Judi Bevan

Facing the flak at Terminal 5

Judi Bevan meets BAA chairman Sir Nigel Rudd, an Eighties entrepreneur turned City grandee who still relishes tough challenges — and has met several at Heathrow

issue 12 April 2008

Judi Bevan meets BAA chairman Sir Nigel Rudd, an Eighties entrepreneur turned City grandee who still relishes tough challenges — and has met several at Heathrow

Sir Nigel Rudd, chairman of BAA and motor group Pendragon and deputy chairman of Barclays Bank, has a reputation for riding towards the sound of gunfire. ‘I like difficult challenges — if it’s not difficult, where’s the fun?’ he says, an impish grin lighting up his solemn face. Not that the opening of Terminal 5 can have been a bundle of laughs amid the public uproar over cancelled flights and mountains of lost luggage. ‘The first few days were a tragedy,’ says Rudd, who admits that BAA must take the blame for some of the equipment not working properly. ‘It was a matter of a number of small things building up into something much bigger.’ Yet he has nothing but praise for British Airways chief executive Willie Walsh, who took most of the flak. ‘I really admired the way Willie took responsibility for the problems and showed true leadership.’

Now 61, Rudd made his name as the co-founder of Williams Holdings, which he built up with Brian McGowan to be one of the Thatcher era’s most successful go-go stocks. These days he is a City grandee, a man they call for when big companies lose their way. He exudes warmth and solidity and might be dull were it not for an irreverent sense of humour bubbling beneath the surface — and a delight in taking risks. ‘I quite like sailing close to the wind because there is a thrill in that,’ he says softly, with a hint of a Derbyshire accent.

We meet in the cosseted splendour of Barclays Wealth Management offices in Mayfair, a world away from the chaos of Heathrow. Here there is no hint of the storm raging over the airport’s proposed third runway or the rumpus over Terminal 5. Rudd looks remarkably relaxed in an immaculate grey suit and pale blue shirt with natty cufflinks; but then, he has never been one to flap. Sorting out BAA, owned by the Spanish group Ferrovial, will be his third job turning round a big floundering company — and by his own admission, the toughest yet. ‘It is so much in the public eye and it is a regulated business with several structural problems.’

In 1997, while still at Williams, Rudd took on the chairmanship of Pilkington Glass; he put in the Italian Paolo Scaroni as chief executive and nine years later sold it to the Japanese. Next, he took the chair at Boots, which to many people’s horror he merged with European group Alliance UniChem and then swiftly sold to KKR and Alliance’s boss, Stefano Pessina. ‘I enjoyed that merger most, partly because the financial community hated it,’ he says, with a gust of mischievous laughter. ‘You don’t mention the good price we got: during my chairmanship we created about £6 billion of shareholder value.’

Since he became chairman of BAA last August, his life has taken on the quality of a soap opera. Threatened strikes, public demonstrations and clashes with the airlines over charges are the everyday story of the airport folk that Rudd leads these days. The fates turn fast. In mid-March he was walking a few paces behind the Queen on her lap of honour round Terminal 5 to cascades of praise; two weeks later he and Willie Walsh were hate figures. Rudd knows it will pass, predicting that Terminal 5 will soon be operating smoothly and that he and his newly appointed chief executive, Colin Matthews, will then be able to get to grips with other problems — such as security — and a huge programme of investment. ‘We need to spend £4-5 billion over the next four years because BAA has been underinvested for decades,’ he tells me.

In the past few months he has inhaled airport culture. ‘There has not been a new runway in the south-east of England since 1946 and we’re supposed to be a modern state,’ he says scathingly, when I ask if we really need a third runway. ‘The Chinese, on the other hand, have gone from thinking about a new airport in Beijing four years ago to having one today. I’m not suggesting we become a totalitarian state but we need to make a decision.’ I confess to being mystified as to why Heathrow, surrounded by dense housing, should be expanded rather than Gatwick or Stansted, which sit amid green fields.

‘The international airlines will not go to Stansted or Gatwick,’ retorts Rudd. ‘Continental Airlines have just paid £100 million for two pairs of slots at Heathrow because it’s the hub; it works for people who want to spend a couple of days in London and business people in transit.’ He claims, intriguingly, that Heathrow is already losing out to Dubai airport, which has been created as a hub for the Far East. ‘Passengers can bypass Heathrow. It’s a disaster for London.’

Rudd was one of 11 ‘New Tycoons’ featured in a book of the same name that I co-authored in 1989, charting the rise of the young entrepreneurs of the 1980s. Of the original players, only Rudd and Sir Martin Sorrell of WPP are still at the top of their game. Both are cool under fire and dispassionate when it comes to making tough calls. While Sorrell has continued to build WPP, Rudd took the hard decision to demerge Williams in 2000. ‘It would have been lovely to stay there with all my friends but we realised that the age of the conglomerate was dead.’

When he arrives at a new company, the chief executive had better watch out. It took him six months at BAA to bid farewell to Stephen Nelson, Matthews’s predecessor. So just how many has he fired? ‘It is not a question of scalps,’ he says defensively. ‘Only one of the seven chief executives I have removed was truly incompetent. The others were just not good enough. It is a mistake to persevere with someone when you can get better.’ He considers his greatest strength to be his judgment of people. ‘I am very rarely wrong and I make my judgment within the first five minutes of meeting someone.’

Rudd grew up in modest circumstances as the second son of a Derbyshire weights-and-measures inspector who was 50 when Nigel was born. He remembers an upbringing of genteel poverty. Painfully shy as a child, he developed finely tuned antennae for reading others. He entered Bemrose grammar school in the bottom stream before putting on an intellectual spurt and taking his O-levels a year early. The experience gave him a lifelong regard for grammar schools. ‘I went to school with all sorts of boys but even if you were from the worst council estate in Derby, from the moment you got on the bus you were in an academic environment where people encouraged and valued you.’

He despises the Labour government for destroying grammar schools. ‘It was the biggest political crime of the second half of the 20th century,’ he says passionately, adding that teachers should be better paid. Most of his charitable efforts go to Derby Independent Grammar school to support children from disadvantaged backgrounds.

His teachers believed he was Oxbridge material but his parents urged him towards the economic security of the professions and in 1962 his father found him a job as a trainee accountant in Derby. The Swinging Sixties passed him by and five years later he qualified as the youngest chartered accountant in the country. During his training he had been shocked at the parlous management of British industry. When he went to work for London & Northern, a conglomerate run by the colourful Jock Mackenzie, he was soon given a chance to run one of the subsidiaries, and also met Brian McGowan.

Rudd married his wife Lesley, a well-grounded Derbyshire lady who shares his sense of humour, when they were both 22. It is clear she has his measure. Fearing he might have too much time on his hands after he left Boots, she urged him to take the BAA job, leaving her free to entertain their five grandchildren during the week. The family base is still in Derbyshire, although they have houses in Belgravia and Portugal. He claims not to have ‘super-expensive tastes’, but drives an Aston Martin DB9 and enjoys regular shooting parties — he lost a finger in a shooting accident some years ago — and exotic holidays. His life is enviably well organised and he is never late despite his working commitments, being deputy lieutenant of Derbyshire, working out three times a week, shooting and playing golf to a handicap of 12.

A lifelong Conservative, Rudd has firm views on environmentalists who want to restrict people’s right to fly. ‘I think they are elitist and the idea of pricing poorer people out of the market is socially divisive.’

Rudd’s contract at BAA is initially for three years and by then the new Terminals 1 and 2 should also be almost finished. ‘In four years’ time 70 per cent of customers will be using new terminals,’ he says. With Rudd and his new team in charge, there’s a sporting chance the openings will be less fraught than that of Terminal 5.

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