determined and, to ensure that BA was ‘put in shape’ for privatization,
appointed Sir John King, later Lord King, as Chairman in 1981.
Privatization plan: The cost-cutting phase
Lord King was the Prime Minister’s kind of businessman. A self-made man
from outside the airline industry, he had amassed a personal fortune from
Ferrybridge Industries, a ball-bearing company that he founded in 1945.
He was later Chairman of the UK giant engineering concern Babcock
International, and was knighted in 1979.
King’s first priority was to stem BA’s losses. The total staff of 52 000 was cut
by 10 000 in the first nine months of his appointment, while another 7000
went in 1982. Although staff were offered generous severance payments,
tough decisions were taken. At a reception in the US, King was reportedly
approached by BA’s US property manager, keen to impress the new
Chairman. King asked how many staff she needed to manage BA’s US prop-
erty, to which she replied 11. Within a couple of months, she managed the
property portfolio by herself. In total, over £150 million was saved through a
pay freeze, the closure of six routes, eight on-line stations and two engineer-
ing bases. Cargo-only services ceased and parts of the ageing fleet were sold.
BA’s management wanted a quick and decisive period of cost cutting
and, in the 1982 financial year, posted a massive headline loss of £545
million. Much of this was due to ‘creative’ accounting, pulling as many
costs forward as possible. The effect was to create a ‘clean slate’ and to add
to the sense of crisis among the staff.
Corporate identity and advertising
A new livery was designed to support the claim of being the World’s
Favourite Airline. A BA official said, ‘People have to see a difference as well
as experience it if their perception is to truly change’.^1
Prior to 1983, BA’s advertising had involved tactical or promotional cam-
paigns emphasizing product features such as seating, entertainment or
scheduling. Price was a key focus and worldwide advertising was con-
trolled by local country managers who were free to create their own copy
and message, ensuring adaptation to local conditions but creating variety
in BA’s image around the globe. The total worldwide advertising budget
was £19 million in 1982–83.
Saatchi & Saatchi
Saatchi & Saatchi, the rising star of British advertising agencies which
espoused the concept of global brands, won the BA account in 1982 with a
456 Relationship Marketing