Don't work for us, urges BA's least favourite boss

Politics is a bit like football, according to Robert Ayling, chief executive of British Airways. "If your father is a Chelsea supporter, you tend to inherit it to some extent." Apart from his devotion to "The Blues", his father also supported Labour.

While his years in the civil service taught him to be "professionally non-political", Mr Ayling is known in the City as a "left-wing capitalist". A member of Labour for a year in his 20s, he left because he was "horrified at the daft things that were discussed". Like his friend Jack Straw, Labour's home affairs spokesman, Mr Ayling would almost certainly find a political home in the outer, right-wing reaches of the Blair camp - yesterday the party confirmed that he is among a group of prominent businessmen who regularly dine with Tony Blair.

"I know what's needed to be economically successful, but I also understand some of the social implications of life; what affects ordinary people," he says.

You could have fooled some of his employees. He has been taken aback by the fury engendered by his radical "Business Efficiency Plan" to save BA pounds 1bn in three years to keep profits rolling in. On a visit to assess morale, he asked a stewardess how she felt about his strategy. Not a lot, apparently. She belaboured him for an hour about the 5,000 redundancies he is seeking; about pay cuts he is demanding and about deteriorating conditions. The pounds 565,000-a- year Mr Ayling was accused of ignorance about the misery he was causing.

What baffled the stewardess most was the need for massive cost-cutting in the wake of record profits. Mr Ayling, whom even union officials describe as "charming", did his best to reply. Eventually however he retired from the fray with as much dignity as he could muster. "I believe in being straightforward with people and I don't expect them to be deferential," he says.

A poster on a BA noticeboards show deference is in short supply. In one he is found guilty of crimes against BA employees: "Lock him up and throw away the key." He concedes that as far as his staff are concerned, he is not the world's favourite chief executive.

But he believes BA faces a tidal wave of competition fostered by deregulation; he says cost-cutting and efficiency improvements are vital to ensure not only the profitability of the company but its survival.

Shareholders and analysts expect pounds 1bn profits by 2000, says Mr Ayling and, with mounting costs, BA will fail to achieve that without efficiency measures. He believes employees have been insulated from change."People at BA have not been affected by the recession like employees in other businesses. Other people have lost their jobs, their businesses and their homes. They don't know how people are treated in other industries. I feel for every one of them, but I do sincerely believe that unless we achieve an improvement in our competitiveness, the dangers we face will be far greater than the affects of the changes." It is not as if BA is a bad employer, he argues. Labour turnover is negligible - less than 2 per cent leave a year - and severance payments are among the most generous in British industry. Although he does not rule it out, compulsory redundancies are not envisaged. Mr Ayling, 50, has an unconventional background for a captain of industry. At 16 he had to leave a fee-paying school after the failure of his father's grocery business in south London. He was articled to a solicitor at 16 and at 24 he was a partner in a practice. At the age of 37 he was an under-secretary at the Department of Trade and two years later was poached by BA. He was successively legal director, company secretary and director of human resources. Just over a year ago he was made group managing director.

He insists he is not in sway to some fashionable management philosophy."I don't read books about management. Most of them are extremely badly written." Mr Ayling's plan bares comparison however with the changes wrought at the BBC by John Birt. At its most basic, an organisation should examine what it needs to do "in-house" and consider farming out the rest. Mr Ayling has mulled over such an approach with Mr Birt in Crickadarn, a village near Hay-on-Wye, where they both own retreats. At BA, Mr Ayling and his board have undertaken such an exercise to see which services can be "outsourced" but have yet to come to final conclusions. Hence the uncertainty and alarm.

In one poster he is accused of running the company through "stealth and fear". He prefers to think he is "open and honest". The openness has not extended however to strategy drawn up by the company in case of industrial action in protest at his plans. Some of his executives are talking of a "Day Zero", in which new conditions are imposed on the work- ers. Hundreds of managers have already been trained to take over the jobs of their ground- staff subordinates.

Despite his reputation, in the City at least, as a caring capitalist, Mr Ayling does not believe the concept of "fairness" has a place in boardroom deliberations. "In a way what we're doing isn't fair. In the same way as it's not fair that nurses in the NHS are not paid more than they are, which we'd all like to see, just because we're human beings. We don't sit down and consider whether decisions may be fair or not. We try and find out how we can make people fly in our aeroplanes rather than other people's."