Nigel Turner FCMAChief executive, BMIYour industry is hugely competitive andrecent fuel price hikes and green taxeshave put sonne airlines out of business.Hovif is BMI coping?BMI is the oldest purely commercial airlinein existence - others may be older, butthey've been in and out of state ownershipor sponsorship. Since we started in 1938we've always relied on ticket sales and otherrevenues to pay our bills. I've been with thecompany for 20 years and, although it haschanged, its fundamental characteristicsremain; we're independent, not part of theestablishment and we differentiate ourselveson operational integrity - ie, we arrive on timeand we don't lose bags. This isn't particularlyglamorous, but if's what customers want.

All industries are competitive - there areno easy meal-tickets out there. But aviationis particulariy tough because fuel prices havereached unprecedented levels and there isgross oversupply in the market. So many stateairlines make a loss year after year but stay inbusiness because they are seen as a symbolot a nation's viriiity - part of foreign policy.Since 1948, when our trade body, theInternational Air Transport Association, wasset up, its members have iost more than theyhave made. So our playing field is not only notlevel; it's on a steep gradient. But there's nopoint in moaning about it. Thousands of otherpeople would do this job if I didn't want it.

To what extent can airlines hedgeagainst fuel price increases?Some of them buy fuei in advance and somedon't, and the amounts they buy vary. BMIhas a long tradition of hedging, but ail it does

is put off the evil day Fuel is now $1,300 atonne, compared with $800 a tonne last year.But then you need to decide whether youshould hedge for next year by buying at thecurrent price - will prices rise further or willthey crash? All hedging does is buy certaintyof price, but it's still inherently risky.

What about other threats, such as theeconomic downturn?People will still want to travel. There are tworeasons why demand may decline. The firstis that if people are concerned about fallinghouse prices and rising bills they may go fromfour city breaks a year to two, or deoide notto visit family in Australia next summer. Thesecond is if FDs start banning employeesfrom flying to encourage them to use cheapercommunication methods such asvideoconferencing. It goes in cycles: peoplecut costs from time to time, but eventuallyit changes back again. For example, someflying bans actually end up costing firmsmoney because face-to-face businessworks better and they start losing sates.

How do you deal with the environmentallobby and questions about airlines'greenhouse gas emissions?Green issues are presented too simplistioallyand the British public are more sophisticatedthan they're often given credit for - they knowthat if you want to travel you are going toburn fuel. It's important that finance peoplestart balancing all the differentgreen costs and not onlyregistering the obvious ones. Forexample, taking the train up to

a financial management

? '

fSi-

People may saythat they want

green flights, but when itcomes aown to it theyalways ohoose on prioe

Scotland for an afternoon meeting may notcost less in terms of carbon emissions if itmeans that you spend the night in a hotel upthere when you could have flown both waysin a day. It's an issue that CIMA membersshould be tackling in their organisations.

Of course, we do treat the environmentwith reverence - we're humans, too, after all.It also makes economic sense. The less fuelwe burn, the cheaper it is to run an airline.We've been seeking efficiency for the past 40years; it's in our interests. Aircraft are madelighter all the time, which makes them moreefficient, but we won't go from 100 to zeroover night. We'll go from 100 to 90, then from90 to 70. Progress is always incremental.

People may say that they want greenflights, but when it comes down to it theyalways choose on price. We don't need rulesto tell us that the less fuel we burn, the betterit is for the environment. Too often rulesactually encourage perverse behaviour.

There has been much speculation thatLufthansa may exercise its option ofbuying Sir Michael Bishop's shares and

Quick CV198Q-

Graduates from the University of Sheffieldwith a degree in business studies andtakes the post of trainee accountant attailors J Hepworth & Son, which becomesNext in 1981.

turner is recruited by Northern Foods,where he works as a company accountantin various food factories. "I am verygrateful for my time there. It was anexcellent company and gave me greatexperience and training," he recalls.

Starts as a cost and budget accountantat British Midland Airways. He becomesfinance director in 1992, CFO in 1997and chief executive in 2004.

so become the mainshareholder in BMI.BMI is speculated aboutmore than other airlinesbecause we are privatelyowned with only threeshareholders: our chairman,Michael Bishop, who owns50 per cení plus one share;Lufthansa; and SAS. We're all used toliving with this speculation, but we can'twaste time guessing what might happen;we have an airline to run. The samechallenges will exist for us to deal with,whoever owns the business in the future.

What was the biggest challenge thatyou dealt with last year?That would be our takeover of BMED, whichwe bought in 2007 from BA, giving us a newrange of destinations in central Asia, theMiddle East and Africa. We managed theintegration in eight months on budget, whichwas a remarkable achievement - projectmanagement is one of the most underratedskills. Everyone always wants to do thegiamorous deal part and not the hard graftof making the integration work. But we gotthere and I was extremely pleased about this.There were so many things that could havegone wrong and none of them did,

You were quoted widely in the pressafter the chaos at Heathrow's fifthterminal led to BA's decision to delay ¡tsfull move to the new building.I was surprised at the T5 situation. Then Iwas annoyed when it prevented BA's move,which aftected our business. All I could doabout it was express my annoyance. Itmeans I've lost my new terminai for a yearand that's impossible to put a price on.

The problems at T5 trashed thereputation of Heathrow and made theindustry look silly But, far more importantly,it has put back the new terminal by a yearand I still have to honour our obligations.

You were CFO before you became chiefexecutive. Did you find it hard to let goof the finances?All CEOs look at the figures, but I spendfar less time doing this now than ( used to.Most of my time is spent thinking aboutsales, marketing, our strategic direction and

external relationships. I'mcompletely cured of thefifiance side and my CFOis extremely competent.Chief executives with a

CFO background havean advantage in that they

understand the numbersand the corporate structure, but

the worst nightmare is the chief executivewho doesn't let go of finance. No CFO worththeir salt would stay there in that case.

Did you always want to work in aviation?It was a complete fluke - I just saw the advertand applied. My background was in retail.I didn't even fly until I was 21 and the weekbefore I joined BMI at 29 I took my third flight.It wasn't that I was from a particuiarly poorfamily; we simply didn't fly as much back then.Now my children think there's somethingwrong if they don't fly everywhere. That'swhere cheap flights have been a great thing,because it has meant that flying is no longerfor the privileged few. The nastier side of theanti-flying campaigns is the snob factor: itsometimes feels like it's the middle classeswanting to keep destinations to themselves.

Why did you become an accountant?Mainly because I was unemployed in 1980.It was the time of the miners' strike and therewere no jobs in Nottingham for graduates,It was a difterent world from how it is todayNo one aged under 35 has had anyexperience of the devastating effects ofrecession and unemployment. I did myCIMA training in evening classes at LeedsPoly {now Leeds Metropolitan University).

Why did you choose CIMA?I was more comfortabie with the qualificationbecause I felt it was more me. I used towonder where all the accountants went,because thousands of us were trained andthere are relatively few CFOs, but now I realisethat many move on to other things, just as 1have. CIMA accountants tend to be fine onthe P&L but they also need to focus on thetechnical finance side, which isn't fashionableat the moment. You don't get to run a bigbusiness unless you understand balancesheets, cash flows, reconciliations and soon. CIMA accountants with strong technicalabilities have the potential to be phenomenal.

10 financial management