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British Airways to Pay for Involuntary Destruction of Its Headquarters

Nov. 24, 2016
2 min read
British Airways to Pay for Involuntary Destruction of Its Headquarters
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After years of debating and planning, London Heathrow's third runway is finally getting regulatory approval to go forward. Amazingly, it'll be the "first full-length runway built in southeast England since World War II". And, it has its share of champions and fierce opponents.

One of these opponents is the CEO of British Airways' parent company IAG. Last December, CEO Willie Walsh threatened to pull IAG out of London's Heathrow if the plans for the third runway went forward. The substantial construction costs for the runway would lead to a doubling of charges airlines have to pay for using the airport.

Now, the plans to expand the runway might make the decision to leave much easier to swallow. Walsh just found out that IAG's Waterside headquarters is going to be demolished as part of the construction of the third runway. And, he's livid that he's just now finding this out from seeing a map of the final plans. As he told The Guardian “We were never actually informed or advised by Heathrow that they intended to knock down our headquarters.”

London's Heathrow might be missing a lot of British Airways planes if IAG goes forward with pulling out of Heathrow.

As part of the plan, IAG will be paid 125% the market value of the property for its destruction. But, the company will end up having to eat a lot of this cost itself. As one of the largest users of Heathrow Airport, IAG will effectively have to pay 56% of the cost of demolition of its own headquarters.

The question now is if this will intensify IAG's threats to bail on Heathrow. This new revelation that its headquarters is going to be destroyed to clear the way for a runway it never wanted probably doesn't help. If so, Heathrow might not need that expensive new runway after all.

Featured image by UIG via Getty Images

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