The predecessor companies of British Airways (BA), the United Kingdom's national airline, go back to five airlines established in the United Kingdom between 1916 and 1922. The first of these was Aircraft Transport and Travel (AT&T), which operated the world's first daily scheduled international flight for commercial aviation in 1919.
The present company was formed in 1974 with the merger of the two largest UK airlines, British Overseas Airways Corporation (BOAC) and British European Airways (BEA), 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. Following privatisation, British Airways entered a period of rapid growth, leading to the use of the slogan "The World's Favourite Airline", and dominated its domestic rivals during the early 1990s. Faced with increased competition and higher costs in the mid-1990s, CEO Bob Ayling led a restructuring effort, leading to trade union clashes; the carrier also invested in regional European airlines, courted international airline partnerships, and attempted a controversial ethnic livery rebranding campaign.
In the early 2000s, CEO Rod Eddington implemented further cost cuts, the retirement of Concorde, and the removal of ethnic liveries. Under Willie Walsh, who became CEO in 2005, British Airways faced a price-fixing scandal, moved its primary hub to Heathrow Terminal 5, and experienced threats of industrial action, leading to a strike in March 2010. On 8 April 2010, it was confirmed that British Airways and Iberia Airlines had agreed to a merger, forming the International Airlines Group, although BA continues to operate under its own brand. The combined airline became the world's third-largest carrier (after Delta Air Lines and American Airlines) in terms of annual revenue.
1910s to 1970s: Origins and expansion
British Airways earliest corporate ancestor is the first British airline, Aircraft Transport and Travel (AT&T), which was founded on 5 October 1916 as a subsidiary of Airco, an aircraft manufacturer. AT&T operated the world's first daily scheduled international flight for commercial aviation on 25 August 1919. Birmingham Small Arms Company (BSA) established Daimler Air Hire on 7 June 1919 and acquired AT&T and its parent Airco in 1920. After the Airco subsidiary, including AT&T, filed for bankruptcy, BSA acquired its aircraft from the liquidator and combined these assets with Daimler Air Hire to form Daimler Airway in 1921. On 31 March 1924, Daimler Airway joined with three other pioneer airlines that started up during the immediate post war period—Handley Page Transport (established in 1919), Instone Air Line (1919), and British Marine Air Navigation Co Ltd (1923)—to form Imperial Airways.Millward (2008), p. 83 Imperial developed routes throughout the British Empire to India, some parts of Africa and later to Canberra, Australia. Meanwhile, a number of smaller UK air transport companies had begun operating, and by 1935 many of these had merged to form the privately owned British Airways Ltd. Following a government review, Imperial Airways and British Airways were nationalised in November 1939 to form the British Overseas Airways Corporation (BOAC).Woodley (2004), p. 10
Post-war, BOAC continued to operate the majority of long-haul services in Britain, other than routes to South America; these were flown by British South American Airways, which was merged back into BOAC in 1949.Beith (2004) Continental European and domestic flights were flown by a new nationalised airline, British European Airways (BEA), which compulsorily took over the scheduled services of existing UK independent airlines. On 2 May 1952, BOAC became the world's first airline to operate jet airliners; the inaugural flight with the de Havilland Comet 1 was from London to Johannesburg.Woodley (2004), p. 117 However, the Comet's service introduction was plagued by structural problems and accidents, leading to its withdrawal in 1954 and replacement with the upgraded Comet 4 models in 1958.
The first attempt to create a new combined British airline through the merger of BOAC with BEA arose in 1953 out of inconclusive attempts between the two airlines to negotiate air rights through the British colony of Cyprus. The Chairman of BOAC, Miles Thomas, was in favour of the idea as a potential solution to a disagreement between the two airlines as to which should serve the increasingly important oil regions of the Middle East. In this proposal, Thomas had backing from the Chancellor of the Exchequer at the time, Rab Butler. However, opposition from the Treasury blocked the idea, and an agreement was reached instead to allow BEA to serve Ankara in Turkey, and in return to leave all routes east and south of Cyprus to BOAC. However, the solution was not entirely satisfactory to BOAC, as BEA's effective control of Cyprus Airways gave it the ability to continue to serve destinations ostensively ceded to BOAC, including Beirut and Cairo by using Cyprus Airways as its proxy.Robin Higham, Speedbird: The Complete History of BOAC (London: IB Tauris, 2013) p.117
In 1967, the government established a committee of inquiry into Civil Aviation under Sir Ronald Edwards. The Edwards Committee reported in 1969 and one of its recommendations was the formation of a National Air Holding Board to control finances and policies of the two corporations. The recommendation was enacted in 1971 with the passing of the Civil Aviation Act 1971, which formed a British Airways Board to control all the activities of BOAC and BEA, including the newly formed BEA Airtours subsidiary which targeted the emerging package holiday business.
Consequently, in 1972 the BOAC and BEA managements were combined under the newly formed British Airways Board, with the physical operations of the separate airlines coming together as British Airways on 1 April 1974, under the guidance of David Nicolson as chairman of the board.Doganis (2006), p. 224 At the time it was the biggest merger in the aviation industry,By some criteria. By passenger-miles (and maybe by passengers) the merged airline was smaller than Delta when it merged Northeast in 1972. creating the world's largest network of routes for the new unified company to harness.Hanlon (1999), pp. 227–8 In 1975, British Airways was headquartered in the Victoria Terminal in London. Its international division was headquartered at Speedbird House by Heathrow Airport, while its European division was headquartered at Bealine House, Ruislip, Middlesex. The regional division was headquartered in Ruford House, Hounslow.
1970s: Consolidation and Concorde
The newly formed British Airways had inherited a mix of aircraft from its predecessors. It quickly retired the Standard VC10s that had come from BOAC and the last Vickers Vanguards from BEA.Pigott (2003), p. 166 It also ordered the Hawker Siddeley 748 for use on Scottish routes to enable the Vickers Viscount to be retired. The first Lockheed L-1011 TriStar was delivered in October 1974, and introduced in January 1975; more TriStars were ordered in following years. The management of British Airways resisted political pressure to purchase the new Airbus A300, stating that it had no requirement for the aircraft;Hayward (1983), p. 167 this rejection complicated Britain's integration into the European Union.Penrose (1980), p. 285 Instead, the company planned to acquire American-made planes such as the Boeing 757;Hayward (1983), p. 170 in 1976 the British government approved the purchase of multiple Boeing 737 aircraft.Hayward (1983), p. 182 An innovation on 12 January 1975 was the British Airways Shuttle service from Heathrow to Glasgow (and later Edinburgh, Manchester and Belfast), which allowed a walk-on no reservation service with a "guaranteed seat" – this latter feature facilitated by backup aircraft or sometimes transfers to British Midland flights.
The Secretary of State for Trade, Peter Shore, reviewed the Government's aviation policy and in 1976 announced a "spheres of influence" policy that ended dual designation for British airlines on all long-haul routes.Thomson (1990), pp. 316–7 British Airways and British Caledonian, the second-biggest airline in Britain, were no longer permitted to run competing scheduled flights on long-haul routes. British Caledonian had to withdraw from East Africa and from the London-New York and London-Los Angeles routes in favour of BA. In return, British Caledonian became the sole British flag carrier to the entire South American mainland, taking over routes formerly served by British Airways to Colombia, Peru and Venezuela.
In 1976, British Airways commenced flying Concorde, making it one of two airlines to own and operate the supersonic Aerospatiale-BAC airliner. Simultaneously with Air France, BA inaugurated the world's first supersonic passenger service on 21 January, a daily service between Heathrow and New York becoming one of the airline's hallmarks. Initially, Concorde was a financial burden,Hayward (1983), p. 132 required of the national carrier by the government, and it attracted criticism from the press as a white elephant. Several significant destinations suggested for Concorde, such as Tokyo, Japan, and Sydney, Australia never emerged as viable in reality.Owen (2001), p. 295
In 1981, Sir John King, later Lord King, was appointed Chairman of British Airways with the mission of preparing the airline for privatisation. King recognised the prestige that Concorde brought to the airline, purchased them outright from the government, and was turning a profit within a year. According to British Airways' management the aircraft broke even on flights holding around 40–45% of passenger capacity; in 1985 the average passenger capacity in use per flight was at 65%. BA used Concorde to win business customers, guaranteeing a certain number of Concorde upgrades in return for corporate accounts with the airline—a key factor in winning business from transatlantic competitors. Although the carrier did not disclose specific numbers, media reports estimated that the Heathrow to New York service made an annual operating profit by the early 2000s (decade).
1980s: Privatisation
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,Votteler (1988), p. 86 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 , to the cost of taxpayers but to the benefit of the future privatised company.