Ayling under fire from BA investors

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Bob Ayling, chief executive of British Airways, came under sustained attack from shareholders yesterday over his handling of the cabin crew dispute, the airline's change of corporate identity, and its pounds 1bn business efficiency plan.

More than 900 shareholders crammed into the Barbican Centre in London for the company's annual meeting and, with the strike providing a stark reminder that BA was not everyone's favourite airline, the vast bulk of the questioning was hostile.

One shareholder, Peter Page, accused Mr Ayling of being the most divisive chief executive in BA's history and said that he and the board lacked integrity: "It is seeping like a stench through the management culture and it emanates from the very top," he added.

Another shareholder took Mr Ayling to task over his pounds 64,000 pay rise last year, contrasting it with the pay freeze and pay cuts that staff had been forced to accept as part of BA's efficiency plans.

Yet another shareholder who was also an employee with 28 years' service said that morale was the lowest he had ever known.

Mr Ayling was frequently addressed as Bob - a reference to his closeness to Prime Minister Tony Blair, who also favours first-name terms - but the questioning was rarely chummy.

One shareholder said that in the days of Lord King the airline had a programme called Putting People First. The initials were still in use today but now they stood for Putting Profits First. Warming to his theme, the shareholder said that BA's staff were now so "alienated and demoralised" that the ailrine could go the way of PanAm, the US carrier that collapsed in the late 1980s.

Lord King, who is being given the honary title of president emeritus to coincide with his 80th birthday, accepted the plaudits but took no pleasure in the attacks on his successors.

Mr Ayling responded by insisting that if shareholders wanted BA to remain one of the world's most profitable airlines, then it had to strive to improve efficiency. The cabin crew dispute was not about union bashing and BA had no plans, repeat no plans, to de-unionise BA, said the embattled chief executive. People who feared BA was being turned into a "virtual airline" were living on a different plant, he said but it had to change to prosper. "Radical and thorough-going change cause upset. The one thing people do not like is change. Last week's strike was a manifestation of that."

But as soon as Mr Ayling had doused one fire of shareholder resentment, another sprang up.

Why was BA's long-haul catering arm being sold off and would it henceforth be run by accountants, asked one shareholder. "Which would you prefer, a meal prepared by a chef or a meal prepared by an accountant?"

A chef, replied the BA chairman Sir Colin Marshall, coming to Mr Ayling's defence. But the fusillade continued. Why was BA having tailfins on its aircraft painted with world designs at a cost of pounds 60m and what evidence did BA have that customers preferred an airline that had abandoned its national identity, shareholders demanded to know.

Mr Ayling sought to explain how careful research had shown that BA's very Britishness was standing in the way of its development abroad. "There are aspects of the way we are which are not always helpful, we seem to be aloof," he explained helpfully. Why not jettison the name altogether then, asked one shareholder, while another suggested BA be renamed British Ethnic Airways.

Mr Ayling kept retreating. The competition was getting tougher, he insisted. "Who would have thought you could have flown Edinburgh to London for pounds 29? It's cheaper than the bus."

But there was no escape. Who would have thought it would cost pounds 450 to fly down from the Outer Hebrides to attend BA's agm, said one shareholder, now that BA had abandoned services to the Highlands and Islands and franchised out the route.