The Monday interview: Tim Byrne

Airtours chief sets sights on FTSE
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Tim Byrne looks remarkably relaxed for a man in the eye of the storm. As chief executive of Airtours, Britain's largest tour operator, he is facing a crisis of confidence among holidaymakers as bookings slump in the wake of the terrorist attacks on the United States.

He has already issued a profits warning, which included a £10m effect from the US crisis and a 10 per cent cut in capacity for its winter holiday season. But the City is expecting more bad news, following rival First Choice's move to axe 1,100 jobs on Friday.

"We are actually selling more holidays now than we did this time last year," he says in an accent which hints at his Wirral background. "And our load factors [the percentage of aircraft seats sold] are the same as last year. But we are having to discount to do that."

The real problem is forward bookings. Summer bookings for next year are down 60 per cent, he says, "because people don't have to make a decision yet". And bookings to destinations around the Middle East such as Israel, Turkey and Egypt "have stopped". Airtours has been offering discounts of up to 40 per cent for some winter holidays just to fill the planes.

A First Choice-style redundancy programme looks inevitable. "We have lost 10 per cent of our workforce in the last 12 months, which means about 3,000 jobs [including 600 to 700 in the UK]," he says. "And we will have to have more. We have written to all staff in the UK, Scandinavia, Germany and the US and we are going through a period of consultation."

About 2,000 jobs are likely to go, including 850 in the US and 300 to 400 in the UK, he says. "That is on the basis that it's bad until December and the demand kicks up again in January. If it doesn't we'll have to review things again."

Other cutbacks include £100m of capital expenditure put on hold. "If the hotels haven't had a lick of paint then that's it, they'll have to go without one. We are not going to go out and spend money now."

A "big bang" launch of a new £100m e-commerce portal under the Mytravelco name has also been pulled. It was planned for 27 September.

It has all been a baptism of fire for the 41-year-old Mr Byrne, who was only appointed chief executive last November, after joining Airtours in 1993 from Granada. The shares have suffered a vertiginous fall as overseas acquisitions in Germany and Scandinavia went pear–shaped last year.

Despite the flurry of profits warnings, Mr Byrne's profile has remained close to zero. The limelight is still dominated by the Airtours founder and executive chairman David Crossland. Doesn't this get on his nerves? "Not at all," he says. "Listen, he built-up a company that was worth £2bn at one point. But this is a young man's business. You don't see many old tour operators because it is so exhausting. David [now 55] will some day want to move on and he needs someone to run this business."

The answer seems typical of Mr Byrne, who is young, forthright and not lacking in self-confidence. He speaks quickly and at length, occasionally running a hand through his generously proportioned hairstyle, which could be described as a "1980's flick".

Mr Crossland spends his time examining new opportunities overseas and negotiating with governments, while as chief executive Mr Byrne runs the business day to day. He denies that as executive chairman, the workaholic Mr Crossland still calls the shots. "He has to have the ability to have the last word ... but he hasn't done that so far."

But it must surely be a nightmare to work with an "owner-driver" entrepreneur such as Mr Crossland, who founded the company nearly 30 years ago, who still controls 10 per cent of the shares and is known for rising at 4am to start his day's work. Mr Byrne says not. "I am the complete opposite. I hate getting up early but I can work through the night. And I live just 17 miles from the office. He [Mr Crossland] lives in Jersey so he's got a slightly longer commute."

Mr Byrne works hard but ensures he makes time for family life with his wife and three daughters.

Mr Byrne is suited to battling it out. Born in Ellesmere Port on the Wirral, he had a relatively humble upbringing. His father was self-employed working as a electrician, as well as having newsagents and an oil distribution business. "My parents always worked hard, they were very rarely at home. So you grow up quite independently. If you wanted something you got it yourself. That's probably been the driving force for me and helped me get where I am.

"I went to a comprehensive school, which was mediocre at best. I wanted to do medicine but my A-levels weren't good enough. I went to do chemistry but didn't like it and them someone suggested I go into accountancy."

Mr Byrne joined a small firm, which he found fascinating as it brought him close to the clients and how they made their money.

His rise to the top of Airtours has been rapid after becoming finance director in 1997 at the ripe old age of 37. His aims now are to steady the controls at Airtours and take it skyward once more.

"My aim is to get it in the FTSE 100," he says, which given Airtours current valuation of £750m implies a near quadrupling of the share price. There are three prongs to the recovery plan. First, to get margins back to £20 per passenger. "We've got 13 million passengers so that gives profits of £260m," he says, against analysts forecasts of £146m for the year to September. Second, to drive group savings and synergies through things such as centralised buying. Third, to look for acquisitions though they are unlikely to be in Europe. "There's nothing left to buy unless you want scraps," he adds. "But there are loads of opportunities in America and we'd like to buy something in Canada."

Tim Byrne checks in

Position: chief executive, Airtours

Age: 41

Salary: £450,000 (plus bonuses)

Biggest personal influence: "It has to be my wife. I stay in hotels all the time and she reminds me of the real world, that if you put your shoes out on the landing at home, they don't get polished."

Biggest business influence: "Lots of different people. David Crossland for optimism, David Plowright [ex- Granada Television boss] for his cool and vision."