Oh dear. To lose one chief executive is careless, but to lose two . . . That's what has happened in the Oneworld alliance where the British Airways (BA) chief executive has been jettisoned, just weeks after Aer Lingus chief Garry Cullen decided to bale out.
Aer Lingus is heading for an IPO and one of its selling points is its membership of Oneworld alliance, a loose grouping of airlines which includes American Airlines and BA.
However, its new friend BA has had a turbulent ride under chief executive Bob Ayling's guidance. BA's share price peaked at 760p in May 1997 and has since fallen 60 per cent. The year before Ayling joined, BA made pre-tax profits of £585 milion (€743 million). This year it is expected to lose more than £200 million.
Ayling cut costs dramatically, slashing £1 billion off the annual bills and had promised to cut another £1 billion during the next three years and to cut capacity as well. He also promised to introduce new products to attract high-paying business passengers.
Aer Lingus too has chosen the upmarket customer flight path, which many analysts believe is fine in a boom, but can be a very vulnerable strategy in a downturn. The airline business is notoriously cyclical and there are rumblings of a downturn coming in the not too distant future.
This does not make the prospect of a flotation any easier to sell. However, it should be pointed out that Aer Lingus has enjoyed several years of profitable growth, in contrast to BA. And Current Account knows of a chief executive with plenty of experience in the aviation sector, who may just be available. . .
