Red, white, blue...and green

In his first year as boss, Willie Walsh had led British Airways through major challenges. The next is the environment

British Airways chief executive Willie Walsh has the look of a man who is up for a challenge. He has been at the helm of the UK flag carrier for only a little over 12 months, but has already faced as many tests as some of his predecessors did during their entire tenure.

In 2006 alone, the airline has been battling to resolve its £2.1 billion ($4 billion) pensions deficit and launched a major long-haul fleet renewal effort, and faced the unplanned issues of a major security alert across the UK during its busiest month (August) a price-fixing investigation that resulted in the resignation of two senior executives and a tabloid scandal over the banning of an employee from displaying a cross on a necklace. And if this was not enough, three BA aircraft were caught up in the Polonium 210 poisoning of a Russian dissident in London.

But Irishman Walsh has taken it all in his stride. He is only 45, but he has been in the airline industry for more than 25 years. Speaking to Flight International at the launch of the airline's new service between its London Heathrow base and Calgary, Walsh said: "The environment is the biggest challenge facing our industry." He is also eager to see some progress at the airline's main base to boost runway capacity, initially by introducing "mixed-mode" take-offs and landings and later the construction of new runway.

Union negotiator

Walsh began his career as a cadet pilot with Aer Lingus in 1979 and spent 18 years flying the airline's Boeing 737 fleet, when he made a name for himself with management as a leading union negotiator which saw him rise rapidly to chief pilot. "I flew my last flight on Christmas Eve 1997 between Heathrow and Dublin," he says.

Walsh had already shown a flair for steering the airline's strategy - he completed an MSc in management and business administration in 1992 - and in 1998 was appointed chief executive of Aer Lingus's Spanish charter subsidiary, Futura. He returned to Dublin in 2000 as Aer Lingus chief operating officer, before being appointed chief executive a month after 9/11 and then steering the airline through a major restructuring. However, when Walsh and the Irish government ultimately fell out over the way forward for Aer Lingus's privatisation, he left the airline in late 2004.

But it wasn't long before BA approached him to succeed Sir Rod Eddington as its chief executive, and Walsh was appointed chief executive designate in May 2005 before putting both hands on the control wheel on 1 October.

With the issue of aviation's impact on the environment looming ever larger, Walsh says BA "fully accepts that the airline industry contributes to CO₂ emissions", but points out that since 1990 the airline has reduced its CO₂ emissions by 27%. "The environment is central to BA's fleet renewal effort, which will begin in 2007," he adds.

The airline will select aircraft in the coming months to replace its 20 oldest Boeing 747-400s and its 16 767-300ERs and Walsh says: "Environmental performance will be a key part of the appraisal."

BA is planning to grow at 3% a year in the short term, but long-term expansion will be severely curtailed unless Heathrow's runway capacity can be increased. While he applauds the UK government's recent re-endorsement of the 2003 Air Transport White Paper calling for new runways at London's Heathrow and Stansted airports, he believes the operator, BAA (which manages both airports), could be doing more to move the effort along at BA's hub. "I believe that if the two airports were under separate management, we'd see quicker development of Heathrow. BAA has not been as active as we have in championing the need to boost the airport's runway capacity."

Walsh says that with public consultation on Heathrow's expansion due this year, mixed-mode operations could be implemented by 2010 and a new runway completed by 2015 - potentially boosting capacity by almost 50%.

BA's near-term challenge at Heathrow is to transfer almost its entire operation to the new Terminal 5. This is due to take place "overnight" at the beginning of the 2008 summer season in March next year. Walsh says that initially, 20% of BA's movements will operate to remote stands after the T5 move, requiring passengers to be bussed, but this will be alleviated by bringing forward the opening of the second satellite by 10 months to May 2010.

Shadow-boxing

On the industry consolidation front, Walsh believes that what has happened so far is "shadow-boxing and the actual future picture will be very different". He adds: "I don't see consolidation being genuinely able to start until there is a relaxation of foreign ownership control in the USA."

Walsh believes the current wave of actual and prospective mergers among US carriers "will lead to a strong US airline industry... and then perhaps the USA will take a more relaxed view of foreign ownership".

Despite BA being a founding member of the Oneworld alliance, Walsh believes such groupings are "poor substitutes for genuine consolidation" and that mergers will not be bound by the current ties but will occur across today's alliance structures. Although Walsh fully expects BA to take part in this future upheaval, he is guarded about what form this will take, saying only that "the industry has seen a lot of poor consolidation" and that any move "must create a better, stronger BA".

Source: Flight International