Aer Lingus chief executive Willie Walsh has resigned along with the two other senior executives with whom he has turned around the failing carrier. The direction being set by the flag carrier's political masters appears to have persuaded the close-knit team that they should go.
Walsh, together with chief financial officer Brian Dunne and chief operating officer Seamus Kearney have agreed that they will stay until May to allow time for a new team to be put in place, but they make clear that this is a final decision. "We've made the decision and we're definitely gone," says Walsh, scotching any suspicion that the resignation might be a political ploy. "People are probably surprised that we all came to the same view, but I had no hesitation and neither did the other two guys."
The executive team and the carrier's government owners have been at pains to avoid any public dispute, but it appears that the aggressive low-fares direction being set by the management team was at odds with the political aims of the government, which is a left-leaning coalition led by Fianna Fail premier Bertie Ahern.
The government had shown little enthusiasm for plans to privatise Aer Lingus, a move also opposed by unions. It had poured cold water on a proposal from the management team to lead a buy-out of the airline, an idea that was withdrawn in October. Analysts do not now expect to see a sale take place before the next general election in 2007.
Besides the issue of investment, the management team had also been pushing for greater freedom on the north Atlantic and for a further wave of cost-cutting, including the loss of another 1,300 jobs. Such aims sat uneasily with the government's political priorities.
"As a management team we felt that we had pushed things as far as we could within reason and that perhaps it was time to hand over to someone else," says Wash, stressing that there is "no animosity" to accompany the resignation.
Walsh and his team had transformed the carrier since arriving in October 2001, turning it into one of Europe's most profitable airlines, with a low-fare short-haul product that was able to take on Ryanair. "We've taken the company as far as we can. Our track record speaks for itself. By any standards we've achieved a helluva lot,"says Walsh, adding that he would welcome the chance to work with the other two executives again in future but that he quits with no firm plans for what comes next.
Aer Lingus acting chairman, London-based financier John Sharman, promises that the board will "ensure a smooth and orderly transition over the coming months, consolidating the progress made by the airline and building upon it". Financial analysts warn that any new team must not let up the pressure on costs. "It is critical that the new management is just as focused on the need for cost efficiency," says one Dublin analyst.
Without privatisation, investment for future expansion remains an issue. Analysts believe that an existing order for seven Airbus A320s to update the narrowbody fleet can be funded largely through cashflow. However, they warn that financing for a prospective widebody order would almost certainly require a fresh injection of cash, as would any new growth plans.
Meanwhile, Aer Lingus has decided to stick with oneworld, putting an end to speculation that the carrier's move towards a low-cost business model would see it leave the alliance. Aer Lingus decided to carry out a review of its membership in the summer ahead of a move towards a one-class product on European short-haul from April next year. It is also ending free food on the services and has now moved to one-way fare pricing across all services, as the push towards online sales continues.
COLIN BAKER AND KEVIN O'TOOLE LONDON
Source: Airline Business
