KEY POINTS:
British Airways chief executive Willie Walsh was flying high as he prepared to deliver the airline's best financial performance in a decade. Then chaos struck at its new London terminal.
The financial year just ended was supposed to mark a turnaround for the incident-prone airline. BA has not paid a dividend for six years.
Walsh has trimmed bulky management, offloaded its loss-making BA Connect unit and helped BA regain investment-grade status, allowing the airline to place an US$8.2 billion ($10.3 billion) fleet order for Boeing Dreamliners and Airbus A380 superjumbos.
But just when Walsh should have been celebrating, record fuel prices and economic malaise made an unwelcome appearance, throwing his ambitious goals into doubt.
On top of that, the high-profile opening of BA's new T5 terminal at London's Heathrow airport has been a public relations disaster, with logistical problems forcing hundreds of flight cancellations and tens of thousands of bags going missing.
"BA's new Terminal 5 may eliminate the passenger affliction known to its CEO as Heathrow Hassle," analysts at Deutsche Bank said. "But problems with bag handling has introduced a new issue: T5 Tedium."
Britain's press has revelled in the chaos, making Walsh the focus of its ire. Walsh's fate lies with the group's non-executive directors for whom a key concern is limiting the damage to BA's brand. "He's on a knife-edge," said one analyst.
Come April 30, the airline will move its long-haul flights, accounting for the other half of its Heathrow passengers, to T5.
Walsh has never shied away from a challenge, having previously taken the job of CEO at Irish flag carrier Aer Lingus when it was mired in losses, and within three years steered it to profit in 2004.
His ability to handle unions was needed soon after he took the helm at BA in October 2005, when he reached a deal to tackle a £2.1 billion ($5.2 billion) pension deficit.
Walsh enjoyed a relatively smooth ride for a few months until British police said they uncovered a plot to blow up transatlantic airliners using liquid explosives in August 2006. The resulting security clampdown threw Heathrow into disarray, costing the carrier around £100 million.
A few months later and police investigating the murder of exiled Russian dissident Alexander Litvinenko found traces of the polonium used to kill him on BA planes.
Then there was the worst fog at Heathrow in over 30 years, and this January its worst safety incident in the same period when a BA flight from Beijing came down short of the runway. Now the Terminal 5 debacle calls into question his project management skills.
"If we see the problems resolved in the coming weeks I think we'll forget about it fairly quickly," said Joe Gill, aviation analyst with Goodbody stockbrokers in Dublin.
"But if it drags on for months and into the summer then I think it's going to become a much more challenging issue for him personally".
- REUTERS
