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Even worse, Britain's Office of Fair Trading (OFT) and the U.S. Department of Justice fined BA more than $500 million in August for price fixing. Ten current and former BA executives face the possibility of criminal prosecution in the U.S. All this comes just as access to the transatlantic market out of Heathrow Airport--now restricted to BA and a few other carriers--is about to be blown wide open...
...confuse this with a crisis. Really. These ignominies, significant though they may be, risk overshadowing the real progress that the 45-year-old Dubliner has made at BA since taking over in 2005 as its youngest ever boss. The scale of the challenge of running BA, Europe's third largest airline, after his four years as boss of the Irish carrier Aer Lingus "was easy," says Walsh. "I just multiplied everything by 10." That applied to problems too. When he arrived, the company's pension fund was short by almost $3 billion, more than the shortfall at any other major...
Fired up by the math, Walsh (a former Aer Lingus pilot who landed the top job there in 2001) quickly got to work cutting the figures down to size. On his first Monday at BA, he set about reaching a deal with trade unions to rub out the pension's deficit over the next decade through one-off cash injections and changes to employee benefits. Two months later, "Slasher," as Walsh was known while rescuing the Irish carrier from the brink, cut hundreds of senior managers. Soon afterward, he unveiled a blueprint for shrinking BA's costs by close...
...price-fixing penalties wiped at least some of the gloss off all that. According to the OFT, scheming with rival Virgin over the level of fuel surcharges started months before Walsh took control. As soon as the OFT informed BA in mid-2006 that it was investigating the company, the airline cooperated with the investigations. (Virgin, whose legal team first contacted the OFT about the scheming once it got wind of the problem, should escape any fine as a result.) Still, it's hardly reassuring that staff at BA thought it a smart idea to collude with the company...
There are signs, though, that change is under way. While his predecessors kept union negotiations at arm's length, union leaders say Walsh's direct negotiation with his counterpart helped speed up a resolution. Ahead of BA's move next year into the new $8.5 billion Heathrow Terminal 5, the airline persuaded thousands of ground staff to agree to change their practices. Such deals, Walsh says, are "evidence of securing agreement without hassle, without friction...