I feel your pain, says BA boss giving up a month's pay (£61k)
Saturday 23 May 2009
When Willie Walsh, the ruthless boss of British Airways, decides that he needs to make a self-sacrificing gesture, the rest of his staff know it is time to fasten their safety belts and grab the sick bags. There is turbulence ahead for the world's favourite airline.
Yesterday, BA reported a loss of £401m in 2008-09, the worst figures since the airline was privatised under Margaret Thatcher more than two decades ago.
That means more redundancies for BA staff, who have only just come out of their previous round of job cuts, which has reduced the payroll from 43,100 to 40,600 since last summer. They are also urged to take unpaid leave. "I want everyone to consider these options," Mr Walsh said ominously.
But an obvious question was what about Mr Walsh? Was he prepared to share some of his employees' pain?
Yesterday, he had a ready answer. He is already self-denying by British boardroom standards. He refuses to drive an expensive car or employ a secretary. He writes his own letters and answers his phone. He is going further – he will work for nothing throughout July. Instead of his full salary of £735,000 this year, he will do without the £61,250 of his July pay cheque, and get by on just £673,750. Finance director Keith Williams will make a similar sacrifice, losing £36,667 from his £440,000 salary.
"Personally, I do not want extra leave or to work part-time," he explained. "But I want to make a contribution in recognition of the extremely challenging position we face. This is no stunt. I do not easily give up anything I have earned."
The losses announced yesterday resulted principally from a 44.5 per cent rise in the world price of oil last year – BA's fuel bill was nearly £3bn. But with the recession reducing passenger numbers and holding down ticket prices, BA's future looked so cloudy yesterday that analysts wondered whether a planned merger with Iberia airlines was still on. BA shares have lost 23 per cent in 12 months. When Mr Walsh called it "the harshest trading environment we have faced", he did not sound like a man on the verge of pulling off a major deal.
The last time BA was in real trouble, along with most of the other major airlines, was when the September 11 terror attacks put Americans off flying. In the year that followed, BA recorded a loss of £200m. At the time, Mr Walsh had just taken over as chief executive of the Irish airline Aer Lingus, having started as a cadet pilot. As the business went into a nosedive, he turned Aer Lingus into a profitable no-frills airline. He eliminated 2,000 jobs, reduced the number of aircraft, sold assets, and cut costs by 30 per cent. He even took the pictures off the walls and sold them.
The unions tried to block the redundancies, so he locked the staff out for three days. He knew about unions, because in his younger days he was chief negotiator for the Irish Airline Pilots' Association. It was then that he is alleged to have said that "a reasonable man gets nowhere in negotiations".
His willingness to be unreasonable undoubtedly made him attractive to BA's board, which had been plagued by bad industrial relations. At the height of the summer season in 2005, 70,000 passengers were prevented from flying after staff walked out in protest against the sacking of 600 employees by catering firm, Gate Gourmet.
There have been no strikes at BA since Willie Walsh was appointed chief executive in October 2005. Instead, profits hit a record peak of £922m in 2007-08. But this has been followed by a year of record losses and Mr Walsh will not be the only person at BA seeing his income make a rapid descent.
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