BA chief in gamble over recession-busting deal (News Feature)

By Anna Tomforde Jul 1, 2009, 15:20 GMT

   London - One of BA's more eye-catching PR-photos shows Willie Walsh, the 47-year-old chief executive of the British airline, reclining on a comfortable airbed in the top-range business class.

   Much promoted by him as the luxury alternative for high-paying travellers amid growing competition for the mass market from budget airlines, Walsh said he was convinced that exclusive air travel is the right way forward.

   But the recession put paid to that vision. BA result for 2008 showed that - along with spiralling fuel costs and a weak British pound - a 13-per cent decline in business class passengers conspired to plunge the airline into the red for the first time since it was privatized in 1987.

   Walsh, an Irishmen who arrived at BA in 2005 after performing a major streamlining effort at ailing Irish carrier Aer Lingus, still believes that luxury travel will prove to be a lucrative earner again in the future.

   But, in order to realize his ambition to return BA to profitability, Walsh has defined the current recession as one which is 'game-changing' for the airline industry.

   BA, he says, is in a fight for survival, and with no sign of a recovery in the near future, only a total overhaul of pay and employment conditions can save it.

   'You can't argue with figures like these,' said the chief executive in a comment on the 2008 losses. 'I'm 30 years in this business and I've never seen anything like this. This is by far the biggest crisis the industry has ever faced.'

   In his four years at the helm, Walsh has left his mark on BA, cutting 2,500 job since last summer while planning at least 3,000 more redundancies in moves earning him the nickname 'Slasher Walsh.'

   His predecessor, Rod Eddington, had cut 13,000 jobs in three years.

   In the latest round of negotiations currently under way, Walsh intends to commit thousands of cabin staff to a two-year pay freeze while getting unions to agree to more redundancies.

   A separate deal has been struck with the airline's 3,200 pilots who have accepted a pay cut in return for a promise that they will be offered shares from 2011.

   Walsh has sought to enlist the direct support of BA's 40,000 staff in his 'sharing the pain scheme,' urging them to follow his example and work for free in July.

   In a move condemned as 'gesture politics' by his critics, and hailed as 'clever' by his backers, Walsh has handed back his monthly pay cheque of 61,000 pounds (100,000 dollars) - an amount many of his employees don't earn in a whole year.

   'Willie Walsh can afford to work for a month free, but our members can't,' said a spokesman for the Unite trade union. Most of the staff would find it difficult to take the request seriously.

   However, the appeal was taken up by some 800 employees, while thousands more said they would take unpaid leave or work part-time to help the cost-saving effort.

   The Guardian newspaper commented that, in principle, there was nothing wrong with the philosophy that all should share the pain to make things better.

   The paper compared the tactics to Lenin's 1920 call to give a day's labour free, but added that, unlike for the workers of the Soviet Union, there was no promise of utopia for the staff of BA in the battle with their mighty boss.