The pledge by International Airlines Group (IAG), the owner of British Airways, to achieve net-zero emissions by 2050 is bold, in the context of a global aviation industry that has been accused of reacting slowly to the climate crisis. But someone needed to set an example.
The onus to act is clear: although aviation’s current share of total carbon emissions is less than 2.5%, its share is projected to grow rapidly. This is even before factoring in the more onerous effects of emissions at altitude, and the warming effect of aircraft contrails.
Yet airlines remain in a bind. While other sectors have clear, achievable methods of decarbonising, aviation struggles to see a route ahead – bar the fraught, unsatisfactory system of offsetting. The energy sector, the previous chief emitter ahead of transport, has rapidly found cleaner alternatives to coal. Within the transport sector, those sustainable forms of energy could transform much of road usage. But battery or hydrogen power will not fly commercial passenger volumes in the foreseeable future.
If offsetting – where companies invest in environmental projects to balance out their own carbon footprints – is the only way, credit is therefore due to IAG for at least doing more than its peers in making such a commitment. And yet the immediate financial impact, a $3m (£2.4m) annual offsetting bill, is small. Offsetting all BA flights would cost less than, say, a pilots’ strike or a data breach fine.
An annual bill in the tens of millions would still only dent, rather than wipe out, BA’s profits. Soon, even that may look cheap for airlines. The question of the environment is on the lips of every potential financial investor.
IAG’s chief executive, Willie Walsh, has been more far-sighted than most of his global peers. He was pushed by the then Labour government’s increase to air passenger duty more than a decade ago to realise how environmental pressure could spell ever more punitive taxes for the industry.
Aviation has now tried to get ahead of the curve in taking the initiative and, in some places, proclaiming its green credentials. The Corsia offsetting scheme agreed at the International Coalition for Sustainable Aviation, the UN aviation agency, is far from perfect but could, if policed and monitored properly, at least allow airlines to mitigate their impact.
The alternative is likely to be growing government action and public pressure to rein in flying. For now, aviation has time to sort its house out; while a growing minority may choose to remain on the ground, it would be premature to believe such attitudes are mainstream.
Flight shaming, or flygskam as they call it in Sweden, has yet to catch on as widely as enthusiasts might hope. Aviation continues to underpin myriad aspects of life that are intensely valued and celebrated – whether that be enabling artists to tour, films to be made, political summits or football matches to take place – let alone the trade Britain needs, or holidays millions take every summer. No one tried to flight shame the 150,000 repatriated Thomas Cook passengers.
That aspect of life was astutely noted by Walsh, who said that if flying were to become “socially unacceptable”, it would be more unacceptable to simply restrict the experience to the very rich, as was effectively the case 40 years ago. Proposals to target frequent flyers for greater taxation, or issue personal quotas for aviation, could prove a more equitable solution.
The evolution of the climate crisis could rapidly bypass such debates. What is clear even now is that offsetting can only ever be part of a global solution, and aviation’s special pleading cannot last for ever. While the hunt for a sustainable solution continues, only by demonstrating that they are doing their utmost to decarbonise will airlines deserve indulgence.
IAG’s pledge is the least that competitors should emulate: a 2050 deadline seems a long way away.
Time to stump up at WeWork
Don’t shed tears for Adam Neumann, co-founder of WeWork, now that he’s no longer worth $4.1bn and is a mere sub-billionaire whose personal wealth is $600m, according to Forbes. These things can happen when your company is exposed to some proper market scrutiny.
In fact, Neumann should count himself lucky that bubbly conditions in private markets lasted long enough for him to cash out a few hundred millions from WeWork. An encounter with reality, in the form of the botched initial public offering (IPO), revealed that the office space company was never really worth $47bn. That was just the silly valuation at which Japanese group Softbank bought its last bundle of shares.
After the collapse of the IPO, the tables have turned. Loss-making WeWork now desperately needs to find lenders willing to keep the show on the road. Rating agency Fitch this month downgraded the current IOUs to triple C-plus status, meaning junk territory, so WeWork will have to pay paupers’ rates for its new money. That’s tough, but just financial reality.
Softbank, one assumes, will be willing to contribute a few dollars for new shares or new debt; it has invested about $9bn so far, and is semi-obliged to carry on. So there ought to be the basis of a refinancing to build on.
But both Softbank and the banks would be perfectly entitled to ask Neumann to dig deep to demonstrate confidence in his creation. He is no longer chief executive of WeWork but remains chairman, so is hardly disconnected from the revised corporate plan to slim down, slow expansion and demonstrate that there’s a solid business there.
Ask Neumann for, say, $200m and see what he says. If he remains a true believer, he ought to jump at the chance to invest.
There are still white knights around
If British industry didn’t have bad luck, it would have no luck at all. At least, that’s the way it sometimes seems after a string of collapses – or chastening near-death experiences – in recent years.
There was the ignominious failure of Carillion and the descent into insolvency of British Steel, whose future remains uncertain despite ongoing rescue talks.
The steady march towards a no-deal Brexit has sent a chill through the car industry, among others, while the decline of the high street continues apace.
Restaurant chains have gone bust or shut outlets, while once-proud retail stalwarts such as Debenhams and House of Fraser are embroiled in existential crises.
US children’s show host Mister Rogers famously said that when he saw scary incidents on television, his mother would comfort him by saying: “Look for the helpers, you will always find people who are helping.”
And so to Thomas Cook and Wrightbus, the two most recent failures to stun the UK business community.
Hays Travel, a successful, family-run enterprise rooted in its home town of Sunderland, came to the aid of 555 Thomas Cook high street shops, promising to save the jobs of up to 2,500 people. John and Irene Hays, the affable husband-and-wife team who run the business, have a big job ahead of them but their confidence and enthusiasm is infectious.
Another ray of sunshine on the horizon emanates from the direction of Northern Ireland, where there is an agreement in principle to rescue bus manufacturer Wrightbus, the maker of London’s revived Routemaster. Last week a deal was struck to save the historic Harland & Wolff shipyard, which built the Titanic and HMS Belfast.
What these dei ex machina prove is that, even in such febrile times, the UK business community is not short on verve, drive and imagination. That should be cause for a degree of optimism, however cautious.
