British Airways Ousts Directors After Botched T5 Move (Update3)

April 15 (Bloomberg) -- British Airways Plc, Europe's third-biggest carrier, ousted two senior managers after the chaotic opening of London Heathrow airport's Terminal 5.

Gareth Kirkwood, director of operations, and David Noyes, director of customer services, have already left, London-based British Airways said in a statement today. Both men are 45.

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

Chief Executive Officer Willie Walsh is under pressure after 600 flights were canceled over 12 days when Terminal 5's baggage system broke down. The disruption cost at least 16 million pounds ($31 million), according to the airline, the building's sole occupant, prompting Walsh to agree to meetings with investors and to delay moving a second wave of services.

``There's a feeling at BA that some of the managers did not fully communicate problems during the planning process of T5,'' said John Strickland, director of aviation specialist JLS Consulting Ltd. ``I don't think this takes the pressure off Walsh. He will know that people are still expecting him to deliver.''

Shares Decline

British Airways, which had been relying on the 4.3 billion-pound Terminal 5 to win back customers disillusioned with Heathrow's overcrowding, fell 7 pence, or 3.3 percent, to 208.5 pence. The stock is down 33 percent this year, cutting the company's market value to 2.4 billion pounds.

Kirkwood was responsible for the ``operational readiness'' of Terminal 5, British Airways spokesman Tony Cane said today. The executive began working in the purchasing division in 1986 and prior to becoming director of operations was managing director of the World Cargo unit.

Noyes joined in 1985 via the graduate training program and held telephone-sales and ramp-management positions. He became director of alliances, franchises and subsidiaries in 1999 and Head of Heathrow in 2004 before taking over at customer services in October 2007.

Noyes on March 13 said passengers using Terminal 5 would be able to enter the building, drop off their bags and clear security in ``no more than 10 minutes.''

20 Years of Planning

Instead, when the concourse opened on March 27, flights were canceled and people were barred from checking in luggage because of a glitch in the baggage system and ``staff- familiarization issues.'' The terminal took almost 20 years to plan and build, boosting passenger capacity to 75 million. The airport has been handling 68 million people in buildings designed for 45 million.

Cane declined to comment on possible candidates for the new position of chief operations officer. The airline will choose ``the best person'' for the job, he said, adding that Walsh will take charge of the duties until an appointment is made.

Walsh said yesterday he'll ask his company's lawyers to examine whether a compensation claim against Heathrow operator BAA Ltd. is feasible. BAA is a unit of Spanish builder Grupo Ferrovial SA.

The earliest British Airways will start shifting more flights to Terminal 5 is June 5, Walsh said yesterday, with the move likely to span several months and possibly not finish until October. The switch was originally scheduled to be completed in a day or so from April 30.

Analysts including Penelope Butcher of Morgan Stanley and Tim Marshall of UBS have trimmed their share price targets and earnings forecasts for the airline in the past week, citing higher costs at Terminal 5 and increased fuel prices. The company is also facing a possible strike by its pilots.

British Airways has been targeting a record 10 percent operating profit margin for the year ended March 31, also set as a benchmark for paying the first dividend in seven years.

``While we made an embarrassing start in T5, I remain absolutely convinced that it will be a fantastic success,'' Walsh said at the Foreign Press Association in London yesterday, adding that he had ``no intention'' of stepping down.

To contact the reporters on this story: Tracy Alloway in London at talloway@bloomberg.net; Steve Rothwell in London at srothwell@bloomberg.net.

To contact the editor responsible for this story: Chris Jasper at cjasper@bloomberg.net.