THE boss of British Airways does a good line in jokes. Here’s one Willie Walsh
was telling on Tuesday night. Record fuel prices, 100% increase in flight
taxes, unprecedented fog and security-related disruptions, the constant
threat of cabin-crew strikes, recurring bid speculation, an Open Skies deal
that gives American carriers far more than their European rivals . . .
It’s the soundtrack to his first 19 months at BA. He could have thrown in
“thousands of items of lost luggage”, and an impending scandal on
price-fixing.
Then the punchline: “Whatever happened to the luck of the Irish?”
Cue the laughter. It went down well on Tuesday when Walsh had a receptive
audience, a City of London dinner for the Chamber of Commerce from his
hometown, Dublin. For those of us who have suffered from any of the above,
it’s not so funny.
But Walsh, a former pilot who once ran Aer Lingus, has an Irishman’s way of
laughing off bad times. Every airline boss is hostage to events – his
predecessor Sir Rod Eddington called it “the tyranny of the urgent”. The
difficulty is moving beyond the urgent to plan for the years ahead.
So an airline boss needs to stay lucky? Walsh drops the boyish smile and looks
serious. “There can be some luck in running airlines,” he says in his Dublin
accent, “but it’s not a lot about luck. There are just issues that need to
be tackled.”
Self-deprecating in public, sharper in private, 45-year-old Walsh is an expert
at tackling tough issues. He looks it, too – tie off, hair shaved, as he
bustles between desk and sofa at BA’s Heathrow head office. Short and
persistent, Walsh is a likeable terrier in interview. To report to, he is
more of a pit bull.
Just ask his former Aer Lingus colleagues. In three years at the top there, he
halved the workforce. And he’s proud of it – because, he says, it saved the
airline. “Simple choice: they went, or everybody went. It was that bad,” he
says.
At BA, where running “the world’s favourite airline” often makes you the
world’s least popular boss – everyone from passengers to politicians has a
grouch – he has had to tread more carefully.
But he has already surprised some with his achievements. Sorting out the
pension-fund deficit, negotiating working practices at Heathrow, pulling BA
out of the regions, reducing debt: all were issues left behind by Eddington
and dealt with by Walsh. He has also set an ambitious target for a 10%
operating margin, to which bonuses are linked.
Yet events still conspire to make it look like an awkward start. Just 10
months from moving into the brand-new Heathrow Terminal 5 – a building Walsh
says will transform passengers’ experience of flying – BA finds itself
constantly buffeted by speculation.
Last month it reported a pretax profit for 2006-7 of £611m, down £5m. It also
confirmed it had joined bidders for rival airline Iberia, in which it owns a
10% stake. On Tuesday the broker Goldman Sachs, which advises Iberia, said
it was suspending research coverage of BA in compliance with its policy on
conflicts of interest. It also scooped up 60m BA shares. That stoked
speculation that BA itself might now be a target. And rumours of union
unrest over Terminal 5 won’t go away.
For BA shareholders, it is hard to know whether to laugh or cry. They haven’t
seen a dividend since 2001 because of debt and pension problems hanging over
the airline. Could a bid be coming just before the good times roll at
Terminal 5?
No comment, is all Walsh wants to say about Goldman. Likewise the price-fixing
scandal for which Walsh has set aside £350m to pay a potential fine. BA
admitted last month that it had breached competition laws in 2004 and 2005,
colluding with competitors over fuel surcharges. Reports suggest BA was
shopped by Virgin in return for immunity from prosecution.
“I am not going to say anything on that,” cuts in Walsh. “What is known is
that the investigations continue, they are serious civil and criminal
investigations, and the lawyers have advised everyone that they should
refrain from speculation. But let me say this: there is a lot of stuff I
want to say, and I am looking forward to the opportunity, when and if it
comes.”
That sounds like a threat. It never seems to end for BA. Has the amount of
needle surprised him? “Oh no,” he smiles. At Aer Lingus, his head office was
directly opposite Michael O’Leary’s Ryanair. “If you want needle, talk to
Michael,” he nods. “Nobody comes as tough as him.”
That sang froid is a Walsh trademark. He walked out of Aer Lingus, where he
had worked since joining as a cadet pilot, when the Irish government baulked
at his privatisation plans. For BA, keen to replace Eddington, it was a
timely exit. The only worry was that Walsh’s reorganisation skills made him
more effective running a budget operation.
Martin Broughton, BA’s chairman, says the past 18 months proved the doubters
wrong. Walsh’s handling of the run-up to Terminal 5, an upgrade of Club
World and plans for fleet expansion show “he knows how to run a quality
airline”. Next, says Broughton, Walsh has to fix baggage and punctuality.
Walsh, when asked to explain the recent baggage problems that infuriated
passengers, opts for the longer response. “It was a number of issues . . .”
and he cites the freezing fog at Christmas, BA’s predominance at Heathrow,
the terminals, BAA’s difficulties – but he doesn’t really provide an answer.
Is he more interested in business passengers now? “No,” snaps Walsh. “We love
all travellers, every person is important to us, it’s just that premium
travel gets more coverage because it’s the bit we do better than most.”
Isn’t he launching business-class-only services from Europe? “No, we are just
studying the options.”
Many think he will struggle to hit his 10% margin target without radical
surgery at BA. He missed it last year (7.1%), and there must have been glum
faces – no bonuses – at BA’s employee forum with Walsh nine days ago. He
only narrowly averted a cabin-crew strike over pay in January. Actually the
meeting was great, says Walsh. “I enjoy a good question-and-answer session,”
he grins. That confidence, you hope, is infectious.
And if anyone can do it, it may be Walsh. He was a pilots’ union official
before making the leap to management, and is an accomplished speaker and
negotiator. Old friends say he combines a memory for figures with charm.
Walsh prefers to cite his experience as a pilot. It teaches you to make
tough decisions quickly. “It also gives you a greater understanding of the
whole operations side.”
Born the second of four children to a north Dublin glazier, Walsh says he
loved anything mechanical from an early age. Both his brothers trained as
electricians, but Walsh wanted to fly. He became a cadet pilot at 17, and
was flying as co-pilot at 19. “Everything that has come to me in this
industry has come early. Flying at 19, union rep at 21, management six years
later – I was 39 when I took over Aer Lingus. I had my 40th birthday a week
later and the newspapers said I had aged a decade in seven days there.”
Then he laughs loudly. That’s the flip side to Walsh – obsessed with business,
but happy to poke fun at his own drive. How does he relax? “I work,” he
says. When did he last take a holiday? “Before I started at BA.” What does
he do with his £600,000 salary? “I don’t know. Good question.” If he didn’t
laugh, you might think he was a monomaniacal bundle of nerves.
Former colleagues say he has always been like that – edgy and focused. He was
the working-class kid who regularly took the bus into work in full pilot’s
uniform, because he learnt to fly before he could drive a car.
“I have seen him tear strips off people he has known since childhood,” says
former Aer Lingus director Dan Loughrey. “That’s part of the focus he has.
But Willie is definitely a boss you would go down the pub with. He’s a very
accessible guy.”
Walsh has been buffing that up, making after-dinner speeches and chatting
through functions. He accepted a recent “airline of the year” award flanked by
BA stewardesses. Is he taking on Sir Richard Branson at photogenic PR? Walsh
cringes. “I didn’t know they were going to be there, to be honest.”
He might need a new haircut to compete. Yeah, he says, he is always under
pressure to grow his hair to a more corporate length.
But enough. I don’t even have room to include his speech on climate change.
Only this on Gordon Brown’s taxes on airlines: “If you can show me any
evidence of a penny of that money going to the environment . . .” He shakes
his head.
At BA, they simply want him to hold everything steady until the company makes
a safe landing at Terminal 5, where the unions could still foul him up.
After that, he can make his own luck.
WILLIE WALSH’S WORKING DAY
THE British Airways chief executive sets his alarm for 6.20am each day. “I
drive myself into our office at Heathrow by 7.20, unless there’s a function
later, then I get picked up,” says Willie Walsh.
He starts meetings at 8am. He has 11 executives reporting directly to him.
Often he will be reviewing performance. He rarely lunches out but tries to
keep an hour a day clear for reading. The boss of BA gets a lot of mail. “I
can’t read them all but they do give me a snapshot of what the issues are.”
Once a week, he tries to get round BA’s Heathrow terminals. He drives home
after 7pm.
VITAL STATISTICS
Born:October 25, 1961
Marital status:married, with one daughter
School:Ardscoil Ris
University:Trinity, Dublin
First job:cadet pilot
Salary package:£614,000 plus bonus
Homes:Dublin and Twickenham
Favourite book:The Godfather, by Mario Puzo
Favourite music:Damien Rice, Red Hot Chili Peppers
Favourite film:Monty Python’s Life of Brian
Favourite gadget:20GB iPod
Last holiday:Austria in 2005
Car:grey Lexus hybrid, a luxury car with both petrol and electric
motors
DOWNTIME
WILLIE WALSH says he has no hobbies: “I find work relaxing.” He does enjoy
sport, but says he hasn’t picked up a golf club since May 19, 2005. “I just
don’t get the time.” He keeps a football in his office at Heathrow. It sits
partially deflated on his meeting table. “I used to kick it around at night
when everyone had gone. I haven’t broken anything yet.”
He is not sure where his salary goes, but thinks moving to a new house in
Twickenham, southwest London, with his wife and 12-year-old daughter might
have accounted for some. “I’ve also been buying BA shares recently – an
excellent buy.”
