BA shares up 2.25% as Walsh takes helm

FORMER Aer Lingus boss Willie Walsh has landed the €850,000-a-year job as chief executive of British Airways.

Mr Walsh, who quit Aer Lingus in January over the failure of the Government to make a swift decision on investment and ownership, will take over from Rod Eddington in September.

It had been rumoured that Mr Walsh and the other two executives who left with him - Brian Dunne and Séamus Kearney - were planning to set up their own lost-cost airline. It is not known if they will join Mr Walsh at BA.

BA chairman Martin Broughton said: “Willie has an outstanding reputation in the airline industry around the world for the way in which he transformed the fortunes of Aer Lingus from a high-cost underperforming carrier into a successful and profitable entity.”

Mr Walsh, 43, became chief executive of Aer Lingus in late 2001 as it was on the brink of bankruptcy. Following restructuring, which has seen nearly 4,000 jobs go, its finances have never looked better and it made profits of about €100 million in 2004.

Last year, he mooted a management buyout of Aer Lingus along with Mr Dunne and Mr Kearney. They dropped the MBO proposal, but were criticised by Taoiseach Bertie Ahern, who accused the trio of trying to “make themselves extremely rich.”

Though highly regarded in the aviation industry, Mr Walsh’s appointment came as a surprise. A number of internal and external candidates had been considered the front-runners for the job.

The markets reacted favourable to news, sending British Airways shares up 2.25% to 251p on the London Stock Exchange.

Mr Walsh will have plenty of work on his desk when he takes over. BA is struggling to compete in Europe against low-fares carriers and has been forced to restructure its business. Some 13,000 jobs have gone under Mr Eddington and more are in the pipeline. The airline employs about 50,000 people, but it is regarded as an inefficient dinosaur by many commentators.

“He was one of the strongest candidates out there,” said BNP Paribas analyst Nick Van den Brul. “He was responsible for the turnaround of Aer Lingus and quite a lot of that was actually streamlining and cost-cutting the organisation. Someone with that experience is going to fit in (at BA), because there’s a lot more to do.”

British Airways’ position as the “world’s favourite airline” has fallen in recent years. The merger of Air France and KLM has seen it lose its position as Europe’s largest airline in terms of passengers carried and Ryanair will this year overtake it as the second-largest.

In a statement, Mr Walsh said: “This is an outstanding opportunity to be at the helm of what many people see as the best airline in the world and I’m very excited at the prospect of joining the team.”

Ryanair boss Michael O’Leary said: “Aer Lingus’ loss is BA’s gain.”

Aer Lingus said it was also delighted with his appointment.

A spokeswoman said he had made a significant contribution to the turnaround in the airline’s fortunes.