British Airways Raises Walsh's Possible Bonus, Tying Fee to Labor Accord

British Airways Plc’s remuneration committee increased Chief Executive Officer Willie Walsh’s bonus to 100 percent of his salary but linked the payment to him ending a strike by the carrier’s 12,000 cabin crew.

Walsh’s potential bonus for the year that began on April 1, to be paid half in cash and half in stock, was raised from 75 percent of his wage last year. The CEO’s salary is frozen at 735,000 pounds ($1.1 million), the company’s annual report says.

Walsh turned down this year’s 334,000-pound bonus, earned because of punctuality and customer-satisfaction ratings, after slumping demand and cabin-crew walkouts pushed British Airways to a record 425 million pound-loss. While a series of strikes that grounded flights on 22 days since March 20 ended yesterday, the Unite union aims to ballot flight attendants on fresh action in their 16-month dispute over staffing levels and future pay.

“I’m sure Walsh will feel himself that he can’t take the bonus and then put forward arguments that times are hard,” said John Strickland, an aviation consultant at JLS Consulting Ltd. in London. “The union will still feel he has a high salary.”

Walsh is seeking savings of 127 million pounds from cabin crew after cutting staff complements in November. Unite says the strikes have so far cost British Airways 154 million pounds, based on the company’s own estimates during the first walkouts.

Bonuses for the CEO and other senior executives will be awarded according to metrics including the completion of a merger with Iberia Lineas Aereas de Espana SA and an alliance with AMR Corp.’s American Airlines, the securing of an agreement to cut the pension deficit and “an improvement in industrial relations,” according to the annual report published today.

‘Uproar’

“With Willie Walsh determined to continue his war against his own workforce there can be little prospect of improved industrial relations at BA,” Len McCluskey, Unite’s assistant general secretary, said in an e-mailed response to questions. There would have been “uproar” if Walsh had taken his bonus this year, the labor leader said, adding that the CEO’s stance “suggests he is not too concerned about next year’s bonus.”

Negotiations between the two parties broke down June 1, and no new date for talks has been set. Unite are insisting that Walsh fully reinstate travel benefits that had been taken withdrawn from workers who went on strike.

Terminal 5

Walsh also declined to take a bonus following the botched opening of London Heathrow airport’s Terminal 5 in fiscal 2008 and a net loss of 375 million pounds in fiscal 2009.

The CEO’s actual salary was reduced to 634,000 pounds last year after he turned down payment for the month of July and asked other workers to do so as well in order to reduce expenses at the height of the global economic slump.

British Airways closed up 1.9 pence, or 1 percent, to 194.8 pence in London. The carrier’s market value has advanced 4.2 percent to 2.25 billion pounds this year.

To contact the reporter on this story: Steve Rothwell in London at srothwell@bloomberg.net

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