Address challenge proactively, says British Airways CEO at ISB

Walsh was on a visit to the School and spoke to the students on Bold Moves in Tough Times.

Walsh joined British Airways as Chief Executive Officer (CEO) designate in the year 2005. Under his leadership, British Airways delivered record profits and an operating margin of 10 percent. He has been in the airline industry since the late 70s, and thus his insights into the complexity of the industry proved very helpful to the students here at the ISB.

Walsh recounted his challenges as a CEO at Aer Lingus, prior to British Airways. The time was an aftermath of 9/11 and the company was faced with bankruptcy and heavy losses. Walsh shared how he radically restructured the airline and transformed it into one of the most profitable state-owned airlines in the western world. A valuable lesson I learnt from this was to address the challenge as soon as you identify it rather than waiting for the crisis to culminate, he said. Here he also noted that any crisis significantly limits the options available, and so one may be forced to take radical options.

Next he plainly put across to the audience that the airline industry is facing a great challenge, and that the external environment is tougher than it was post 9/11. He predicted that in the coming year passenger traffic will fall by 3 percent and cargo traffic will decline by 5 percent. The globally gloomy environment, he shared, was due to declining economic growth in key markets and because consumer confidence is at an all time low.

Walsh also shared some tangible actions taken by British Airways to counter the present scenario. Some of them were - look at areas of inefficiency and eliminate them, make cuts on capacity, for example reduce flights by 3 percent during winters, and most important have a radical restructuring of the management. The British Airways was always overtly bureaucratic, and so we attempted to improve efficiency and reduce bureaucracy, to change the culture within business, he said.

In his conclusion Walsh added, I passionately believe in deregulation and liberalisation of the airlines industry. It is ironic that this industry that has actually accelerated globalisation, cannot fully participate in it, he said, mentioning that all restrictions on airlines by virtue of their nationality should be removed.