BA’s CEO, Willie Walsh, says post-election indecision will block building of any new south east runway
Willie Walsh, CEO of IAG, the parent company of British Airways, has again said that there will not be a new south east runway. He has often said this before, but this time he sees the likelihood of political indecision after the election as an additional issue. Willie Walsh thinks that to build a runway, there would need to be “political consensus across all the parties – not just coalition partners.” He also warned that the cost of each of the 3 runway proposals would all be prohibitive. The expense would lead to higher landing costs, and airlines would not find that acceptable. Willie Walsh reiterated his view that there was “no business case” for a 2nd Gatwick runway, with not enough demand from airlines for it. He has said in the past that Gatwick does not have the same international attraction as Heathrow. He commented that Heathrow was already “the most expensive airport around.” The runway decision would be a political one, and with a coalition government looking to be inevitable, there would be huge political difficulties in pushing through an unpopular runway, with dubious benefits even to the airlines.
Post-election indecision will halt airport expansion in south-east, says BA boss
Willie Walsh also warns cost of three competing runway schemes at Heathrow and Gatwick are a political barrier
By Gwyn Topham (Transport correspondent)
Post-election indecision will scupper the building of any more runways in the south-east, according to British Airways boss Willie Walsh, despite pledges from the main parties to respond to the Airports Commission’s verdict on expanding Gatwick or Heathrow.
Walsh, who is chief executive of BA’s parent company IAG, said there needed to be “political consensus across all the parties – not just coalition partners – before you can have any confidence that anything will come about. I don’t see any evidence of change in the outlook.”
He also warned that the cost of the three competing runway schemes – two Heathrow options or Gatwick – would be prohibitive: “The politics of this will be the main stumbling block – not the only one, because the cost of all three options are excessive and would translate into an unacceptable increase in charges at the airports.”
Walsh reiterated his stance that there was “no business case” for Gatwick expansion, but said Heathrow would also need to review its proposals. “Heathrow is the most expensive airport around and increasing costs here would be unacceptable to us, so I think they’re going to have to sharpen their pencil and come up with a way to make it more cost-effective.”
Walsh declined to endorse a party ahead of the election, but said he did not think the Conservatives were good for business or that the prospect of a Labour-led coalition would affect his company’s economic fortunes. He said: “I’ve been very open in my criticism of all politicians. I don’t take the view that Conservatives are good for business and therefore Labour are bad. We’ve looked at the election and in the totality it’s not going to impact on IAG.”
He said devolving decisions on air passenger duty to Scotland and potentially seeing the tax cut should the SNP hold power would benefit BA but would damage airports in the north of England. “If you devolved APD the Scottish economy would benefit but at the expense of the north of England.”
Walsh was speaking as the airline group revealed it had for the first time made a profit for the first quarter of the year – traditionally a difficult trading period for European aviation. [First announced last year].
The group made an operating profit of €25m, compared with a loss of €150m in the same period in 2014. Revenue rose 12% to €4.7bn. BA drove much of the increase but Walsh said sister airline Iberia’s performance was particularly pleasing, with the standing of the brand and customer satisfaction having improved as well as revenue growing and costs being cut.
Walsh defended his own 30% pay rise to £6.4m, revealed last month. “I’ve seen my pay increase largely as a result of the increase in the share price … my base salary has remained the same. The benefit I see is one that all of the shareholders see.”
Regarding IAG’s ongoing bid to buy Aer Lingus, Walsh said “constructive” discussions were continuing with the Irish government over its stake. “We’re hoping they will be able to make a decision in relation to their shares in the next couple of weeks … we’re relatively calm about the timing.”
Willie Walsh says there is no business case for a 2nd Gatwick runway – BA has Gatwick’s 2nd largest number of passengers
Willie Walsh, the head of IAG, will not support a 2nd Gatwick runway, even if it is chosen by the Airports Commission or backed by the next government. He does not believe there is a business case to support its expansion, and there is insufficient demand from airlines for extra capacity at Gatwick. Mr Walsh campaigned heavily for a 3rd Heathrow runway before 2010, but has made frequent comments indicating he does not believe UK politicians will have the “courage” to build that. Willie Walsh says British Airways would resist higher landing charges, which would be necessary to fund a runway – either at Heathrow or Gatwick. (EasyJet has also said in the past they don’t want a new runway, if it means substantially higher charges – their model is low cost). BA would want lower costs, not higher costs, from a new runway. IAG’s shares have now risen as it has now made a profit at last, and will be paying its first dividend (and maybe some UK tax). Gatwick’s main airline is EasyJet with around 37% of passengers, and British Airways 2nd largest at around 14%.
Willie Walsh still wants 3rd runway – but “Heathrow is always going to be a 2-runway airport”
Interview in the Independent on Sunday with Willie Walsh. He wants a 3rd Heathrow runway, though he unwillingly accepts it will not happen. He says he stopped campaigning when “the Conservatives said they were not going to support it.” … “I accept it…. I’ve not done anything since.” Now, he says, there is “not sufficient political will – it’s seen as too risky to support a 3rd Heathrow runway. Even Labour, which did back the idea when in government, has changed. “Ed Miliband was the only member of the Labour Cabinet against the 3rd runway. Now he’s the leader”…. “It’s highly unlikely we will see a 3rd runway. Heathrow is always going to be a 2-runway airport.” We can, Walsh says, dismiss Boris Island for a start. “There’s no support for Boris island other than from Boris.” As for Sir Howard, it does not matter what he concludes, because “whatever he does will be handed over to politicians, none of whom are bound by his recommendations”. So with no new runways we just reach south east airport capacity and UK aviation stops growing? Yes, says Walsh.
Willie Walsh of BA: Heathrow expansion is a ‘lost cause’
Willie Walsh, chief executive of BA owner, IAG, has said again that there will not be a 3rd Heathrow runway, as it is too controversial. He says UK politicians “lack the character” to get it built. “Historically, politicians have not been brave enough and I don’t think they will be brave enough going forward. You need a big shift in the politics of the country,” he said. However, Walsh warned a Conservative or Labour-led government against choosing Gatwick for an extra runway, adding that the case for growing the capital’s second-largest airport is “significantly weaker.” Gatwick did not have the same international attraction. He said: “You won’t find many airlines that say ‘God I’d love to be able to fly to Gatwick’. That’s why this isn’t a business issue, an economic argument. It’s a political argument and the politics of expanding Heathrow are significantly more difficult than the politics of expanding Gatwick.”
Willie Walsh tells AOA that a Heathrow 3rd runway will never be built – it is too politically difficult
Willie Walsh has said – at the Airport Operators Association in London – that a 3rd runway at Heathrow will “never” be built – as he claims politicians will always put their election campaigns over national interests. He said nimbyism will stop politicians from doing anything with the findings of Sir Howard Davies’s Airports Commission – and a new Heathrow runway is just politically too difficult.” He claims, rather bitterly, that “This is politics with a small ‘p’. The national interest gets lost as the individual politicians look to understand how this will impact on them getting elected.” Perhaps he is also considering self interest. Sir Howard Davies, also speaking at the AOA conference, said of the airport capacity/new runway decision: “Realistically this is the sort of decision that gets made early in a Parliament if it gets made at all,” as it is too contentious to be dealt with by politicians in the run-up to an election. The Airports Commission know any new runway would take “a decade or more to come into effect” and the process will likely be delayed by legal challenges. The commission already faces the threat of a judicial review after campaign group, Stop Stansted Expansion, initiated legal proceedings earlier this month.
Willie Walsh tells Transport Committee there is no business case for a Gatwick 2nd runway
IAG is to pay its first ever dividend and British Airways is due to return to profit
The parent group that owns British Airways, IAG, have said that they are now making profits and will give their first dividend, probably in November. This is their first dividend since they were created in 2011 through the merger of British Airways and Spain’s Iberia. IAG has also bought bmi and Spanish budget carrier Vueling since its formation. Analysts believe shareholders will receive their first payment at the end of IAG’s 2015 financial year at the latest, as the controversial turnaround at Iberia, which required the loss of some 4,500 jobs and sparked strikes and political outcry in Spain, has stemmed the losses. IAG posted a €96m pre-tax profit for the six months to June 30 this year, up from a €503m loss at the same time in 2013. IAG says it is on track to improve operating profit this year by “at least” €500m, from €770m in 2013. British Airways’ CEO, Willie Walsh said in August that BA had now returned to profit for the first time since 2007, the start of the financial crisis. BA has barely paid any UK corporation tax for years – it may pay round £61 million for the 2013 financial year.