BY any definition, Mike Clasper must be under pressure right now.
“Pressure?” says the 52-year-old BAA boss with an amiable grin. “That wouldn’t be the word I’d use. It’s challenging, and there’s certainly lots to do, but it’s exciting, yunno?” We certainly do. The media and markets have been all of a flutter for four weeks, since Spain’s Ferrovial revealed that it intended to bid for BAA, the world’s largest airport operator. BAA’s share price has shot up more than 20%. And now another consortium led by the Australian investment bank Macquarie, is planning to join the party.
But where’s the Spanish bid? It’s coming, we are told, once Ferrovial has put together its bidding consortium. That has given Clasper, 23 years at Procter & Gamble (P&G) before he joined BAA and no stranger to rigorous planning and preparation, plenty of time to work out his defence.
Is he edgy? Well, sitting in his second-floor office near London’s Victoria station, he doesn’t look it. Jacket off, tousled and burly, the Sunderland-born chief executive exudes a blokeish charm that just about covers his aggressive ambition.
Both have been in evidence in his three years at the top of BAA, which he has driven hard while attempting to rebuild some fractured relationships. Many airlines dislike BAA’s stranglehold on the key southeast airports — it operates Heathrow, Gatwick and Stansted plus four other British sites. They also mistrust its close alliance with government interests, a legacy of its previous status as a state-owned operation privatised in 1987.
Many passengers, too, are disappointed with the increasingly shoddy feel of Heathrow and the congestion clogging many large British airports.
Clasper, like every BAA boss, can respond that he is hemmed in by conflicting interests: government strategy, planning issues, competition rules, air-travel growth. And he is still building Heathrow’s new Terminal 5, and seeking permission to build another runway and terminal at Stansted. As for airlines and passengers, he describes BAA’s relationship with them as analogous to P&G’s with supermarkets and consumers.
“Only I’m not sure the supermarkets ever accused P&G of being an ‘over-charging rapist’, which is what Michael O’Leary called me.” He laughs. The Ryanair boss, he says, is sometimes a law unto himself.
Then, just as BAA was celebrating its successful £1.2 billion bid to buy Budapest airport, up pops Ferrovial.
The Spanish firm is expected to announce a bid of more than £9 billion for BAA soon. Ironically, it was one of the competitors BAA beat in the auction for Budapest airport. What’s going on — if you can’t beat them, buy them? “Yunno, I think they are motivated by admiration,” jokes Clasper in his northeastern brogue. “In Budapest, the Hungarian government ranked all the bidders financially and in technical skills, and we came first in every category. Ferrovial was a fair way down the list. So it must be admiration.”
But the bid is bad timing for BAA — it is in the middle of a regulatory review from the Civil Aviation Authority that will determine how much profit it can make from its key British airports in future.
And doesn’t it rankle that Ferrovial, with a market value of just over £6 billion, is smaller than BAA (£7.1 billion before the bid)? Clasper chooses his words carefully. “Ferrovial has a tremendous reputation in Spain. I don’t know how that has been developed. I presume because it is very well run.
“It’s a family company that was created by the father of the current chief executive, and they are ambitious. They want to be the leading airport company in the world.”
That, he says, is as much as he knows. There has been zero communication between the two companies, apart from a polite phone call between their chairmen. Clasper’s job, however, is now infinitely more complicated.
Is it true that his team never saw it coming? Like many others, they thought BAA was simply too big, or too involved with government, to be bid for? “Of course we were caught by surprise,” he says, “and we haven’t even had the bid yet . . . But then the British market is totally open. There is no government golden share in BAA any more, so perhaps it’s not that surprising in hindsight.”
Clasper, the son of a builder, is an engineer by training but a marketer by experience. He will be drawing on all of that to develop defensive options against Ferrovial, and any other bidders. These options could include trading assets with Ferrovial to persuade it to go away, selling BAA’s airports in Scotland to return cash to shareholders, and emphasising the damage any takeover might do to BAA’s investment in Heathrow. Or so the speculation goes.
Clasper’s eyes just twinkle when I list the possibilities. “I would love to have a conversation with you about all that, but the lawyers tell me I can’t comment right now — for legal reasons, not because I am an awkward bugger.”
Would he be happier if his key customers were lined up behind him? Some airlines seem to have welcomed the bid, seeing this as an opportunity to break up BAA’s “monopoly” in southeast England.
“I think you would always like your customers saying good things about your service,” says Clasper, wrinkling his pudgy face. “But in this case, some might feel there are strategic advantages to be gained.”
But don’t, he adds, make the mistake of thinking they are right in using the word “monopoly”. He runs through the characteristics of monopolies — uncompetitive prices, lack of investment in assets, operational inefficiency, little innovation, poor service — and dismisses each in regard to BAA with a flurry of statistics and examples, pushing me to agree.
Others who have worked with him outside BAA suspect that is the way he will go with his bid defence, working up arguments for investors, regulators and government alike, and demanding commitment in his characteristically blunt style.
For Clasper is not shy in putting himself forward, as you would expect from a Brit who rose far in the American-owned P&G, though he has deft people skills, too. “If Mike is going to bulldoze you,” says one associate, “he will tell you he is going to do it first.”
That has been exactly what BAA needed, according to another Clasper contact. “The BAA he inherited still had a number of the attributes of an organisation run by civil servants,” says John Gummer, the former Conservative minister. “His clarity and forcefulness are important.”
Clasper will also be driven by doing “what’s right”. That was a key motivator in his P&G career, where he rose to become president of global homecare and won a CBE for work he did to mitigate the polluting effects of detergent.
“Mike’s very bright. He has a forensic mind,” says Rita Clifton, chairman of Interbrand, the global branding consultancy. “He will want facts and data and he will assemble a business case in the way he has been trained to do. But at the end of the day he will find a course of action that’s doing the right thing.”
Would he stay if the Ferrovial bid was successful? Clasper raises his hands in exasperation. “I can’t answer that, can I?” he says. Beneath the jovial banter, there must be a welter of emotions whirling.
Before we part, he says he does want to emphasise one thing: the company’s commitment to turn Heathrow into a truly world-class airport.
“I recognise the Heathrow experience is not what it should be for passengers and airlines, but that’s because we are pushing 67m people through space designed for 45m. It’s not just about Terminal 5. We want to rebuild the central terminal, too, and redesign the airfield so we can get people on and off the planes as quickly as possible.”
What is he saying? Is he apologising? Or is he claiming that Ferrovial might baulk at such a commitment? Clasper won’t expand. He is off to Wilton’s for lunch with a stockbroker. At a time like this, he needs to make sure everyone is onside.
Vital statistics
Born: April 21, 1953
Marital status: married, with three children
School: Bede Grammar, Sunderland
University: St John’s College, Cambridge
First job: graduate trainee at British Rail
Salary package: £936,000
Homes: Hemel Hempstead and Westminster, central London
Car: blue Chrysler Voyager
Favourite book: Rebus series
Favourite music: Cream
Favourite film: Return of Jedi
Favourite gadget: corkscrew
Last holiday: Rioja, Spain
Interests: sport, theatre, art
Mike Clasper's working day
THE BAA chief executive wakes at his Westminster flat at 6.30 most mornings. Mike Clasper will have a poached egg for breakfast — “Unless I’m starting a meeting at the Goring hotel. Then I’ll have lamb kidneys.”
An average day might include a leadership meeting at the London head office, or a trip to Heathrow, walking the terminals. He will frequently meet regulators and politicians, too.
At present more than half his working day is given over to planning BAA’s response to Ferrovial’s likely bid. “Lots of people haven’t had a well-defined view of what we are. This is a huge opportunity to get our ambitions firmly planted in the minds of shareholders and others. And the good news is that our core investors are very confident in the strategy and the team.”
Downtime
MIKE CLASPER has a passion for the theatre, dating back to his time working in Newcastle for Procter & Gamble. “Coming back to London from Brussels has been a dream. Even during all this bid stuff I am still going. I saw David Suchet at the National last week. Next week, subject to the Spaniards, I’m going to see Honour at the Wyndham’s.”
He also collects contemporary art and will pay up to £5,000 for a piece. “I’m just a poor chief executive. I don’t have any Van Goghs.”
Sport is his main hobby. “I play tennis and golf and have helped to coach rugby in the past,” he says. “My tennis style? Aggressive. Big serve, then volley into the corner, other guy doesn’t even see it – it just doesn’t happen often enough.”
He supports Sunderland FC, too, but suggests the least said about that, the better.
