Set British Airways free: IAG and its overpaid boss no longer seem capable of piloting struggling airline out of the storm, says ALEX BRUMMER
The surrender of sovereignty over British air travel to Spain is a catastrophe in the making.
Both Heathrow and British Airways are dominated by Spanish ownership and, in the process, in danger of surrendering London’s role as the world’s leading entrepot – a key geographical centre for commercial and economic activity.
Heathrow’s dominant shareholder, the Spanish infrastructure group Ferrovial, is far more interested in increasing returns for its overseas owners than the passengers and airlines who are the airport’s lifeblood.
Hot air: IAG chief exec Luis Gallego (pictured) blames Brexit and Covid-19 for everything that has gone wrong at British Airways
During lockdown the airport introduced drop-off fees at terminals, raised parking charges and has been lobbying for higher landing charges, which would inevitably fall back on travellers.
Then there is IAG. Former BA and IAG chief executive Willie Walsh had a great vision for turning BA – once the world’s favourite airline – into a global champion.
But in that process, BA has been starved of investment and the workforce shrunk, making for deteriorating standards of service.
This includes fully loaded planes left standing for hours on the Tarmac (I recently encountered a five-hour delay to Tel Aviv), phones never answered, air miles that cannot be used, soaring fares and sub-quality service. And what is the response of overpaid IAG chief executive Luis Gallego?
It is to blame Brexit and Covid-19 for everything that has gone wrong.
Amid all of this chaos, the IAG chief (as reported by The Mail on Sunday) stands ready to collect an astronomical pay packet of £4.7million this year if he hits all his targets.
No wonder investor advisory services ISS, Glass Lewis and Minerva are up in arms. If BA shareholders, now in the IAG orbit, want to voice their disquiet, they will have to make a costly journey to Madrid on Thursday.
Indications are that relationships between parent IAG and BA, and its chief executive Sean Doyle, have become strained. The effort to create a European leader in the skies is badly shaken. A return to form for BA means recapturing its domination of business travel across the Atlantic.
But BA’s unreliability as the country came out of Covid led many businesspeople to change carriers or to set out from Continental Europe rather than London.
There is a view that IAG doesn’t make much sense any longer and BA would be better off cut loose from its Iberian masters, focusing on customer service and rebuilding its reputation.
It is time for the IAG board to consider whether it is a good moment for BA to do the splits.
When it comes to money crises, the Financial Conduct Authority has often been slow to act.
So it deserves credit for its series of warning to consumers about the dangers of investing in cryptocurrencies, or the firms cashing in on the bubble.
The end to money printing in the US and Britain, and the march of higher interest rates, is showing that bitcoin and other cryptocurrencies are not the new gold or a great hedge against uncertainty.
Many younger investors attracted to crypto as an alternative to Wall Street-style capitalism conveniently forget that mining bitcoin runs roughshod over the greening of the world.
It requires the power of the Hoover dam or more to mine a bitcoin.
Early investors will have minted fortunes in crypto but the good times are coming to an end. Crypto lender Celsius has done a Woodford and blocked investors from pulling out funds.
It has been joined by Binance, the self-declared biggest dealer in the world. The price of bitcoin has plummeted more than 50 per cent this year and doubtless has much further to go.
Anyone in the market to buy fashionable Non-fungible Tokens (NFTs)?
If so, jump clear.
Off the rails
Back to foreign ownership. The bids rolling in for transport operators Go-Ahead and First Group (the latter rejected by the board) come hard on the wheels of Stagecoach’s sale to German asset manager DWS.
It might be thought that no one could do a worse job in terms of reliability and time-keeping than the current owners.
But allowing most of the nation’s privately owned bus and train operators to fall into overseas hands, with dividends flowing abroad instead of into networks, is not very clever.
Think of the calamities of airport chaos, P&O ferries labour relations and sewage spills by Thames Water.