BA chief gets £35k pay rise (plus £1m if he wins over disgruntled passengers)

British Airways chief executive Willie Walsh will get a £35,000 pay rise and has been offered the prospect of a £1million-plus bonus if he can improve the airline's appalling reputation and performance.

The extra cash will be largely dependent on improving service to passengers - many of whom have been left disgruntled over the disastrous opening of Terminal Five.

It comes after Mr Walsh announced last month that he would forgo his £700,000 bonus for 2007/08 after the airline's Heathrow fiasco.

Now, the airline's annual report published on Tuesday shows that Mr Walsh will see his £700,000 basic salary increased to £735,000 next month, while he could also pick up a bigger bonus in this financial year worth up to 150 per cent of his salary.

But the bonus targets will be more dependent on customer service and satisfaction as it seeks to rebuild its tarnished reputation in the wake of the disastrous T5 opening.

Mr Walsh said it would be "inappropriate" to take his bonus this year - despite unveiling record full-year profits.

Dozens of flights were delayed and cancelled and thousands of passengers separated from their bags in the troubled move to the new building in March.

His decision to decline the bonus was widely applauded by passengers, politicians  and the world beyond the City and in was in stark contrast to taxpayer-funded Network Rail bosses who kept theirs - despite overseeing chaos on the railways at New Year.

BA also revealed on Tuesday that former commercial director Martin George, who quit in October 2006 over the airline's part in a transatlantic price collusion scandal, was paid a further £486,000 in defence costs and leaving salary payout on top of the £356,000 he received in the last financial year.

Hearts and minds: The extra cash for Willie Walsh will be largely dependent on improving service to passengers

BA was fined around £270million last year by authorities in the US and UK after it admitted collusion in fixing the prices of fuel surcharges.

British Airways' reputational woes overshadowed record pre-tax profits of £883million for the year to March 31, up 45 per cent on the previous year, despite soaring oil costs.

BA's annual report also shows that chief financial officer Keith Williams will receive a pay rise to £440,000 and a hike in maximum available annual bonus to 125 per cent of basic salary.

It said that the remuneration committee felt that the two executive directors were "high calibre, talented individuals".

Airline analyst Andrew Fitchie of Collins Stewart said that BA's top executives will have to work hard to achieve this year's bonus targets and praised its move to put greater emphasis on customer satisfaction.

He said: "They've set them a challenging hurdle.

"To focus more on customer service and satisfaction entirely makes sense."

Earlier this month, directors at tax-payer -funded Network Rail vowed to keep their lucrative bonuses - despite widespread criticism and even a highly-critical missive from the rail regulator pointing out a string of failings.

These included the disastrous New Year engineering overuns which led to the company being fined £14million by the regulator.

Chief executive Ian Coucher received  a £305,581 performance bonus on top of his £539,000 salary - plus a £205,000 long-term bonus - taking his total package to £1,049,581.

Infrastructure director Peter Henderson has a bonus of £219,391 on top of a £399,000 salary - plus a £153,000 long-term bonus - making a total package of £761,391.

Finance director Ron Henderson has a bonus of £208,944 on top of a salary of £385,000 - plus a long-term bonus of £153,000 - making a total package of £746,944.

Former NR chief executive John Armitt is now chairman of the Olympic Delivery Authority, but he will get a £178,000 bonus for being in office during part of the last three years.

The bonuses were paid after Network Rail - which gets half its £6billon a year funding from the tax-payer - made  £1.2billion profit.