The bill for British Airways's IT carnage? $111 million, Citi estimates

Owen Stevens
June 1, 2017

Shares in IAG dropped 2.8% to 597p after a computer system failure led to cancellations and delays for 75,000 British Airways passengers over the bank holiday weekend. Flight compensation website estimated that around 800 flights were canceled at Gatwick and Heathrow on Saturday and Sunday. Customers are entitled to compensation under European Union law if their flights are delayed by at least 3 hours for reasons within an airline's control.

The Telegraph meanwhile reported that Cruz had refused to resign and had refuted claims by the GMB union that the systems failure could have been avoided if the airline had not outsourced hundreds of IT jobs to India's Tata Consultancy Services a year ago in an effort to save money.

The system failure has affected the airline's baggage handling solution, booking system, mobile phone apps and check-in counters.

A worldwide systems crash systems crash at British Airways has caused significant disruption and flight cancellations since Saturday, with thousands of passengers stranded.

British Airways boss Alex Cruz refuses to resign.

BA's Indian supplier is Tata Computer Services, which has been tasked with "supplying some IT activities". While the airline insisted that there was no evidence of a cyber attack, the possibility can not be ruled out.

The disruption forced the airline to cancel flights over the busy Memorial Day travel weekend from London Heathrow and Gatwick, affecting about 75,000 passengers.

Travellers, however, some times find it hard to get the airlines to cough up these refunds.

The disruptions continued on Sunday, and some short-haul flights out of Heathrow were also disrupted on Monday.

The company faces a compensation bill for accommodation and food of up to UKP100 million (115 million euros, USD128 million).

"It was restored after a few hours in terms of some hardware changes... we will make sure that it doesn't happen again".

Some passengers expressed frustration on Twitter over missing bags and long waits in telephone queues to speak to BA staff. BA said it had introduced more flexible rebooking policies for passengers affected.

'Although cost cutting has been good for the share price in the past year, it will come back to bite IAG if it stops them from doing what they are supposed to do: fly passengers to their destinations'.

While unions blame cost cutting, the airline has little choice but to bear down on expenses.

Chief executive Michael O'Leary said: "While many competitors subcontract their IT development to high-cost third parties, in Ryanair we believe the success of labs has vindicated our decision to manage and control this development internally".

Other reports by VgToday

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