Leadership, Culture and Trust - A Letter from Sir Richard Branson

Many thanks to Louise Lucas who has alerted me to this fabulous resource which can be used to help teach a variety of topics, including leadership, employee relations, corporate culture etc.

Sir Richard Branson has stepped in to a dispute between Virgin Atlantic and its airline pilots. Threatened strike action by the pilots may throw Virgin Atlantic into the same hugely disruptive and costly experience that British Airways has suffered during recent disputes with its cabin crew. Branson has written an open letter via the media, reproduced below, which states his case. Are you persuaded?

Dear Virgin Atlantic Pilots,

The very founding of Virgin Atlantic in 1984 was born out of an idea to reinvent the airline industry. To create an airline where the staff were united to offer a wonderful service to their customers. An airline with a special culture where the people working for it were treated well and where the company was responsive. It literally takes a lifetime to build that kind of culture – well 27 years to be precise! And what a great airline everyone has created.

The frightening thing is how quickly that culture can be lost. Therefore although I haven’t been involved with managing the airline for a number of years, as its founder I take a keen interest in its future, the future of its people and wish to make sure that no one makes a decision that damages or destroys it. It would be just too sad.

Keeping this kind of culture when the going gets tough is particularly challenging and a particular challenge for all of us.

Virgin Atlantic has withstood the toughest conditions in the aviation market since 9/11. You’ve all battled against a deep recession, the impact of volcanic ash clouds, earth quakes in Japan and severe snow storms on both sides of the Atlantic to name but a few.

The airline and our customers continue to face rising APD taxes, sky high fuel prices, a weak pound, increased competition on most routes and uncertain consumer confidence.

Although you may not always agree with senior management decisions, I believe that the team has built a great airline. Starting with just one second hand 747 few people thought we would survive for more than a year or two, let alone expand to create as many jobs and careers as we have. “Too young to Fly, too old to Rock n Roll” were Lord King’s famous remarks at the time.

In the intervening years Virgin Atlantic has grown, while the industry has seen a number of airlines such as British Caledonian, Laker Airways, Dan Air, Air Europe, XL, People Express, Air Florida fail resulting in many lost jobs. A lot of our older pilots were casualties of these bankruptcies and only managed to get a job again due to the tremendous team that was building our great airline, keeping the planes flying and ensuring the public wanted to fly with us.

In America the internal strife in the airlines led to almost every one of them going bust; but importantly some of the jobs were saved by going into Chapter 11 and launching again. A luxury that doesn’t exist in the UK - you are either bust or you are solvent.

In the last week I have spent a lot of time trying to understand whether the management team at the airline has treated everyone fairly and whether the company can afford to go further with its pay offer.

The balancing act our Chief Operating Officer and board have is that if we go further for one sector of the workforce, especially in these difficult times for everybody, we have to do the same for all sectors. And from looking at the figures it will mean asking the public to pay higher fares and in this difficult economic climate, we simply cannot do that at this time.

The management have told me they are happy to share up to date corporate accounts with your union so they can understand the financial context from where the offer has been made. As shareholders we’ve also got to ensure the airline is strong enough to withstand the many challenges it faces in this constantly changing market.

I have looked at the details of your offer and believe it is fair. From the company’s point of view possibly a little too fair! It is one of the best in the industry, along with many other commitments that offer real value to you. If you haven’t read it I would suggest you do.

The COO has to balance the interest of everyone at Virgin Atlantic and I don’t envy his job especially as we’ve had three very tough years in a row. I believe over the last 27 years the team has got it about right. As a result, Virgin Atlantic has survived and jobs have been secure.

Whilst on the subject of fairness I think it’s worth you knowing I have taken no salary out of Virgin Atlantic since 2005. Since Singapore Airlines bought into the company 10 years ago both of us have invested more money into the airline than we’ve taken out to deal with crises like 9/11 and to fund vital products and service innovation.

Despite this I am still committed to continuing to support Virgin Atlantic through difficult times provided those difficulties are not self-inflicted.

Which sadly brings us on to BALPA’s very public threat of a strike. I was obviously extremely sad to see threats of strike action in the press as these negative comments will have already damaged the reputation of our airline and the trust our customers place in us - which we rely on so heavily. They have also played into the hands of our larger rivals.

We are already losing business from this and are in danger of losing money again this year if the uncertainty of those travelling lasts much longer. Just look at what happened at BA over the last few years.

We need to make sure that we never inflict such damage upon ourselves and our customers and to do so in this market place would be very dangerous.

Unless BALPA withdraw its threat very soon it will leave an indelible scar on the company, impact customers’ trust in us and damage the unique and friendly culture at Virgin Atlantic. It will affect jobs and it will make it very difficult for the company to afford the current offer on the table.

Your union asked me to get involved and I’ve looked at all the facts and believe that our management have made the best offer it can. Our Chief Operating Officer, Steve Griffiths is ready to meet with BALPA and your committee again and I appeal to you to insist that they do so as soon as possible.

Your union representative also publicly asked to meet with me personally. I believe that would only cause more publicity which would further damage the airline and I am not best placed to deal with the details of the negotiation. However I would be happy to have a private meeting with as many pilots that are available to answer your questions about the future of the airline. I will have a member of my team get in touch regarding potential times.

Anyway, united we ‘sailed’ through the last 27 years together, united we’ll enjoy another 27.

I look forward to celebrating them with you. I look forward to seeing you all soon.

Best,

Richard

PS: Having spent the last few days reflecting deeply on this issue I believe that both management and union need to urgently work together on modernising both their relationship and communications.