[pixelmeister]

Only problem is that the notion that any salary increases for the board (what some seem to refer to as ‘snouts in the trough’) is miniscule compared to the amount needed to pay a dividend. IAG has 1.6bn shares. That means that a 1p dividend would require £16m. Has director pay increases for the year totalled more than £16m ? Well, as the board pay is only £6m it seems a tad unlikely.

To put it another way, even after you take into consideration preferential shares, the board salaries would have to more than double for the shareholders to get a 1p per share dividend. Now, in the current climate doubling board pay is simply not going to happen.

The 10% shareholder discount is worthwhile if you plan to buy a couple of longhaul club tickets in a year – share price is currently around £1.50-£1.60, so 200 shares costs c£300. Bargain !

Oh and for those who didn’t read the 2011 annual report, Walsh recommended that his salary was frozen, so he does seem to be practicing what he preaches.

[Tim2soza]

Board remuneration should be a % of dividends which should be a % of net assets + capital Investemnt + cash reserves. I have no problem with any Exec team being paid squillions when performance is deliverered, but it should be zero if profits are negative or dividends suspended. So often It is all too cozy.

On the staff side, if service is good, I will book another salary payment (flight). If not, I will spend their pension hopes with their competitor and smile. I hope my customers take the same approach with me.

[JulianCucumberpatch]

Aa a contradiction to my assertion that British management of the car industry led to its demise, it seems that carriers in the Middle East are thriving under UK CEO’s and management.

The same cannot be said about Qantas and IAG, who are suffering from the same style of leadership more suited to a low cost carrier. Both companies are being brought to their knees.

http://www.telegraph.co.uk/finance/newsbysector/transport/9348975/Qantas-warns-government-we-could-go-under.html

I note that Walsh is now taking legal action against the arbitrator for over extending his powers, since the use of the Spanish Establishment has not born the same fruits as warping the UK legal system, in order to beat democratic industrial action.

[SimonS1]

“Carriers in the Middle East are thriving under UK CEOs”

CEO Qatar – Al Baker (Qatari)
CEO Etihad – Hogan (Australian)
CEO Oman – Pearce (Australian)
CEO Emirates – Sheikh Ahmed (Emirati)
CEO Saudis – AlMolhem (Saudi)
CEO Gulf Air – Majali (Jordanian)

I don’t see too many UK CEOs there?

[AnthonyDunn]

@ Tim2sms – 22/06/2012 19:30 GMT

Just so.

Otherwise, I am attending the London Evening Standard’s “Whither London’s airports” debate on Wednesday evening 27th June (see http://www.standardevents.co.uk/airports/ for details). For admirers and detractors alike, Willy Walsh will be a panellist, will be speaking and will be taking questions. Other than that the debate is about the future of London’s airports, any proposed questions from anyone?

[AnthonyDunn]

@ pixelmeister – 22/06/2012 15:30 GMT

“Only problem is that the notion that any salary increases for the board (what some seem to refer to as ‘snouts in the trough’) is miniscule compared to the amount needed to pay a dividend. IAG has 1.6bn shares. That means that a 1p dividend would require £16m. Has director pay increases for the year totalled more than £16m ? Well, as the board pay is only £6m it seems a tad unlikely”.

This is true as far as it goes but I am afraid that by taking a narrowly “accountants’ ” stance towards the payment of boardroom megabucks cf. dividends, you appear to be missing the wider picture. This is that successful management means leading from the front and by way of example – rather than behind closed doors and from behind. It astounds me that so many in senior positions (be they senior exec or board level) simply do not “get” the point that rewarding themselves with pay rises well in excess of inflation and well in excess of what is being doled out to the “proletariat” is guaranteed to hack-off and demotivate said staff. In any organisation, this is likely to be damaging but in a service organisation where the smile (or not) on your average cabin crew member’s face is a basic part of service delivery/the customer experience, it is a killer to staff morale and customer service standards.

Please correct me if I am wrong but it is my very clear understanding that whereas Willy Walsh insists of his staff that they take reduced pay and pension benefits to ensure BA’s competitiveness at the same as doing “more for less”, he himself received a substantial increase in pay and pensions as a result of moving from CEO of BA Plc to that of Group CEO of IAG. Surely a case of “don’t do as I do, just do as I say…!” If there is one thing guaranteed to provide a red rag to a bull in a UK industrial relations context, it is senior management sticking snouts in the trough whilst telling everyone else to tighten their belts.

[Age_of_Reason]

on the day when 11 more englishmen joined the Underperforming Millionaires’ Club, I must comment on the performance-related remuneration vs dividends argument.

For a business to attract capital investment, or justify retention of an existing stake, it should pay a ‘rent’. Usually this is done by dividend. This is particularly appropriate in capital-intensive cyclic business. If the cash generated in good years is not shared but is squandered, then in lean years famine and its consequences inevitably follow. Every farmer knows this. The airline business is remarkably similar to farming, in that fat years come along, but catastrophe at nature’s whim is ever-present.

When good years’ yields are attributed to ‘management’ who help themselves to unearned bonuses rather than accepting the good wage of competent administrators, the investors draw their own conclusions and punish the share price. The boardroom of an established business cannot be compared with that of an entreprneur’s, who has risked his and others’ capital and developed a business dynamic enough to take over the dinosaurs pastureland and evolve.

[Age_of_Reason]

And, closer to topic, how does BA get away with recoding former BEA routes now reaquierd via the BD takeover, as BA codes albeit still from T1 and attributed to British Midland ‘management’ and not giving online checkin service via ba.com

The customer is Wrong, in some administrators’ eyes?

[pixelmeister]

I don’t recall much in the media about BA staff being asked to take pay cuts , but am prepared to be corrected – I vaguely recall that the pilot community offered something as part of the cost cutting back in 2009.

On the pensions side, wasn’t BA stuck in a somewhat invidious position ? I believe the company still operates a final salary scheme, which is more than a large number of other organisations do. BA could presumably have saved itself a heap of cash by moving all its pensions to a money based scheme.

Did Walsh deserve a pay hike when he took on the role of CEO of IAG ? Is the CEO of IAG a bigger job with more responsibilities than CEO of BA ? If IAG had opted to go out into the market place to hire a CEO what would they have offered as a package, and how would staff in the respective subsidiaries have viewed that package ? It’s all a case of perception.

Again, the bit about snouts in the trough is not borne out when you look at the figures in the annual report. The actual awards are not dissimilar in percentage terms to that enjoyed by the workforce.

[transtraxman]

Forget about Willie and read about Keith Williams…

http://www.flightglobal.com/interviews/keith-williams/the-interview/

[CallMeIshmael]

The Bond issuance, (to raise at least a quarter of a billion pounds sterling) which was to be a foundation stone for BA’s future investment has been cancelled due to concerns and lack of interest by investors.

Some of the funds were also to be used to finance the recent BMI restructuring.

This snub by the city’s financial institutions is an embarrassment for Walsh who must surely have tested the water before embarking on a non standard (backed by LHR slots) venture, yet it has failed to come to fruition.

[pixelmeister]

Thought I’d bump this thread before Tete gets in with the usual anti WW comments after the IAG half year figures 🙂

[VintageKrug]

Good thinking, Batman.

[Age_of_Reason]

Are there Dark Knights ahead for IAG? Considering the hash that’s being made of IAG takeover of BD International, how can we relax in our seats and plan to continue utilising his company.

Why can’t WW, after a good outcome on his IAG takeover of BD, not just leave BD Int operating happily under IAG with identity, marketing and service philosophy and symbiotic economy-of-scale with BA and Iberia? Nobody wil get uptight about the colour of the plane,; what we object to is confusion about which website to use (I flew a BD flight in late July with a BA prefix nd was turned away by http://www.ba.com – not even a reroute back to bmid site – just a go away not wanted/recognised).

Let BD keep their T1 service and feeders and evolve slowly with the market. T1 to/fromT5 is not a simple matter, (esp with the chronically silly BAA signage) but made sense when transferring between ‘competitors’. IAG should now acknowledge the value of easy internal transit without leaving T1. Confusion about flight now and connection policy/pricing appears to be an attempt to destabilise T! internal UK connects from T1, presumably to give ‘evidence’ about under-usage and justify withdrawal. The Management is clearly not customer-focussed.

[Age_of_Reason]

For those interested in information before attitude …… BA and Iberia parent group reports losses.

The parent group of British Airways and Iberia has reported a 390m euro ($476m; £306m) loss for the six months to the end of June and warned it: “will not be able to avoid job losses”. (BBC)

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