Steady as she goes into the storm
Profile: Colin Marshall; The chairman of British Airways is sanguine about the turbulence ahead. His attitude leaves Paul Rodgers puzzled
At first glance, BA seems in excellent shape. Since Lord King and Sir Colin, then chairman and chief executive respectively, piloted it through privatisation in 1987 it has become the leader in the race to establish a global network of alliances. It has also maintained a relatively robust profit-and-loss account, even during the recession of the early 1990s. Sir Colin's weather eye should now be fixed on the turbulence approaching along three fronts: the fight to get a fifth terminal at Heathrow, the long-term health of some of his overseas investments and the battle with Virgin Atlantic in a US courtroom.
But he is sanguine about this rough air ahead. The evidence the company plans to present to a hearing later this month on Terminal Five will break little if any new ground. He describes USAir, in which BA has a 25 per cent stake, as something of a success story for turning in a small interim profit after losing $3bn (pounds 1.9bn) since 1988. Asked about BA's famous dirty tricks campaign against Virgin, he is dismissive. Richard Branson's airline is only a minor competitor, it settled its UK actions against BA out of court last spring, and a US judge has thrown out all the allegations it brought before her relating to sharp practice.
Yet somehow, not all his arguments are convincing. While a new terminal at Heathrow would relieve congestion, it would also boost demands from competitors, especially American ones, for more slots at the airport, something BA opposes. And in the short term, the airline is bent on adding to the problem by replacing smaller planes with new Boeing 777s that will bring thousands of extra passengers a day.
There are doubts, too, about the foreign investments. USAir made $16m in the first six months, cut $400m in costs and brought $100m in new business to BA. "If it's a dog, it's a very lively one," says Sir Colin. But it is far from a contender at Crufts. Most of its business is short-haul, where costs per mile are high and margins slim. Furthermore, Sir Colin admits its need to reduce labour costs will likely be put off until its existing labour contracts expire. Most telling, perhaps, is his assertion that BA "will not contemplate any further investment until we're assured of the ongoing viability of the company".
The Virgin situation is similarly perplexing. Sir Colin is right in saying that Judge J Cedarbaum, ruling on BA's motion to dismiss Virgin's case in New York, threw out the common-law complaints, and two others relating to its deal with USAir. But the three main allegations are to go to trial. All three are anti-trust cases, far more serious than common-law complaints. Nor do they skirt the dirty tricks issue. In dismissing the others, Judge Cedarbaum noted that they are "based on the same facts as those alleged in its federal anti-trust claims". And while BA trumpets the UK settlement, Virgin counters that it was merely a tactical move to clear the way for the more important US case, where Mr Branson is claiming a staggering $325m.
Meeting a man like Sir Colin one expects to see an experienced captain of industry. In this, he disappoints. He is more round than angular, and often wears an unconsciously comic expression. But the eyes betray the steely will and determination that has taken him to the top. He seems confident even when being badgered about the dirty tricks campaign.
Friends and critics alike admire him for his attention to detail. Little of the airline's operations are unfamiliar to him. Weighty documents that other executives would pass on, unread, to underlings are carefully examined.
Sir Colin's hands-on approach is in sharp contrast to that of Lord King, who rarely used his office at BA's Heathrow headquarters. When Sir Colin took over in 1993, he did not bother to shift his gear across the hall, using Lord King's old room to meet visitors. The suite is decorated with the usual model jets as well as a collection of paintings of camouflaged Spitfires and Hurricanes. They are a reminder, perhaps, of his wartime boyhood in Edgware. "On my way to and from school I used to watch aerial dogfights," he recalls.
During the war, his father was with the fire service. Afterwards, he worked as a clerk with Daimler Hire, a car rental company, rising to be managing director. His son was later to follow a similar path.
His life story really begins at 17, when he left University College School at Hampstead - which he had attended on a scholarship - to go to sea. The tours of duty as a purser were long, and when he decided to marry shipmate Janet Cracknell it was time to move to a new career ashore.
Both he and his wife had taken a shine to America, so he jumped at a proffered management trainee spot in Chicago with Hertz, the car rental firm. His rise was rapid. He was posted north to Toronto briefly, then south to oversee expansion of the company's 90-car Mexican fleet. There his only daughter Joanna was delivered. At that time, in the early 1960s, his mentor was heir apparent to the Hertz presidency, and Marshall was invited back to the US to be his aide. But a palace coup upset those plans, and after a period of cooling his heels, he was sent to sort out the company's UK operations.
His next career move came four years later.He was head-hunted by Avis, the number two car rental company, which wanted him to run its European division. He was recalled to the US in 1971 to be chief operating officer, and rose to his first stint as a chief executive.
In 1979, his world was turned upside down when Norton Simon, a conglomerate, made a hostile bid for Avis. Marshall fought the offerbefore selling out. He was kept on at Norton for 18 months. It was a mistake. "It was probably the only job I've done that I didn't enjoy," he says. He moved to the board of Sears, the UK mini-conglomerate, and was quickly made deputy chairman and later chairman.
His move to BA in 1983 and subsequent rise, including his knighthood in 1987, is well-documented, although for most of the last 12 years he stood behind the throne while Lord King was the public face of the company. But Sir Colin's role was as important at King's. One of his first decisions was a reorganisation that saw 70 senior managers leave. The airline's adoption of a free-market mentality long before it was floated in 1987 is largely due to his commitment to customer service.
A year later, he and Lord King masterminded the takeover of British Caledonian, now BA's charter arm. He was also an early proponent of the globalisation of airlines, the now widely held belief that only a few mega-carriers will survive. Thanks largely to Sir Colin, BA is almost certain to be one of them. Its current network of alliances lacks only a partner on the lucrative Northern Pacific routes.
Considering his breadth of experience, and the vision with which he has approached challenges in the past, Sir Colin's casual attitude to current problems is puzzling. "All we can do is go on doing what we have done - giving as good a service as we can," he says. One suspects, and hopes, there is more up his sleeve than he is ready to reveal.
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