BA starts search for potential successor to CEO Walsh

By James Daley
Sunday 23 October 2011 02:01

British Airways has appointed the recruitment consultants Whitehead Mann to find a new chief operating officer and possible successor for its embattled chief executive Willie Walsh.

The successful candidate will a fill a newly created role, which was devised after the recent Heathrow Terminal 5 fiasco. Both BA's director of operations, Gareth Kirkwood, and head of customer service, David Noyes, parted company with the group last month. The two roles will now be combined to create the position of chief operating officer.

The airline, which will publish its full-year results on Monday, is believed to have instructed Whitehead Mann to find a senior level candidate who could be considered for a position on the board within two years, and could also be a potential replacement for Mr Walsh within five years.

Mr Walsh may well not make it through another five years in the job, however. Both he and his board colleagues have come under fire over the past few weeks, over their handling of BA's switch-over to Terminal 5 at Heathrow. Having failed to adequately train their staff and test the new facilities, thousands of customers found their flights cancelled or delayed when the terminal opened at the end of March. The airline also managed to lose some 20,000 pieces of luggage.

The management is expected to come under more pressure this week when it further updates the market on the effects of the Terminal 5 debacle, as well as the extent of the financial damage caused by the rising oil prices. Although last year, the company committed to putting a dividend policy in place by the end of March 2008, Mr Walsh is expected to confirm on Friday that there will be no dividend for 2007. The airline has not paid a dividend since the 11 September terrorist attacks in 2001.

Last week, the group revealed that its passenger numbers had fallen 7.9 per cent in the previous month – its worst April for five years. The group was forced to cancel 430 flights as a result of the Terminal 5 episode.

Investors are also bracing themselves for more bad news regarding the group's future earnings guidance, with some analysts expecting the airline to issue its second profits warning of the year.

The price of crude oil is now more than $125 a barrel, having doubled over the past year. BA has said that it loses £18m in profits for every $1 increase in the price of a barrel of oil. Some analysts predict the price could go as high as $200 a barrel over the next few years.

Although the airline has put up its fuel surcharges over the past fortnight, in an attempt to try to recoup some lost revenue, it is now in increasing danger of seeing passenger numbers drop further, as the UK and US economies slow.

A spokesman for BA confirmed yesterday that the hunt for a new chief operating officer was under way. He said: "The process of appointing a chief operating officer is ongoing and we are using a variety of ways to find the best candidate. We are looking for a person who has a wide range of operational experience and customer service knowledge.

"They must be at a very senior level already within their organisation and have proven leadership skills. The person will rep-ort directly to Willie Walsh and have in excess of 20,000 people in their department."

Shares in British Airways have fallen sharply in recent months, halving since this time last year. The stock closed at 228.25p on Friday, having lost another 4 per cent that day. The company now has a market value of £2.63bn.

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