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BAA boss quits on eve of Heathrow T5 opening
Jonathan Prynn, Consumer Affairs Editor27 Feb 2008
The boss of airports operator BAA - which runs Heathrow, Gatwick and Stansted - has quit amid a growing crisis at the company.
Stephen Nelson had only been chief executive officer since July 2006. His ousting comes after a year of unprecedented criticism, particularly over conditions suffered by passengers at Heathrow.
His departure is only weeks before the opening of Heathrow's £4.3 billion Terminal 5, designed to ease pressure on the congested airport.
The former Sainsbury's executive had faced accusations that he cared more about developing terminal shops than improving facilities and cutting queues for passengers.
He is likely to get a pay-off worth at least a year's salary of about £700,000.
On 1 April he will be replaced by former water boss and ex-British Airways director Colin Matthews.
The shake-up was initiated by BAA chairman Sir Nigel Rudd, who was appointed by the company's Spanish owner Ferrovial last summer.
BAA is also the subject of a Competition Commission review that could lead to it being forced to sell one London airports.
Next month the Civil Aviation Authority will announce new price caps for Heathrow and Gatwick charges over the next five years.
The loss of Mr Nelson is also thought to be linked to the problems Ferrovial faces in refinancing £10 billion of debt it took on to buy BAA. Yesterday Ferrovial said profits last year fell by almost half to ¤733.7 million (£552 million), partly because of the cost of servicing its debts.
It has said it can continue with its existing financing arrangements until 2011, but analysts believe it must complete a refinancing deal within a few months or the firm could be crippled.
Such a deal has been hugely complicated by the global credit crunch and if it fails, analysts warn, in a worst-case scenario BAA could run out of cash, forcing it to halt projects such as the renovation of Heathrow Terminals 1 and 2 before the London Olympics.
Nicolas Villen, chief financial officer of Ferrovial, said he still hoped to have refinancing completed by the middle of this year. But he admitted: "The capital markets are very difficult. We are working on the refinancing. We think it is possible but we have to study alternatives."
Ferrovial hopes to complete a £400 million sale of World Duty Free next month. BAA also plans to sell its property arm in April.
Mr Matthews, 51, is seen as one of the most successful turnaround specialists in British business. He was previously at Severn Trent, the scandal-hit Midlands water firm, where he was asked to clean up the business.
He gained experience of Heathrow as a director of engineering at British Airways. A committed Christian, he has said: "In business having a clear sense of Christian ethics is important."
Reader views (1)
Heathrow - the world's least favourite airport.
- Sean V, st ives, 27/02/2008 13:22
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