US deal could let BA chief Walsh go early on high note

WILLIE WALSH wants to retire at 55 and, a month after turning 48, he says that is still the plan.

It seems an absurd notion for British Airways’ driven chief executive, especially given the merger with Spain’s Iberia that he announced just over a week ago.

But sitting in his office in BA’s Waterside headquarters near Heathrow, Mr Walsh insisted 55 was still the deadline. “At some point, I think I’ll have done enough. And maybe 55 is a good time.”

Maybe. This is a man who says he has not had a holiday since the beginning of 2005. The weekend before last was the first he had taken off in “a couple of months”.

What he clearly does like is work, which is just as well. It has been four years since Mr Walsh formally replaced Sir Rod Eddington (who happened to be 55) at BA and the list of what the Irish former pilot has been through since then is exhausting.

The list includes: record profits in 2008 of £922 million (€1.02 billion), record losses in 2009 (£401 million); bomb plots; price fixing fines; the awful Terminal 5 opening; the row over the ban on staff wearing a crucifix; the row over plugging the hole in the airline’s pension schemes; job cuts; pay cuts; working for no pay at all; and always, it seems, the threat of a strike hovering in the background.

The Iberia deal has the potential to be one of the biggest achievements yet for Mr Walsh, creating Europe’s third-biggest airline group behind Lufthansa and Air France-KLM, with 419 aircraft flying to 205 cities and eventually, it is claimed, annual savings of €400 million.

Mr Walsh will be chief executive of the Spanish parent holding company, TopCo, in which BA investors will initially have 55 per cent to Iberia’s 45 per cent.

The deal, which is not due to be completed until late next year, will see the two airlines run from their existing home bases by a British and Spanish operating company, each with its own chief executive – Keith Williams, BA’s chief financial officer in London, and Rafael Sanchez-Lozano, Iberia’s existing chief executive, in Madrid.

The structure is modelled closely on the Air France-KLM merger, and Mr Walsh and Mr Williams say it creates a template for possible future tie-ups with other airlines around the world.

Mr Williams has mentioned American Airlines, although current foreign ownership rules make that more of a long-term aim.

Mr Walsh says the structure would also allow BA to look again at Qantas. BA ditched talks with it last year after the sides failed to agree terms. One of Mr Walsh’s biggest headaches may be the BA pension scheme deficit recovery plan, due to be finalised by the end of June. If Iberia does not like it, it has the right to sink the merger.

He is confident an agreement will be reached. But he has also been confident on getting a positive result on the other big matter in his in-tray – a decision from the US department of transportation, which is weighing anti-trust approval for BA, Iberia and American Airlines to deepen their existing alliance. A decision due by October 31st has not materialised.

If Mr Walsh pulls that deal off, he could retire well before 55 knowing he has achieved as much as any workaholic could hope. – (Copyright The Financial Times Limited 2009)