A vintage time for Walsh

The range of views on British Airways is almost as wide as the route map it covers. To read some of the recent commentary, one might think that the loss of privileges in business, such as a panel of oenologists choosing the finest of claret, is symbolic of declining values.

And that is certainly true when compared to the fine vintages offered by Middle eastern-based carrier emirates.

But in contrast to so much else which is on offer, BA and its fellow airlines Iberia and Aer Lingus, part of the band of brothers in the International Airlines Group, are to be savoured for soundness.

There’s something comforting about making a booking on BA when small fry such as Flybe and others are being squeezed – and Flybmi has collapsed – due to overcapacity in the skies, and passengers find the shortcomings of Ryanair increasingly irritating.

Providing BA avoids a computer meltdown of the kind experienced in 2017, the lack of legroom in coach, slightly dated movies and the end to free meals doesn’t feel so bad. But some water would be nice.

What IAG chief executive Willie Walsh and his BA counterpart Alex Cruz have achieved is a degree of financial stability which other carriers can only dream of.

Big American airlines have been in and out of Chapter 11 bankruptcy so often that it is hard to keep count.

In europe the decision of the Dutch government to build up a 12.7pc stake in subperforming Air France-KLM, unleashing a battle of words between EU compatriots the Netherlands and France, shows how bad things can get.

IAG has been able to cruise above much of this and produced a strong set of results reporting earnings of €3bn (£2.6bn), up 9.6pc on the previous year. That allows BA to offer something to two sets of constituents: shareholders and passengers.

Investors, who will still include some private stalwarts from privatisation, receive a higher dividend pay-out. Customers, especially on the premium transatlantic routes, will be relieved to learn that BA is putting in an order for 18 Boeing 777-9 Dreamliners which will make for less noisy, greener and more comfortable flying

The big uncertainty for IAG at present is its ownership structure. Walsh is confident that IAG’s carriers can navigate Brexit without excessive turbulence. In terms of operating licences and the roll-over of open skies agreements, there is no obvious cause of anxiety. More worrying are ownership rules requiring EU carriers to be majority owned within europe. At present IAG hopes to pass the test by including UK shareholders in the count.

But what happens post-March 29 is unsettled. Walsh has been a fiery negotiator when dealing with labour problems in the UK and Spain. Negotiating with the EU, as Mrs May has learned, is a different order of problem.

Jet stream

AT first blush you might think that Britain’s world-class aero-engine maker Rolls-Royce is heading for the scrap heap of history. A headline loss of £2.9bn is a very big number.

But if one delves into the figures it becomes clear that this was driven largely by two factors. One is very real: the cost of £790m for having to re-engineer the Trent 1000 engine and compensate all those carriers whose planes have suffered downtime as the repairs are made.

Chief executive Warren east could have done without this but it is a legacy issue which is hopefully resolved.

The other big contributor is Rolls-Royce’s complex hedging arrangements. In 2017 the mark-to-market gain was £2.7bn. In 2018 it swung in the opposite direction with a loss of £2.1bn. That is why east has been encouraging investors to focus not on headline numbers but operating cash flow, which doubled in 2018 to £641bn suggesting, as east claims it was, a ‘breakthrough’ year.

After a healthy rise in the share price in the last year, it slipped in latest trading. But with orders for next-generation engines for Boeing and Airbus starting to be filled, there should be clearer skies ahead.

Giving guide

THREE cheers for Welsh-born Silicon Valley financier Sir Michael Moritz of Sequoia for stepping in to save the Man Booker Prize with a generous endowment.

even better, former Time magazine writer Moritz is demanding no branding rights and the prize returns to its original name of The Booker Prize.

In the Judeo-Christian tradition a degree of anonymity is the highest form of giving.