Search on to replace Ayling

By THIS IS MONEY
Updated:

 

Qantas chief executive James Strong is an obvious contender as the British Airways board searches to replace CEO Bob Ayling, analysts and industry executives said on Friday. 'There has been a lot of talk about Strong for a long time now,' said Deutsche Morgan Grenfell airlines analyst Chris Partridge, who believed an internal candidate was also a possibility. Ayling quit on Friday, an airline spokesman saying the board had decided it was time for a new CEO. The company is looking at outsiders, having employed headhunters to search for candidates.

Industry executives said it was very difficult to predict British Airways's choice, since the world had so many airline bosses, not to mention Ayling's top former subordinates. They doubted the chances of the former heir apparent at British Airways, Carl Michel, an executive in his mid 30s who Ayling promoted last year to head the division responsible for sales, marketing alliances, cargo and airline subsidiaries.

'I would be surprised if they would fill the role with Michel,' said a top executive from a rival airline. 'It is probably too big a step for him.' 'The trade was pretty surprised when he was put in that job.' Michel had previously headed British Airways's small German subsidiary, Deutsche BA.

One analyst said: 'How many people would actually believe in Ayling's ability to choose a successor, given that the share price has rallied on his departure?'

Partridge said the complexity of issues confronting British Airways might lead the board to choose an internal candidate already familiar with them, but one executive from another airline thought insiders would suffer from association with earlier bad times. 'It will be hard for someone who was part of the team to say 'I had nothing to do with all that',' said one executive who agreed that Strong was an obvious candidate.

Over the past year, British Airways's profits have nosedived, with competition driving prices down as fuel costs rose. The airline's share price has underperformed the London market by 25 percent so far this year and 62% in the past five years.

Strong himself is not entirely an outsider. British Airways owns 25% of Qantas. The Australian executive, in his mid 50s, has managed Qantas since 1993, when the former state airline was a loss maker. The company last month reported a pre-exceptionals net profit of A$338 million ($207 million), a margin of 7.5% on sales of A$4.51 billion for the six months to December 31.

Most watched Money videos