Eddington act will be hard to follow

NO wonder BA is keen to play down talk that its well-respected chief executive, Rod Eddington, may not be in the pilot's seat for too much longer.

Eddington's reign so far has been a marked contrast with the tenure of his predecessor, Bob Ayling, a man so disliked by his own staff that he was actually hissed at by crews.

An Australian with an Oxford degree, Eddington combines a razor intellect with a willingness to tackle tough issues head-on.

The company's straightforward description of yesterday's first-quarter results as merely 'reasonable' is an example of this refreshing - and rare - corporate honesty.

He has needed these qualities in spades as he has embarked on a radical reshaping of the airline through its Future Size and Shape programme, involving the loss of 13,000 jobs with more to come.

Eddington himself made it clear he is not quitting in the immediate future. He may not be ready for take-off quite yet, but the signals from within the company are that he is ambling towards the departure lounge, possibly in 2006.

The chief executive's job at BA is one of the most difficult in the business and it would be understandable if he felt that five or six years was enough. Aged only 54 now, he would still have time to pursue other interests.

It is the nature of the airline industry that turbulence is never far away. Having survived 11 September - which sent many rivals swiftly into the bankruptcy courts - BA has had to contend with Sars and the Iraq war.

Eddington has set about cutting costs, tackling BA's £3.8bn debt burden and fighting back against the budget airlines.

His efforts have paid off in the form of improved profitability. But despite an improvement in industrial relations since the Ayling era, BA is yet again facing the threat of disruption this summer, with two unions conducting strike ballots.

Even more seriously, the soaring oil price and the gaping pension fund deficit are threatening to blow holes through much of Eddington's good work.

A sustained high oil price would batter BA and other airlines, which would be among the first to feel the damage that would ultimately be inflicted on the wider economy.

The flight surcharges BA has announced so far will cover around only £70m of the £225m expected extra costs caused by rising fuel prices. Passengers should expect further levies.

Everyone's eyes are on oil at the moment, but the pension fund issue is equally, if not more, worrying long term.

Its deficit stands at just over £928m, around half of BA's market value, making it one of the most exposed companies in Britain to the retirement funding crisis. The company has pledged to pay more than £133m a year for the next decade to plug the gap - a huge drain on resources given the size of its debt and its other costs.

Even if Eddington stays a good many years yet, he is still likely to bequeath a pension shortfall to his successor.

Hoberman's headache

WHY are shares in lastminute.com taking such a battering?

Fears over the oil price and terrorism are hardly conducive to a boom in tourism. But that is not the only issue. Brent Hoberman, the youthful chief executive, has been on a takeover binge, snapping up 14 businesses in four years, including the recent purchase of German namesake lastminute.de.

Unfortunately, the economic gloom in Germany means that many of its inhabitants are staying at home rather than nabbing the best sun loungers.

Investors have been rattled by the sale of £1.5m worth of shares by former deputy chairman Clive Jacobs last week, coupled with the dumping of 18m by an unnamed City investor.

There are rumours that former managing director Martha Lane Fox, currently recovering from a near-fatal car crash, is looking to offload more of her remaining stake, after selling £4.6m in March at 230p a share.

The company's frequent use of sheer gibberish also raises hackles. It boasts that 'pro-forma organic like-for-like departure-based Total Transaction Value growth increased by 22.3% in quarter three', whatever that might mean.

Never mind the TTV or the EBITDA, another measure much-quoted by lastminute. In old-fashioned profit and loss terms, it was in the red by £17m, up from £12.2m.

It is true that the shares have always been on a rollercoaster, previously sinking as low as 18 3/4p before recovering.

But Hoberman faces an uphill task to get back in the City's good books.