• Return to familiar ground for former tube executive
• New London Underground boss faces complex funding row
A London Underground tube train. Heathrow boss will find his new job demanding. Photograph: Frank Baron
The boss of Heathrow Airport is to tackle one of Britain's most demanding transport jobs by taking charge of the London Underground network amid a multibillion pound funding row.
Mike Brown, chief operating officer at Heathrow, will return to LU as managing director a year after he quit as chief operating officer of the organisation to join airports operator BAA, which owns Heathrow.
The moves comes as a dispute with Tube Lines, the contractor responsible for upgrading a quarter of the network, enters a critical phase with the two sides billions of pounds apart in a row over how much the work programme should cost.
London mayor Boris Johnson warned last week of a "massive black hole in the city's transport budget, putting further pressure on LU to settle the Tube Lines dispute and heralding a rise in tube fares.
Brown replaces LU's highly-rated former boss, Tim O'Toole, who stepped down this year to return to his native United States. O'Toole won praise for his handling of a £30bn private public partnership to upgrade the tube, but which continues to trouble LU.
An aviation industry source said Brown's affinity with LU, where he had worked for 18 years before joining BAA, made it impossible to keep him.
"Mike Brown has worked man and boy at London Underground and it is no surprise that he has been attracted back to take charge. BAA was resigned fairly quickly to losing him."
In his short period in charge of Britain's largest airport Brown, who was born in Northern Ireland, has overseen an improvement in punctuality and queues at security checkpoints, with nearly eight out of 10 flights now departing on time and 98.4% of all passengers passing through security in less than five minutes, compared with 92.4% last year.
Declining passenger numbers have also made the notoriously crowded airport less congested.
Brown was lured to Heathrow by BAA chief executive Colin Matthews, who has made improving the performance of BAA's biggest asset a group priority.
Brown is returning to a transport network that, like Heathrow, has major congestion problems. The tube carries about three million passengers a day and swaths of the network are disrupted every weekend by upgrade work to allow more frequent services. He joined LU's management programme in 1990 and has helped guide the organisation through difficult periods including the imposition of the public-private partnership (PPP) programme to upgrade and maintain the network.
The PPP will be one of Brown's biggest challenges when he returns because its last remaining contractor, Tube Lines, is embroiled in a funding dispute. Tube Lines is adamant that work on the Piccadilly, Northern and Jubilee lines over the next seven years will cost £6.8bn, while LU insists that the bill should be £4.1bn and is unlikely to receive further funding from the Treasury if it is forced to accept the Tube Lines estimate.
Johnson is expected to raise bus and tube fares next year. But the recession is hitting fare revenues, which account for half of Transport for London's income.
LU took over the biggest PPP contractor, Metronet, two years ago after the company racked up a projected overspend of £2bn, and it claims that it can carry out the complex engineering work more cheaply and efficiently than the private sector.
Relations with Tube Lines reached a low this year when O'Toole raised doubts over the future of the company by asserting that LU would get a better return for the taxpayer if it took over the work. Tube Lines hit back, claiming that it inherited an underperforming network when the PPP programme began in 2003.
The simmering dispute between LU and Tube Lines reignited last month when Johnson criticised delays on the Jubilee line and warned that the patience of Londoners was at "breaking point."
Richard Parry, the acting managing director of LU, warned that the credibility of the much-criticised PPP system now rested on Tube Lines.
"As the one remaining PPP contractor, it is on their shoulders that the case for a PPP model now rests," he said.
The PPP contract arbiter, Chris Bolt, is preparing to launch a consultation into the cost of the Tube Lines work and could order a scaling back of engineering programmes that would exacerbate overcrowding on the network.
According to his preliminary estimates, the next phase of the PPP programme should cost between £5.1bn and £5.5bn.
Industry sources have speculated that LU could make a compulsory purchase of Tube Lines if agreement is not reached, but the taxpayer would have to pay off Tube Lines' borrowings of around £2bn under that scenario, with little prospect of a Labour or Conservative government giving LU the cash.