Two BA chiefs lose jobs over Terminal 5 mess

By Martin Hickman, Consumer Affairs Correspondent
Wednesday, 16 April 2008


Two British Airways executives lost their jobs yesterday as the airline tried to quell public anger stemming from the shambolic opening of Heathrow's long-awaited Terminal 5.

A week after BA cancelled the transfer of almost all its long-haul flights from Terminal 4 because of continuing problems at the new £4.3bn facility, the airline announced that the operations director Gareth Kirkwood and the customer services director David Noyes would be "leaving the company".

The former national flag-carrier refused to say whether they had been sacked or left of their own accord but explicitly linked their departure to the debacle at the new terminal.

T5 was meant to showcase the future of air travel in the 21st century when it opened on 27 March but its sophisticated baggage system failed, leading to the loss of tens of thousands of bags and the cancellation of hundreds of flights. BA was forced into trucking passengers' luggage to a sorting centre in Italy.

At an upbeat media conference given by BA and the Heathrow operator BAA before the opening, Mr Noyes insisted that the project was going to be "a fantastic facility".

Travellers queuing at check-in would not expect to have more than one person in front of them, he said, and the new baggage system would mean BA would "really improve its baggage performance". He told reporters: "We are confident that this building is operationally ready."

But when T5 opened, staff failed to turn up, or turned up late, blaming problems getting through security and bags piled up because there was no one to haul them around.

Despite obvious evidence to the contrary in the form of queues of furious and confused customers, Mr Kirkwood insisted T5's opening day had been a success, before slipping through a side door. He had been working on the project for 18 months.

As pressure continued to whirl around the BA chief executive Willie Walsh yesterday, BA issued a terse three-sentence statement to the press. It read: "British Airways has announced today that Gareth Kirkwood, director of operations, and David Noyes, director of customer services, will be leaving the company.

"The airline is looking to appoint a chief operations officer to combine both roles. The departures follow the airline's move to Terminal 5."

The problems at T5 have been so severe some insurers including Direct Line and Tesco, have stopped offering cover for lost luggage or delayed flights.

BA was able to run a full service at T5 only last week, and a planned 30 April transfer to the terminal of long-haul Heathrow flights was put back to an unspecified date in June. The delay has angered rival carriers, many of whom were scheduled to move into Terminal 4 after BA had left.

Mr Walsh announced the switchover delay last week, and said he would not have been happy to move BA's short-haul operation into T5 if he had not been confident T5 would be a success. He took responsibility for the problems, saying that its opening was not the company's finest hour.

John Strickland, director at the air transport consultancy JLS, told the BBC there seemed to be "a lack of communication about the problems involved in the run-up to the opening".

BA has admitted the fiasco is likely to cost the airline £16m. Its shares fell 3 per cent to a 12-month low.

UK's Brown vows new measures to pass on rate cuts

LONDON, April 12 (Reuters) - British Prime Minister Gordon Brown has promised new measures to ensure that Bank of England interest rate cuts are passed on to mortgage holders.

A global lending squeeze has made it harder for banks to raise funds on financial markets, forcing mortgage lenders to toughen up their loan terms and raising the risk of a sharp housing market downturn and economic slowdown in Britain.

"Although the Bank of England has cut rates in recent months, the banks have not always been passing those reductions to their customers," Brown said in an article for Sunday's News of the World tabloid newspaper.

He said Finance Minister Alistair Darling will be meeting with the main mortgage lenders to discuss what further steps can be taken.

Brown, whose comments were released on Saturday by the newspaper, promised "new measures to ensure those lower interest rates are passed on to mortgage holders."

On Friday, Britain's mortgage lenders called on the "cautious and slow" Bank of England to increase efforts immediately to ease the credit crunch, warning of a danger of home loans halving from last year's levels.

"There is a real and immediate need for broader-based action than we have seen to date," Steven Crawshaw, chairman of the Council of Mortgage Lenders (CML), said in a speech in London.

The BoE has made funds available to try and ease the crunch and has cut interest rates three times since December, but policymakers are wary of rescuing financial institutions from the consequences of their own investment decisions.

Brown wrote: "The Bank of England is injecting an additional 15 billion pounds. We need to do more to see this feed through to improved availability of mortgage lending," he wrote.

Brown called for greater transparency.

"If the world's largest banks could come together quickly and agree as a group to come clean about the potential bad debts they face, we could reduce the uncertainty and risk they face and restore confidence back into the markets," he wrote.

But he insisted that the soaring price of debt would not prevent the government from borrowing money itself to carry out his spending plans.

"We are able to stick to our public spending plans for the next three years because Britain has lower levels of government debt than most of our competitors. This means the government can borrow more for the next few years without threatening our economic stability," he wrote. (Reporting by Paul Majendie; Editing by Jon Boyle)