British Airways said this morning that it managed to rack up record profits of £883m in the year to March, on revenues of £8.1bn. Not only is this a 45% increase on the previous year, it also means that CEO Willie Walsh has finally hit his ambitious target of a 10% operating margin – making BA one of the world’s most profitable airlines. Walsh called it an ‘outstanding financial result’, and given the spiralling fuel price and various other problems this year, he’s got a point.
Of course it’s hard to write anything about BA at the moment without mentioning the T5 debacle – and although its catastrophic opening came right at the end of this period (thus minimising its impact on the figures), it was still at the forefront of everyone’s minds today. And apparently it’s going to hit Walsh where it hurts – he said today that he would forego his annual bonus of about £700,000 because it would be ‘inappropriate’ in the circumstances.
Now you might argue that this is basically a self-serving gesture – if he’d decided to take the cash despite all the recent upheaval, it would have infuriated investors, attracted a storm of negative publicity and possibly re-ignited calls for his resignation (which seem to have died down slightly in recent weeks).
On the other hand, Walsh said that he would take personal responsibility for the fiasco – and by giving up his bonus, that’s exactly what he’s done (admittedly his previous attempts to protect his position by sacking two of his key executives suggested he had a slightly unusual take on this concept, but still). After all, there are plenty of executives in the banking sector who have managed to pocket huge bonuses, despite their organisations suffering eye-watering losses. So whatever the reasons, we’re glad he’s done the decent thing.
Unfortunately for Walsh, any good cheer generated by today’s results is likely to be short-lived. Next year’s profits will take a big hit from the T5 delays, and the threatened industrial action by BA pilots over its new Open Skies subsidiary could also prove a major headache. But its big problem is the escalating oil price – it’s already doubled in the last 12 months, and with further increases likely, BA is about as likely to make a 10% profit margin this year as it is to get through 12 months without losing any of our bags.
So Willie’s unlikely to get much of a bonus next year either. Guess he’ll just to have to struggle by on his £700,000 salary...