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Breakfast with Frost
Rod Eddington, Chief Executive, British Airways
Rod Eddington, Chief Executive, British Airways
BBC BREAKFAST WITH FROST INTERVIEW: ROD EDDINGTON, CHIEF EXECUTIVE, BRITISH AIRWAYS SEPTEMBER 8th, 2002

Please note "BBC Breakfast with Frost" must be credited if any part of this transcript is used

DAVID FROST: And now joining us is someone, Rod Eddington, the head of British Airways whose business was massively affected, as all airlines were, by September 11th. Rod, welcome.

ROD EDDINGTON: Thanks David.

DAVID FROST: First of all, if you hadn't moved fast and taken emergency measures, how close would an airline like British Airways have been to meltdown after September 11th?

ROD EDDINGTON: I think we were all close - one way or another. We moved quickly, most airlines did. Some airlines perhaps were a bit closer to the edge before the 11th of September and of course as a result of that a number, including household names like Swiss Air, actually failed.

DAVID FROST: And what would be the effect on you, on British Airways, if the subject we've been talking about all morning, if the war on Iraq happened?

ROD EDDINGTON: It would be a major issue, obviously, for all the intercontinental airways, including us, British Airways. We've been through it before with the Gulf War in the early Nineties, and of course with the events of the last twelve months. So we'd have to respond, but if you look at what we've done since the 11th of September it's about building a more robust business and that in making it more robust ensures that we can survive whatever bumps come our way.

DAVID FROST: Has life changed for all airlines, permanently, do you think?

ROD EDDINGTON: I believe it has - clearly some of our customers are still apprehensive and the additional security arrangements on the ground put some people off travelling. But I'm an optimist and by that I mean I think travel is in people's life blood, whether they travel on business or with their families on holidays. So although our world's changed, and we must change with it, people will come back into the air.

DAVID FROST: But at the moment, even before a war on Iraq, you said that the demand is soft, as you put it.

ROD EDDINGTON: Yes it is and we understand that, not just because of apprehension but of course many major companies, who are important for us because they provide us with customers, have really had a tough time economically - banks, major corporates - and people just aren't travelling in the way in which they were.

DAVID FROST: And what about today, this is a decision week for you, in a way, with the Footsie index - will you hold your place in the Footsie 100? The Sunday Times business section front page says "BA poised to drop out of Footsie". Do you think you can hold on?

ROD EDDINGTON: Well we'll wait and see what Tuesday brings. But whatever happens on Tuesday, our priority is to build a much more robust business. We've done that, we've taken unprofitable flying out of our route network, we've attacked our cost base, we've worked much harder to compete with the no-frills carriers, we're always in the customer service business and we must never forget that. And if we can build a strong robust British Airways - as we will - then if we do fall out this time, we will come back.

DAVID FROST: But for the moment, how much will it hurt for this national carrier if - let's say you do go out and then come back - but I mean at the moment of going out, does it matter?

ROD EDDINGTON: Well I think no company that's in the Footsie wants to come out of it, and we're certainly in that groove. But our focus must be, whatever happens, to make sure we build a robust company so that we are always up there as a major British blue chip.

DAVID FROST: And what about the threat of the Ryanairs and the rest, I mean they've been doing really very well, and easyJet, doing very well on short haul flights and so on. You've always said the vital routes for you most of all, apart from the Middle East, is the transatlantic routes. Could these fellows challenge you on the transatlantic routes as well?

ROD EDDINGTON: Well in some ways we already face that sort of competition on the transatlantic. There are, in the UK, there are a number of very well run and very strong charter carriers - like Britannia, like Airtours, or My Travel as they're now called, JMC - who challenge us on these long haul routes. In responding to the no-frills carriers on the short haul, we're also ensuring that we can take whatever challenges come our way on the long haul routes - because, as you say, they're fundamentally important to us.

DAVID FROST: What about the easyJet acquisition of Go? The fact that you got 110 million for it and they sold it on to easyJet for 374. If you had your time over again, would you have not sold it or sold it for more or what?

ROD EDDINGTON: I think when you sell an asset you always want to try and get as much for it as you can. We sold Go, having put 25 million into. We wanted 100 million out and it took us six months to find someone who would pay us 100 million. But when we sold it, we sold it at a time that was right for British Airways, because I think as a company we only really responded properly to the easyJets and the Ryanairs and the challenges they deliver us after we'd got out of the business of owning one of our own no-frills carriers.

DAVID FROST: So in fact, if easyJet had wanted to, they could have bought Go for 110 million. Did you offer it to them?

ROD EDDINGTON: Yes but of course at that particular time, they may not have had the capacity to pay what they subsequently did. We sold, for instance, Air Liberte at the same time, we got 40 plus million pounds for that and they went bankrupt 18 months later. I think it's the nature of these sales - you have to sell them at the time that's right for you, except that the price could go up or it could go down.

DAVID FROST: One last question, will BA be fully in bed with another carrier, another international carrier, in our next interview in a year's time?

ROD EDDINGTON: I hope so David, but these things move very slowly so we'll have to wait and see. Our main priority is to make sure our business is strong and robust.

DAVID FROST: Rod thank you very much indeed.

INTERVIEW ENDS

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