Walsh joins BA as fuel crisis grows

BRITISH Airways incoming chief executive Willie Walsh arrived at the 'world's favourite airline' just days before it is expected to unveil its highest fuel bill in a decade.

In a note ahead of BA's full-year results on 13 May, Deutsche Bank analyst Lars Slomka said he expected its annual petrol pump bill to have risen 26.5% to £1.17bn. This would make it BA's biggest fuel bill in at least ten years.

Slomka also warned that the price BA will pay for its jet fuel will soar 9% next year to £1.25bn. And the analyst, one of the airline's most vociferous critics, also said the amount BA spent on fuel in the three months to March was likely to have risen by 35%.

The price has soared because of the continuing strength of oil, which remains above $50 a barrel. BA has bought 50% of the fuel it needs through to December, and just 30% from then until March 2006. The rest must be bought on the open market.

The fresh focus on oil came as Walsh, former boss of Irish airline Aer Lingus, arrived at BA's plush Waterside headquarters for the first time. He takes full control of the BA flight-deck from incumbent Rod Eddington in September.

Walsh's contract reveals he will receive an annual salary of £600,000 - the same as Eddington - and will be entitled to the same benefits. His contract was published just two days before the airline's April traffic figures, which are likely to be very similar to those for March.

Walsh will shadow Eddington for the next four months, but analysts have already begun to speculate on the challenges he faces. Stephen Furlong, at Dublin-based stock broker Davy's, put the future of BA's under-performing short-haul network, and the likelihood of it raising its 9% stake in Spanish airline Iberia, at the top of the Irishman's agenda.