British Airways - History

History

British Airways (BA) was created in 1974, when the British Overseas Airways Corporation (BOAC) and British European Airways Corporation (BEA) were combined under the newly formed British Airways Board. Following two years of fierce competition with British Caledonian, the second-largest airline in Britain at the time, the Government changed its aviation policy in 1976 so the two carriers no longer would compete on long-haul routes.

British Airways and Air France operated the supersonic airliner Aerospatiale-BAC Concorde; the world's first supersonic passenger service first flew in January 1976 from London Heathrow to Bahrain. Services to the US were inaugurated to Washington Dulles airport on 24 May 1976; flights to New York JFK airport started on 22 September 1977. A service to Singapore was also operated in co-operation with Singapore Airlines, as a continuation of the flight to Bahrain. Following the Air France Concorde crash in Paris and a slump in air travel following the 11 September attacks in New York in 2001, it was decided to cease Concorde operations in 2003, after 27 years of service. The final commercial Concorde flight was BA002 from New York JFK to London Heathrow on 24 October 2003.

In 1981, the airline was instructed to prepare for privatisation by the Conservative government. Sir John King, later Lord King, was appointed Chairman, charged with bringing the airline back into profitability. King was credited with transforming the loss-making giant into one of the most profitable air carriers in the world, while many other large airlines struggled. The flag carrier was privatised and was floated on the London Stock Exchange in February 1987. In July 1987, British Airways effected the takeover of Britain's "second" airline, British Caledonian.

The formation of Richard Branson's Virgin Atlantic Airways in 1984 created a strong competitor for BA. In 1993, the intense rivalry between British Airways and Virgin Atlantic culminated in the former being sued for £610,000 for a "dirty tricks" campaign against Virgin and around £3 million in Virgin's legal costs. British Airways' campaign against Virgin included poaching Virgin Atlantic customers and tampering with private files belonging to Virgin. Following a court case, British Airways was forced to pay Virgin damages and legal costs causing BA management to apologise "unreservedly" for the alleged "dirty tricks" campaign. Six months after the "dirty tricks" campaign, Lord King stepped down as chairman in 1993 and was replaced by former deputy, Colin Marshall, while Robert Ayling took over as CEO.

In 1992, British Airways expanded through the acquisition of the financially troubled Dan-Air, giving BA a much larger presence at Gatwick airport. In March 1993, British Asia Airways, a subsidiary based in Taiwan, was formed to operate between London and Taipei. Additionally in 1993, BA purchased a 25% stake in Australian airline Qantas in March, and acquired Brymon Airways in May to form BA Connect. In September 1998, British Airways, along with American Airlines, Cathay Pacific, Qantas, and Canadian Airlines, formed the Oneworld airline alliance. Oneworld began operations on 1 February 1999, it is one of the largest airline alliances in the world, behind only SkyTeam and Star Alliance.

Benefits under CEO Robert Ayling's leadership included cost savings of £750m and the establishment of Go Fly in 1998. However, one year on, in 1999, British Airways reported an 84 percent drop in profits, its worst for seven years. In March 2000, Robert Ayling was removed from his position and British Airways announced Rod Eddington as his successor; Eddington would make further workforce cuts due to reduced demand following the 11 September attacks in 2001. In September 2004, BA announced the sale of its Qantas stake.

In September 2005, Willie Walsh, former Aer Lingus pilot and Managing Director, became the Chief Executive Officer of the company. In January 2008, BA unveiled its new subsidiary OpenSkies which takes advantage of the liberalisation of transatlantic traffic rights between Europe and the United States. As of 2008, OpenSkies flies non-stop from Paris to New York and Washington D.C.

On 30 July 2008, British Airways and Iberia, a Spanish fellow Oneworld partner, announced a merger plan; the two airlines would retain their original brands, similar to KLM and Air France in their merger agreement. An agreement to merge was confirmed in April 2010. In July 2010, the European Commission and US Department of Transport permitted the merger and to co-ordinate transatlantic routes with American Airlines. On 6 October 2010, the alliance between British Airways, American Airlines and Iberia formally began operations; the alliance generates an estimated £230 million annual cost-saving for BA, in addition to £330 million by the Iberia merge.

British Airways ceased trading on the London Stock Exchange on 21 January 2011, after 23 years as a constituent of the FTSE 100 index. On 21 January 2011, British Airways and Iberia merged, resulting in the world's third-largest airline in terms of annual revenue and the second largest airline group in Europe. Prior to merging, British Airways owned a 13.5% stake in Iberia, thus it received ownership of 55% of the combined “International Airlines Group”, Iberia's other shareholders received the remaining 45%. In September 2010, Willie Walsh, the CEO of IAG, announced that IAG is looking at other airlines; and that a shortlist of twelve possible acquisitions existed. In early November 2011, IAG announced an agreement in principle to purchase British Midland International from Lufthansa.