Article
The British Airways is the largest UK airline based on fleet size, international flights and destinations. It was formed in 1971. In 1987 British airways became privatized with shares oversubscribed 11 times over. This means that it was transferred from a public sector organization to the private sector.
There are many reasons behind the privatisation of the British Airways. One of them being over-employment. The productivity of BA was low compared to its competitors. Costs of labor were too high. Another reason for privatization was that British Airways’ aim was not profit maximization due to it being a public sector organization. This meant that the British Airways did not operate at the highest effieciency. This lead to major losses in the future. Finally, they wanted to decrease the power of labor unions. By privatizing the firm, actions held out by labour unions do not directly affect the whole economy.
The British Airways became a public limited company where shares were sold on the London Stock Exchange. This decision was declared by the new conservative government. This meant that they would not receive any state support nor interference in its operation. This was at the time of a recession. Following privatisation , the Chairman of the British Airways, Sir John King, transformed the company into one of the most profitable air carriers in the world. It was named to be “The World’s Favourite Airline”.
Following privatization, British Airway experienced a major increase in profit. For example, in 1983—before privatization—profits for British Airways were £65 million, however, in 1997—following privatization—profits increased to around £725 million. This was a major increase for BA. Since privatization, BA has seen an increase in stock
In conclusion, the privatization of British Airways proved to be successful as it caused the Airline to rise from major losses to high profits.
