"Interview Geoff Muirhead, chief executive of Manchester Airport Group"

Saturday, May 15, 2004

Interview Geoff Muirhead, chief executive of Manchester Airport Group/
Northern sky driver
United Kingdom - The Guardian.


Geoff Muirhead has a vision of heading one of the world's premier
airports, served by fast inter-city trains, regional commuter services
and local trams, which breaks the stranglehold of south-east England.

Wishful thinking? No. Manchester airport is already heading towards the
top of the European league with a three-terminal complex, a new pounds
60m rail and bus transport interchange that is much flashier than
Heathrow's, and a strong asset base embracing ownership of three other
airports: the recently re-named Nottingham East Midlands, Bournemouth
and Humberside.

As chief executive of Britain's second-largest airport group behind BAA,
Muirhead knows others have cast envious eyes at an enterprise with an
annual pre-tax turnover of almost pounds 50m that once appeared to sit
uneasily in an economy where every conceivable public asset and industry
was being hived off or privatised.

"Our shareholders take a long-term view," says the jovial boss who found
his way into senior airport management by accident after supervising the
airport's expansion as a civil engineer. "They look at this as a
commercial venture, period, and are very much interested in growing the
business for their benefit."

The owners are the 10 councils in the Manchester region, with the city
council having a 55% stake in a business that last year produced pre-tax
profits of pounds 11.2m, pounds 5.5m of which was channelled to the
shareholder authorities. While other municipal owners have either sold
their airports or found commercial partners to take a hefty stake in a
classic New Labour public-private deal, Manchester Airport Group has
been content to remain a public enterprise - probably the largest in the
country these days, next to a struggling Post Office.

But while being a handy nest egg for hard-pressed councils, the question
of a partial sale or flotation to boost municipal coffers has been
suggested - often by free-market zealots or the last government, which
seemed ideologically opposed to the enterprise. Muirhead says council
ownership has benefits and a few pitfalls, notably having to get
ministerial approval before any acquisition.

"There are some very positive aspects, notably longer-term vision and
commitment rather than short-term gains," he says. "The owners haven't
done anything to harm the business because, fundamentally, the success
of the airport is synonymous with the success of the [north-west] region
and the city as an economic entity fuelled by a first-class airport.

"They still, of course, want dividends - every investor does - and we
aim to deliver against that criterion. Public ownership has provided
some different challenges, but it hasn't got in the way of developing
the business."

Driven partly by a strong sense of municipal entrepreneurship in the
leadership of Manchester city council - the airport, to the south of the
city, is connected to the M56 close to the Cheshire boundary - the
undertaking is seen by its supporters as the ultimate manifestation of a
city and region determined to challenge the might of the south-east. And
Muirhead is so confident of its standing that he expects Manchester
airport, with more than 20 million passengers in 2003, to overtake
Gatwick and become second to Heathrow in 10 years.

But the past few years haven't been easy. Building a pounds 172m second
runway in the late 90s close to the Cheshire stockbroker belt produced
protests from the rich and powerful, as well as campaigners committed to
direct action. Bailiffs had to remove protesters from tunnels and trees.
Work was held up by ugly demonstrations.

Three years after the opening of the runway, Muirhead is sanguine about
the bruising experience, noting that a balance has to be struck between
environmental concerns and the greater benefit of the surrounding region
and the wider north. Others have noted wryly that some of the strongest
protesters were people from well-heeled Cheshire who depend on the
airport to keep their own businesses go ing, although Muirhead
diplomatically steers clear of that line of attack.

As a civil and structural engineer, he arrived at the airport in 1988 as
director of development and planning charged with overseeing
construction of the second terminal, which opened in 1993. The following
year he became chief executive and saw the third terminal open in 1998.

"They say nowadays everybody needs two careers," he chuckles. "I did not
expect to stay in the airport development business. I came here because
I'd always been on the contracting side and wanted some further
understanding of construction and I became, if you like, a poacher
turned gamekeeper. Airports are huge investors - so it was good
grounding to understand the clients' perspective - but I thought I'd
then move on to other organ isations, or back into contracting. It just
developed from there."

To his surprise, he found a go-ahead and ambitious organisation. "Local
authority ownership was quite irrelevant. The attitude and culture of
the organisation, which now directly employs 2,600, with another 23,000
working for other companies at the four airports, was progressive,
commercial and, as time progressed, it became the second largest airport
group in Britain."

Manchester airport joined the big league in 2001 when it bought the then
East Midlands airport, with 2.2 million passengers annually, and the
smaller Bournemouth, with 270,000 a year, in a package from the National
Express group for more than pounds 240m. The re-branded Nottingham East
Midlands airport, at Castle Donnington, was clearly a prize as one of
the largest cargo airports in Britain. Bournemouth, according to
Muirhead, is the "biggest undeveloped property on the south coast", with
great potential to add value for Manchester Airport Group, or MAG, of
which he became group chief executive in 2001.

With passenger numbers and freight growing annually, it is tempting to
assume that MAG is still on the acquisition trail. But Muirhead is
cautious. "Never say never in business," he responds. "There are always
possibilities. Quite clearly, with four airports, we've got to make sure
we're not taking our eye off managing and developing those sufficiently,
but if an opportunity comes along to broaden our base I'm quite sure
we'd be interested."

But the priority is to grow the existing business, squeeze more from the
assets which, Muirhead reckons, are probably worth more than pounds 1bn
after borrowings have been eliminated. That means improving transport
links to Manchester airport, the core business. Although well-served by
local rail services at the new transport interchange, Muirhead and his
municipal board have grander ideas.


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