page_title: History of British Airways
section_title: 1980s: Privatisation and dirty tricks
hierarchical_section_title: History of British Airways / 1980s: Privatisation and dirty tricks
caption_attribution_description: English: British Airways offices at London Heathrow Airport in the 1980s
context_page_description: British Airways, the United Kingdom's national airline, was formed in 1974 with the merger of the two largest UK airlines, British Overseas Airways Corporation and British European Airways, and including also two smaller regional airlines, Cambrian Airways and Northeast Airlines. The merger was the completion of a consolidation process started in 1971 with the establishment of the British Airways Board, a body created by the British government to control the operations and finances of BOAC and BEA, which initially continued to exist as separate entities.
  British Airways acquired the supersonic Concorde in 1976, operating it on transatlantic services. The same year it assumed sole operation of international flights to North America and Southeast Asia from rival British Caledonian. The formation of Virgin Atlantic in 1984 began a tense rivalry, which led to "one of the most bitter and protracted libel actions in aviation history".
  Under the leadership of Chairman Sir John King and CEO Colin Marshall, British Airways was privatised in February 1987, and in July of the same year, it launched the controversial takeover of British Caledonian.
context_section_description: As British Airways headed towards privatisation, Sir John King hired Colin Marshall as CEO in 1983. King was credited with transforming the loss-making giant into one of the most profitable air carriers in the world, boldly claiming to be "The World's Favourite Airline", while many other large airlines struggled. The airline's fleet and route map were overhauled in the early years of King's tenure, with brand and advertising experts being recruited to change the airline's image. Over 23,000 jobs were shed in the early 1980s, though King managed the considerable trick of boosting staff morale and modernising operations at the same time. Offering generous inducements for staff to leave led to record losses of £545 million, to the cost of taxpayers but to the benefit of the future privatised company.
  At Marshall's direction, the airline consolidated most of its long-haul operations in 1986, including Concorde services, at the newly constructed Heathrow Terminal 4. Terminal 4 would remain as BA's hub at Heathrow Airport for the next 22 years. Due in part to a recession and rising fuel prices, aircraft such as the Hawker Siddeley Trident, Vickers Super VC10 and Boeing 707 were quickly phased out of service, and planes such as the Boeing 737 were acquired in their place. In an effort to increase the use of the operational Concorde fleet, King allowed the planes to be chartered for special services. Concorde services to Singapore in cooperation with Singapore Airlines began, in addition to a service to Miami by 1984. In the 1980s, British Airways regarded Concorde as its flagship, both prestigious and profitable.
  The flag carrier was privatised and floated on the London Stock Exchange in February 1987 by the Thatcher government, the initial share offering was nine times oversubscribed. The privatisation of British Airways was regarded as very successful by industry observers, perhaps the most successful of a series of companies divested by the state in this era. Four months later, in July 1987, BA announced the controversial takeover of Britain's "second" airline, British Caledonian. The acquisition led to concerns regarding competition; within the industry it was widely acknowledged as a mutually agreed rescue deal to avoid the latter's collapse. The Caledonian name was kept alive, the charter subsidiary British Airtours being rebranded as Caledonian Airways. In 1992, BA absorbed Gatwick-based British carrier Dan-Air.
  Soon after British Airways' privatisation, Richard Branson's Virgin Atlantic began to emerge as a competitor on some of BA's most lucrative routes. Following Virgin's highly publicised mercy mission to Iraq to fly home hostages of Saddam Hussein in 1991, King is reported to have told Marshall and his PA Director David Burnside to "do something about Branson". This began the campaign of "dirty tricks" that ended in Branson suing King and British Airways for libel in 1992. King countersued Branson and the case went to trial in 1993. British Airways, faced with likely defeat, settled the case, giving £500,000 to Branson and a further £110,000 to his airline; furthermore, BA was to pay the legal fees of up to £3 million. Branson divided the compensation among his staff, the so-called "BA bonus." British Airways and Virgin Atlantic continued to be noticeably bitter and active rivals for many years afterwards.
caption: British Airways main office at Heathrow Airport in the 1980s
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