Before diving into my thoughts, I want to welcome you to our new regular column – Boston Spotlight where we are inviting employees from all parts of our business to write about and bring to light their experiences in the Boston group of businesses. We will be making this available on our website but also via the social media channels we use. I hope you find this both interesting and informative and we welcome any comments, suggestions, and content you might like to introduce over the coming months.
I gave a staff briefing on our FY2019 results and the plan for 2020 on 24/01/20 and in it I gave a warning on the potential impact the virus would have on our long-haul airline customer base. We had seen this before in the SARS crisis in 2004 but that petered out in Asia and whilst aviation was impacted it was limited to a very specific market. Never for once did I believe that less than 2 months after the staff briefing global passenger aviation would be at an almost complete standstill and much of Asia and Europe would be in lockdown.
We all remember the terrible television images coming out of Lombardy in northern Italy and the sense of panic amongst European governments about this new disease that nobody had a great deal of knowledge about.
Like any well established medium sized business, we had a disaster recovery plan but we certainly didn’t have a plan for what to do in the event of an entire collapse of large parts of our market due to a global pandemic. This was new territory for everyone and we spent the next 7 weeks constantly reforecasting and running financial models for multiple scenarios. It was quickly apparent in aviation that this was going to be extremely severe and the recovery would be entirely dependent on a vaccine, cure or simply the virus becoming weaker over time. We made decisions quickly and for the first time in my 24 year career at Bostonair we were facing a significant resizing and the inevitable cuts to staff and our supply base to ensure not only that we survived but were also fit for an eventual recovery. Resilience and adaptability become critical in situations like this.
Ever since I started the business, we have focused on building strong balance sheets and maintaining cash within the business. This was important in the financial crisis as well but for very different reasons to this particular crisis.
Our diversified customer base both within wind energy and aviation has been critical. For example in a normal recession destocking tends to hit the cargo market early and the passenger airline market is a late entrant to recession due to the level of forward bookings. In this crisis the passenger airline market was immediately hit and very hard. This resulted in the loss of belly freight capacity and the diversion of that into the full cargo market. In addition the acceleration in consumers buying online has further bolstered the express freight sector. This meant we had to rethink our traditional models on what to expect in a recessionary environment.
Throughout the entire first wave of the crisis we had over 250 people working across Europe to maintain aviation operations and to build and maintain wind farms. This is a multinational workforce dedicated to our customer base and they worked selflessly to keep critical air freight operations moving and help with the security of energy supply. We only had one known Covid case back in March and they made a swift and full recovery. As we moved into late April and customer confidence grew in terms of the management of safe operations under Covid restrictions we built our travelling workforce back up to around 350 people. This is still well below our planned workforce for 2020 but nevertheless a significant recovery.
We never closed our offices but we did ask certain teams to work from home in accordance with the government guidance. Our decision to move to MS Teams and cloud based computing in late 2019 meant that we could maintain operations relatively seamlessly. Tech businesses have been the big winners in 2020 and given the length of time that certain restrictions have been in place I believe there has been a fundamental shift in how people live and work. The changes were coming anyway, the pandemic has probably accelerated that process by 10 years or so. I however was keen to up staffing at our offices as soon as we were allowed because as good as the technology is, you lose a certain dynamism, fluidity and social element to the operation when shut away at home.
So what happens now? I am an optimist and as much as the autumn and winter will continue to be difficult I don’t think we will see an unmanageable peak in Covid 19 or indeed winter flu. The lack of a spike in London at the moment would suggest there is perhaps some element of herd immunity there from the first wave and the regions now being hit, saw very little of the outbreak in the Spring. Thankfully, progress has been made on vaccines but perhaps more importantly on how to treat serious forms of the disease. We have to, and will learn to live with the virus and by the Spring of 2021 I think that the UK and many other nations will be able to lift most of the restrictions. I am also sure we will be able to look forward to an overseas holiday next summer. The challenge in the airline industry will be one of repairing balance sheets and anticipating which parts of the market will recover first and what will happen at the premium end with business travel. Renewable energy in all its forms will become increasingly important as a new driver for global growth but also in tackling the climate and environmental challenges we face.
Never ones to stand still, we have used the downturn to accelerate a plan we had for creating Boston Rail and we expect to be announcing our first framework contracts in this sector before the end of the year. There will be more on this in future Spotlight articles.
Finally, there will be some tough times for many with job losses, emerging health issues and the loss of time in education for young people. It is our job as an agile free thinking business to be part of restoring the fortunes of those that have been severely impacted and the best way we can do that is by being at the centre of these emerging opportunities, being prepared to invest and create well paid skilled jobs in exciting industries.
Mark Parkes – Group Managing Director
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