(Repeats story published on Sunday, with no changes)
* Walsh made his name wielding axe at former state-owned
carriers
* Says will continue to cut costs and look at M&A
opportunities
* Graphic on passenger numbers, revenue: reut.rs/1UUavj3
By Sarah Young and Victoria Bryan
LONDON, Jan 31 Once dubbed “Slasher Walsh” for
his relentless drive to cut costs, the boss of British
Airways-owner IAG is showing no sign of going soft.
Willie Walsh has built his reputation on his refusal to give
ground to unions and a willingness to wield the axe at former
state-owned airlines, convinced it’s the only way to stay
competitive in an era when budget carriers increasingly rule the
roost.
It is a testament to his success that while IAG lags
Lufthansa and Ryanair in terms of passenger
numbers, it is expected to report more operating profit for 2015
than those carriers or any other European rival.
Sporting a close-cropped haircut as he spoke to industry
delegates at a conference in January, ahead of the five-year
anniversary of the formation of IAG, he said there would be no
let-up in his mission.
“Hence the reason for my haircut – that’s the theme for
2016, it’s all going to be about cutting costs,” said the
Irishman, who encourages a focus on financial results by telling
staff “show me the money”.
Walsh’s strategy over the past 15 years has also been marked
by an aggressive M&A policy as he sought to prevail in what he
once described as a “fight for survival”.
As CEO of British Airways (BA), he lined up a merger with
Spanish carrier Iberia in 2011 to create IAG, which in turn
snapped up Britain’s BMI, Spain’s Vueling and Ireland’s Aer
Lingus.
Once again, the 54-year-old signalled there would be no
retreating from this strategy for IAG, even should he follow
through on his once-stated plan to retire at 55.
“There’s lots more deals for IAG to do, but whether I do
them or someone else … It doesn’t matter when I go or if I go,
there’ll be someone there to replace me,” Walsh added on the
sidelines of a conference in Dublin this month.
‘ZERO TIME FOR TITLES’
A pilot from the age of 17, he rose to become CEO of Aer
Lingus in 2001, taking over just when the 9/11 attacks crippled
global travel demand. It was there he formed the template for
his strategy, when he had a front-row seat to the rapid
expansion of budget airline Ryanair as its neighbour at Dublin
Airport.
He soon earned the Slasher Walsh nickname for the job cuts
he made at the Irish carrier before he was hired to become boss
at BA in 2005 where his skills were put to the test when the
global financial crisis also dampened demand for travel.
He cut BA staff and froze pay, despite 18 months of bitter
industrial dispute, and after the 2011 merger with Iberia, he
embarked on a similar battle at the loss-making Spanish carrier.
“I was really sceptical how that was going to work out with
the (Iberia) unions, and he got that all through,” said one
top-30 shareholder in IAG, who declined to be named.
When Iberia workers went on strike in Madrid, waving flags
saying “British Go Home”, a bullish Walsh declared he would see
off the protests, telling the media: “I’ve done it before and
I’ll do it again.”
“This is an all too rare example of an airline management
team setting a clear path and sticking to it, in the face of
strong opposition from unions,” said Jonathan Wober, the CAPA
Centre for Aviation’s chief financial analyst.
While he can be tough Walsh is also pragmatic, said Jack
O’Connor, president of Aer Lingus’s largest union, SIPTU.
“Like most employers I’d say he’d prefer not to deal with us
but he’s not ideologically opposed to making deals with trade
unions … That’s not to say that he’s easy to deal with,” he
said.
Walsh showed similar single-mindedness during the Icelandic
ash cloud crisis in 2010, when he ordered full Britain-bound BA
planes to take off from the east coast of the United States and
Canada, even though UK airspace was still closed to landings.
It was a risky bet, but with BA losing millions of pounds a
day due to grounded planes, he wanted to pressure authorities to
quickly revise a decades-old safety code to reflect new tests
that had shown flying through a certain concentration of ash was
possible without damage to aircraft.
The gamble paid off – the authorities changed the rule in
the nick of time and his planes were able to land in London,
rather than resort to back-up destinations, such as Ireland’s
Shannon.
One adviser, who worked with Walsh on one of his takeovers,
said the ash cloud episode showed how ruthless he could be to
achieve his goals. But he added he could also use charm and
diplomacy to navigate political and union tensions when needed.
“It helps that he has a huge appetite for work while being
able to relax outside of it,” the adviser, who declined to be
named, said of Walsh, a Liverpool soccer club fan.
“He tends to eschew the pomp and ceremony of leadership and
instead wears his no-nonsense approach to business with pride.
He has zero time for titles.”
NOTHING PERSONAL
With Walsh’s overhauls, IAG’s airlines stole a march on Air
France-KLM and Lufthansa which are still
struggling to persuade staff of the need for change, a tougher
task now as oil prices are boosting profitability.
“He’s way ahead of where Lufthansa and Air France are,” said
Ryanair CEO Michael O’Leary.
Walsh now sees more cost-savings on the horizon, including
grinding out efficiencies in areas like maintenance and
handling, and combining his carriers’ back-office functions in
an office in lower-cost Krakow, Poland.
The IAG boss again overcame opposition – both political and
union – last year to seal the 1.3 billion euro takeover of Aer
Lingus. It followed the acquisitions of BMI in 2012 and low-cost
carrier Vueling in 2013.
The Aer Lingus deal reunited him the with the carrier where
he began his career, but he stressed this month that this played
no part in his thinking: “I can assure you there’s nothing
personal about this. It was a business decision.”
While IAG may not be actively pursuing M&A deals at the
moment, he says it will be on the look-out for opportunities.
There has been media speculation that Finnair
could be the next target, an acquisition that would enhance
IAG’s links to Asian markets from the Helsinki hub, though IAG
has said it is not in talks with the carrier.
Change is now afoot at IAG, with British Airways’ veteran
boss Keith Williams set to retire and be replaced by Vueling
head Alex Cruz in April.
When asked about the tenure of Walsh himself, a company
spokeswoman said that he has a rolling 12 months contract and
that there was nothing further to add.
But whether he goes sooner or later, a lot of
heavy-lifting’s already been done.
“He’s done a very good job and it’s a very nice position to
take over now, rather than 10 years ago when it was an
incredibly tough one,” said the top-30 investor.
($1 = 0.9233 euros)
(Additional reporting by Conor Humphries in Dublin; Writing by
Sarah Young; Editing by Kate Holton and Pravin Char)
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