BT: BA chief refuses bonus despite record profits
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Published May 17, 2008  |
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BA chief refuses bonus despite record profits
He says £700,000 payout is not right after Heathrow debacle
(LONDON) British Airways has registered record profits and will pay a dividend for the first time in seven years - but its chief executive, Willie Walsh, has decided to forgo his own bonus. Mr Walsh said that it would be inappropriate, given the shambles in the opening days of moving to BA's new terminal at Heathrow Airport.
BA reported a net profit of £680 million (S$1.82 billion) for the year, compared with £290 million for the previous 12 months. Its shares rose 4 per cent on the London Stock Exchange and the company decided to return £58 million to shareholders, paying five pence a share. Mr Walsh would have been entitled to a bonus of up to £700,000 based on various performance targets, but he decided to refuse it following the chaotic opening of Heathrow's Terminal 5 on March 27. Problems with the baggage handling system led to hundreds of flight cancellations and thousands of bags going astray. 'I felt it would be inappropriate in the context of the very disappointing opening of Terminal 5 in March,' Mr Walsh said. 'So despite the fact it was a record year in terms of our financial performance, I advised the chairman that I thought it would be inappropriate.' Mr Walsh said that there had been no pressure 'whatsoever' from other board members and big investors for him to forgo his bonus payment. But he said: 'We have let our customers down and I take responsibility for that.' BA operations director Gareth Kirkwood and customer services director David Noyes resigned following the Terminal 5 fiasco and this week, Mark Bullock, managing director of Heathrow's owner BAA announced that he was stepping down. Mr Walsh, too, had initially faced calls to resign but insisted that he felt his position was not under pressure, adding: 'I feel like I have just won the Premier League with these financial results.' The airline reported its widest-ever operating margin of 10 per cent. It was Mr Walsh, who joined in 2005, who had set the 10 per cent margin goal for the company. BA's 42,000 other employees will still receive their bonus from a £35 million bonus pool for meeting the target. The profit hike came despite a year of soaring oil costs that saw the airline's fuel bill top £2 billion. Mr Walsh said: 'This is an outstanding financial result for the company despite rising fuel prices and significant economic slowdown in the last six months.' The company now plans to move its long-haul flights to the new terminal from June. -- AP, Bloomberg | |||||||||
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