Outlook: Ayling fights to pull BA's shares out of tailspin

BRITISH AIRWAYS' share price is suffering from the same problem as its giant ferris wheel on London's South Bank. As Richard Branson pointed out yesterday with characteristic cheak, Bob Ayling just cannot get it up. In the space of the last five months BA's shares have gone into such a tailspin that the chairman of Virgin Atlantic is thinking of resurrecting plans to acquire a minority stake in his arch rival.

This would be a magnicent publicity coup, albeit an expensive one, but it couldn't seriously be viewed as much else. Mr Branson would find it impossible to gain regulatory clearance for a stake large enough to exert any influence. So if the chairman of Virgin can see value in BA, even in its current state of de-tumescence, then perhaps others should too.

The impending sale of a minority stake in British Midland to one of three suitors will crystallise the value of all those precious take-off and landing slots at Heathow. BA has almost three times the number of slots as BM. Furthermore, BA's continental rivals in the shape of KLM, Swissair and Lufthansa have started to follow its example by reducing transatlantic capacity in the hope of eventually improving revenue per passenger.

Unfortunately, time is a commodity that is increasingly in short supply as far as the chief executive of BA is concerned. Since Mr Ayling took the controls, BA's shares have remained grounded nothwithstanding the pounds 1bn of efficiency gains Mr Ayling says the airline has reaped in the last three years.

Next week BA will publish another grim set of monthly traffic figures and if the half-year results are as bad as the City fears, then the heat will be turned up further under Mr Ayling. BA's ferris wheel will presumably be in place by the millennium, but will its chief executive?

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