Willie Walsh is not quite enjoying the retirement he had planned. When his departure was announced in January, he had just led British Airways owner IAG to a €2.3bn pre-tax profit for 2019, its share price was moving back towards all-time highs, and as one of the FTSE 100’s longest-serving chief executives, he was preparing to step down in March.
Fast-forward eight months and the world looks very different. After pushing back his leave date when the severity of Covid-19 became clear, Walsh will finally hand over the controls at IAG’s delayed annual meeting on Tuesday, at a time when the airline industry appears permanently changed by the pandemic and British Airways is flying only a fifth of its pre-crisis schedule. Instead of churning out profits, IAG made a €4.2bn loss in the first half of 2020, and Walsh himself will leave under the cloud of a potential shareholder revolt about his big pay packet at a time when the company is laying off thousands.
Walsh is a rare thing in the airline industry: a former pilot who made it to the top of the boardroom. Starting at Aer Lingus before moving to British Airways in 2005, Walsh engineered BA’s 2011 merger with Spain’s Iberia to create a new, unorthodox group with separate management teams but shared costs in some central services.
Beyond the pandemic lies a bigger challenge for an industry still hooked on fossil fuels: the climate crisis
At Aer Lingus he earned the moniker “Slasher Walsh” after cutting thousands of jobs and selling off the company’s art collection. That approach has continued right until his last days in the job, with British Airways alone announcing plans to cut 12,000 jobs during the pandemic. It has made 6,500 voluntary redundancies so far, to the anger of unions, which argue that the company is taking advantage of the crisis.
Investors at Tuesday’s meeting, to be held in Madrid, will have the chance to give Walsh a final bloody nose before his departure: the influential adviser Institutional Shareholder Services is urging investors to reject an £883,000 bonus to be awarded to the chief executive for 2019 in a non-binding vote on its pay report. Several major investors are said to have indicated that they will vote against the report.
The company argues that the bonus relates to pre-pandemic performance and that Walsh’s pay has been cut by a fifth since April. However, there is little sign that the company’s at times uncompromising style under the chief executive will be abandoned.
Walsh’s notoriously tough style has its advocates. John Strickland, who runs aviation analyst JLS Consulting, said that Walsh understood the importance of cost management to airlines even before the crisis, as budget airlines took market share. He adds that Walsh’s legacy is evident in IAG’s large cash reserves, which have allowed it to avoid government bailouts through the pandemic.
Walsh will on Tuesday hand over to new chief executive Luis Gallego, the lieutenant whom he trusted to oversee Iberia’s turnaround in 2012. Chairman Antonio Vázquez last month announced his intention to retire in early January 2021, so the company’s recovery from the pandemic will be overseen by a new team.
Gallego’s attention will be focused for months on the recovery effort – helped by a €2.75bn fundraising call, also to be voted through on Tuesday. But beyond the pandemic lies arguably a bigger challenge for an industry still hooked on fossil fuels: the climate crisis.
Walsh has talked a good game, committing the company to net zero carbon emissions by 2050. But aircraft technology lags far behind green ambitions, so Walsh leaves IAG with few clues to its long-term future.