The Financial Week Ahead – Is FD set for departure?

There’s Something in the Air according to British Airways’ latest TV ad and ominously for the revamped airline weathering stormy times its 60s-hit-turned-corporate-anthem is sung by a crooner named Thunderclap Newman. Sixty-one-year-old finance director Derek Stevens is rumoured to be close to retirement and after a bad year for the airline could soon choose to follow former chief executive Bob Ayling through the terminal doors. Aviation watchers believe that Stevens and his new chief executive Rod Eddington will this week post annual losses that have flown into the region of #250m. Ayling’s shock resignation in March after four years in the cockpit followed a pre-tax loss of #60m in the last quarter of 1999. BA shares had nosedived from a 1997 high of 760p to just under 300p during his tenure sparking widespread calls for a new boss with fresh ideas. Too many aircraft on North Atlantic routes and too few passengers fuelled by rising oil prices created a rough ride for Ayling, despite his cost-cutting measures that produced #1bn savings before his exit from the executive departure lounge. New chief pilot Eddington cruised on where Ayling left off earlier this month with an au revoir to loss-making subsidiary Air Liberte for #47m to Gallic investment specialist Tiatbout. Stevens and Eddington will continue to downsize – with up to 6,400 of its worldwide workforce believed to be facing the axe – in a bid to regain the plot for BA by concentrating on its business paying customers and getting rid of its low-rate economy class. The ‘world’s favourite airline’ motto and the inclusive but unpopular world image logo have also been dumped for an exclusive ’21st century air travel’ message and a new take on the old Union Jack design. Senior managers have also earmarked #100m investment into its online strategy and last week BA joined up with 10 other continental airlines to form an online European travel agency. A former Shell executive, Stevens joined British Airways in 1989 as chief financial officer and is also chairman of trustees of BA Pensions. He qualified as a chartered accountant with Touche Ross in London. Stevens can also look to fellow accountant Silla Maizey, BA’s director of procurement, to oversee an ambitious e-commerce strategy that aims to use an industry-wide electronic trade exchange to slash #180m from its #3.9bn purchasing budget. Other benefits to the airline include bringing transaction costs from #70 per transaction to #10, and bringing savings to major expense items such as fuel. The e-venture is set to go live by the end of the year. But perhaps more worrying for the airline giant’s suppliers, BA hopes to use the move to whittle down its supply chain from 14,000 to 2,000 suppliers by March 2002.

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