Heathrow appoints its new CEO

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• Lady London says:

  1 Jul1 July 11:22

  “the British Government, which would like a say in the airport but doesn’t hold an ownership stake”

  How very true.

  If you as a country’s government want to have a say, you have 2 choices:

  1. legislate
  2. don’t sell off the assets in the first place.

  How much else is this true of, in Britain.

  • JDB says:

    1 Jul1 July 12:26

    A lot of governments have sold off businesses/assets because while they would happily keep milch cows, they hate ones that require ongoing capex that would have to compete for funds with health, education, benefits, police, defence etc. and the government can’t be the one seen to put up utility bills or airport charges.

    Even in that socialist nirvana of France, sensitive areas like water have been privatised for 30/40 years with 80% owned by just two companies. The French State has kept 50.6% of ADP but it has kept the monopoly. Having worked on many privatisations around the world, the one Mrs T was keenest on by far was water as she foresaw the vast cost of upgrading the Victorian infrastructure. Although there have been excessive dividends taken out, there as been something around £200bn invested in the water/sewerage system since privatisation which is big money even in the context of the UK government had the sector remained state owned. The new Labour team has sensibly back of the various re-nationalisations proposed by JC – they recognise they really don’t want these things being their cost or responsibility.

    • yorkieflyer says:

      1 Jul1 July 13:03

      Agreed, however we have a history of regulators of privatised natural monopolies being conflict averse and the idea that the consumer funds investment upfront rather than the company raising debt for investment stinks tbh. Instead we see heavily leveraged outfits maxing out their dividends. Just look at Heathrow and Thames Water and don’t get me started on the overpaid CEO’s of these crap shoots who wouldn’t last five minutes running a business subject to competition

      • JDB says:

        1 Jul1 July 13:49

        These sort of casual insults are really quite strange. Do you actually know anything about these CEOs other than what you read in the press or perhaps some limited observation after walking through an airport? Have you met them, heard them speak or taken the trouble look at their track records. Have you met CEOs of other big companies to compare them against? Both Thames and HAL have very savvy experienced shareholders (and one big one in common) so do you really think they are going to entrust their asset to being run by some second rate CEO?

        I don’t know the recently departed CEO of Thames Water but the company has done a brilliant job for its shareholders over the years; it’s the second rate wimpy regulator you want to direct your ire at. The directors will talk about working for all stakeholders but their fiduciary responsibility is to shareholders.

        JH-K has had an amazingly successful career – he was promoted to CEO after delivering T2 on time and on budget. He is a highly intelligent and charismatic leader and for what he has to deal with, he is paid peanuts compared to his market value. It’s not easy running a huge, very complex operation whilst dealing with hands-on shareholders, government and regulators and regulation takes up a totally disproportionate amount of time. In more recent years of course he had to deal with a sudden drop of 90% of revenues while stuck with a lot of fixed costs without any government subsidy beyond that available to all; he is perceived to have dealt with that extremely well. Clearly you have a very low opinion of Heathrow, but there is a huge amount of co-operation in the major airport world as they aren’t really competitors and people from what I imagine you think of as ‘good’ airports vie to come to LHR on secondments from their home airports as HAL’s operational capability and operations centre is extremely highly rated.

        He will quite likely go in to private equity rather than taking on another CEO role so he can make some proper money.

        • Lady London says:

          1 Jul1 July 22:21

          Who cares about the CEO?

          As @Ken says, the figures speak for themselves.

          The business loaded with debt, charges to captive consumers for a close-to’monopoly-type utility monstrously hiked to service that debt, and meanwhile alnost all profit paid out as dividends to shareholders.

          Granted the job is clearly more about pleasing shareholders than customers as you’ve said JDB. And if you don’t want to deal with regulators then don’t run this tyoe of business.

          No wonder infrastructure funds are such a one way bet.

    • Ken says:

      1 Jul1 July 13:49

      Alternatively…..

      £200bn works out at £6bn a year. Hardly an enormous sum.

      On the decade to 2017, profits where £19bn of which £18.4bn was paid in dividends.

      Debt now stands at £60billion

      The amount of shareholder capital by comparison invested is tiny.

      Prices rose by 40% more than inflation in first 25 years of privatisation (source national audit office).

      Not a single new reservoir built in last 30 years (somehow managed to build them pre privatisation).

      20% of the average bill goes on either dividends or debt interest.

      To ‘successfully’ run a water company, the emphasis is on gaming the system with Ofwat and hoping you don’t get caught when repeatedly polluting rivers with sewage.
      Even when a judge describes Thames water pollution levels as ‘borderline deliberate’ you will trouser £2m a year for running the company.

      Still Macquarie bank has got to gouge UK customers somehow.

      Hard to believe anyone would argue privatising water has been a stunning success.

      • JDB says:

        1 Jul1 July 14:07

        Water privatisation has been a big success for shareholders and for the government in get the problem off their books, which is why Labour definitely doesn’t want the water industry back. They also won’t do anything too draconian that might scare off (future) investors, particularly foreign ones.

        The problem is that while there is an adequate regulatory system in place, the companies are better funded and so employ much smarter people so have run rings round the regulator who shouldn’t have enforced faster, bigger investment and reduced dividends.

        Governments are generally shockingly bad at running businesses and even worse at allocating capital. They also find it harder than private companies to put it back on the customer through higher bills, so having water companies as the bogeymen works fine.

        • JDB says:

          1 Jul1 July 14:10

          @Ken – you must be the only person on this site other than me than doesn’t like gaming the system and hoping you don’t get caught. You mention it in the context of water companies so I assume that covers credit card gaming, or is that somehow different?

        • Ken says:

          1 Jul1 July 15:33

          @-JDB

          AMEX have no obligation to offer anyone a credit card, or give retention or referral bonuses for that matter. They charge 23% interest on balances not paid off, and charge for some of their cards.
          They are in a competitive environment & the core of their business in managing vast amounts of data – if they wish to weed out the gamers, it’s a simple matter.

          Water companies are monopolies and if you live in London you have no choice but get your water and sewage from Thames.
          If Macquarie chose to load £2Bn of debt on to Thames to pay for their takeover (as they did), the debt cost just gets passed on to customers (as it did).

          I’m surprised that you find any equivalence.

        • yorkieflyer says:

          1 Jul1 July 23:13

          I think you meant an inadequate regulator?

    • Bob says:

      1 Jul1 July 18:18

      “socialist nirvana”… France…

      where Nahel has been killed by a policeman…

      erm…..

      • dougzz99 says:

        1 Jul1 July 21:26

        WTF, maybe the best bit of whataboutery I’ve seen on HfP

      • Lady London says:

        1 Jul1 July 22:26

        Hey dougzz9 : what exactly is ‘whataboutery’ ?

• yorkieflyer says:

  1 Jul1 July 13:08

  I think Mrs T mainly foresaw electoral benefit in selling off stuff we already owned in common under value, including council houses to Sid was it?

• ADS says:

  1 Jul1 July 15:30

  On the question of whether Heathrow’s third runway ever happens … as well as the issues around HAL’s balance sheet, and the current high interest rates … there’s also the issue about whether an incoming Labour government will try and stop it.

  At a recent debate in Parliament (Westminster Hall rather than proper HoC) London’s Labour MPs were lining up to oppose it.

  • BA Flyer IHG Stayer says:

    1 Jul1 July 15:39

    A debate in Westminster Hall is just as valid as one in the main chamber of the House.

    It’s hugely increased the ability of back benchers to initiate debates and ministers attend to reply to the debate and be held to account,

    BTW the former member for Uxbridge and South Ruislip was against it until he was for it!

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