12 JULY 2010

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Article from BTNews 12 JULY 2010

COMMENT: Willie Walsh at the Aviation Club

As he addressed members and guests of the Aviation Club at London’s Institute of Directors last week British Airways Chief Executive Willie Walsh seemingly concentrated on the fast coming together with Iberia to launch the International Aviation Group (IAG) at the end of the year.  It was IAG this and IAG that.  Mr Walsh was in sparkling form.

Asked by AERBT where the airline stood with regard to his much trumpeted emphasis on the four-runway Madrid Airport he made it clear that brand British Airways could easily expand at that airport.  

“BA would grow in future at Madrid rather than Heathrow if the UK failed to build the infrastructure needed to cope with rising demand for air transport,” he said.  He clearly still sees London as the powerhouse of the UK’s and Europe’s economy but strongly warns: “We can compete effectively for a few years, maybe ten years but 20 years from now the UK is going to be bypassed because we won’t have the infrastructure to support the demand that exists.”  He also flagged competitors and aspirants.  “British Airways will be ready to buy or merge with other airlines around the world from next year,” he emphasised.

“The ambition is truly global,” he noted once again highlighting IAG where his role will be as Chief Executive (to be replaced at BA by Keith Williams, currently BA's Chief Financial Officer).  “The intention is to be in a position to avail of opportunities if they present themselves, certainly within the first year of operation.”

It was a fascinating presentation which slowly came to the boil.  On a very hot day it was all economy seating, 11 to a table, with the guests including VJ Mallya of new oneworld member Kingfisher, the retiring Chief Executive of Rolls-Royce Sir John Rose, Sir Roger Bone of Boeing, Alex Cruz, Chief Executive of Vueling, and Patrick Shovelton, the man who negotiated the original Bermuda 2 North Atlantic airline agreement in 1977, whom, as he put it “is still not liked by Americans.”  The former civil servant is now 91 but as sharp as ever.  After rambling on a little his question was probably the best of the lunch.  “In view of problems with the share price what was BA’s views on a possible takeover bid from a Middle East investor.”  Willie was dismissive.

Mr Walsh started his speech with IAG, noting that it would have a combined fleet of over 400 aircraft and fly daily something in the order of 160,000 passengers to 200 destinations.  If the partnership with American Airlines goes ahead, and here he mentioned the existing approved anti-trust agreements concerning Air France and Delta, and Lufthansa and its US Star Alliance members, his comment was robust.   “For them to remain the only immunised alliances across the Atlantic would not be in the consumer interest.”  He would be very surprised if the AA tie-up was not approved.

No speech at this time could be without a mention of the BA cabin crew dispute.  It was not the core subject of the presentation and Mr Walsh was clearly focussing on the future, the present a (probably annoying) diversion.  “I am pleased that Unite is putting our latest offer to its members in a postal ballot,” he said.

In the time allocated it was impossible for Mr Walsh to cover all current air transport topics let alone gaze into the future.  He did mention the forthcoming massive hike in departure taxes, possible whole plane charges and the European emissions trading scheme, which are all irrevocably linked.  AERBT would like to see BA, on behalf of the whole airline industry, seek for a postponement of the November increase until this whole question can be properly sorted out.

The speech and question and answer session that followed ran for nearly 50 minutes, easily a record for the club.  Virtually nobody departed during the dialogue. 

Mr Walsh acknowledged during his discourse the statement last month by the new Transport Secretary Philip Hammond in which he recognized the UK aviation industry’s contribution, both to the national economy and people’s lives.  One would hope that Mr Hammond will be a guest of the Aviation Cub in the not too distant future.  Maybe Willie will be an attendee at that time.  What an ideal opportunity to ask a few really good questions!

Malcolm Ginsberg

Editor in Chief

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