British Airways owner has 'no confidence' Heathrow runway can be built within budget

Willie Walsh, the chief executive of British Airways (BA) owner International Consolidated Airlines Group (IAG), said that he has no confidence a new runway at Heathrow Airport cam be built within budget.

Earlier this week, Britain's largest airport was given the green light for a third runway by ministers, beating Gatwick Airport following a lengthy consultation. The long-awaited decision was described as part of the Government's plan to "build a global Britain and an economy that works for everyone" and as a "major boost" for the UK economy.

However, Walsh warned the airport faced a "significant challenge" in delivering the runway while keeping charges flat, as indicated by the government, adding Heathrow's celebrations had been premature.

"Do I have confidence that the current team at Heathrow can do it? No I don't," he said on Friday (28 October).

The Civil Aviation Authority has told the airport it expects charges to remain unchanged and – upon confirming approval of Heathrow's expansion plans – the government warned the runway had to be "delivered without hitting passengers in the pocket".

However, Walsh, who in June accused the airport of "ripping off customers" over the runway plans, said the expansion can not be delivered without increasing charges.

"Among other things, the airport will have to confirm that the [project] can be built without raising passenger charges," he said.

"Can the proposal given by Heathrow to the airports commission be built and keep charges flat, no it can't."

The IAG boss added that "some radical change in their [the management's] behaviour and thinking" was required if Heathrow was to successfully build a third runway, although he added: "I'm personally not confident they can do it."

IAG operates approximately half of all flights out of the West London airport and is Heathrow's biggest customer – Walsh insisted the airport faced a significant challenge.

"It's a significant new challenge for the airport and not one they have had to face up to in the past," he added.

"If the argument is that the third runway is positive for the UK economy we've got to make sure that it is for the benefit of customers and not for the shareholders."

However, Walsh, who once publicly supported a third runway, conceded expanding Britain's main airport presented British Airways with an important opportunity to strengthen its already dominant position at the airport.

"It represents an opportunity for British Airways as clearly its current schedule would operate better if operated over three runways and it gives British Airways and other airlines an opportunity for expansion which we don't have today," he explained.

Heathrow reiterated its commitment to keep landing charges and passengers charges low, indicating it had consulted IAG over its expansion plans.

"As our biggest customer, Heathrow has been listening to IAG about the cost of the current proposal for expansion," said a spokesperson.

"Heathrow is determined to work with all our airline partners to deliver expansion as cost efficiently as possible – keeping landing charges low and delivering value for our passengers."

Earlier today, IAG blamed the pound's decline and lower trading after the Brexit vote for its decision to cut its profit growth forecast for 2016.

The group, which also owns Iberia and Aer Lingus, now expects operating profit for the current financial year to grow 7% from 2015 to £2.2bn, compared with the lower double digit figure it forecast in July.