to get away on holiday. I’d like to thank our customers for their great patience,” he said, in his British Airways video statement.

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While the majority of the affected IT systems were back up and running on Sunday 28 May, the fallout from the issues meant British Airways flights were still subject to delays and cancellations.

Cruz, in a follow-up statement dated 28 May, also warned passengers against travelling to the airport without a confirmed booking, as the company sets about dealing with the backlog of customers who still need to fly.

“I know this has been a horrible time for customers. Some of you have missed holidays. Some of you have been stranded on aircraft and some of you have been separated from your bags. Many of you have been stuck in long queues while you’ve waited for information,” he said.

“On behalf of everyone at British Airways, I want to apologise for the fact you’ve had to go through these very trying experiences.”

Hard to predict financial impact

In a statement, published on the London Stock Exchange website, City Index analyst Kathleen Brooks said the long-term impact of the IT outage on the company’s financial performance is difficult to predict.

“Will the market be merciful since most flights are now taking off on time, or will it punish BA for an IT failure that didn’t involve cyber hacking and was blamed on a power surge – something no-one is going to believe,” said Brooks.

While precise details about the root cause of outage are thin on the ground, British Airways is known to have outsourced some of its IT functions to Indian firm Tata Consultancy Services, paving the way for it to downsize its UK-based IT function in 2016.

Cruz has been quick to deny, during interviews with Sky News and others over the weekend, that its decision to outsource played any role in the outage.

“I can confirm that all the parties involved around this particular event have not been involved in any type of outsourcing in any foreign country. They have all been local issues around a local datacentre,” he told Sky News.

An earlier IT outage, in September 2016, resulted in British Airways staff having to issue handwritten boarding passes to passengers, as well as flight cancellations at multiple airports around the world.

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