 | |
| Company type |
|
|---|---|
| Industry | Aerospace |
| Predecessor | |
| Founded | 29 April 1977; 48 years ago (1977-04-29) |
| Defunct | 30 November 1999; 26 years ago (1999-11-30) |
| Fate | Merged withMarconi Electronic Systems |
| Successor | BAE Systems |
| Headquarters | , United Kingdom |
| Products | Aircraft |
| Subsidiaries |
|
| Website | bae.co.uk at theWayback Machine (archived 1998-01-21) |
British Aerospace plc (BAe) was a Britishaircraft,munitions and defence-systems manufacturer that was formed in 1977. Its head office was at Warwick House in the Farnborough Aerospace Centre inFarnborough, Hampshire.[1] It purchasedMarconi Electronic Systems, the defence electronics and naval shipbuilding subsidiary of theGeneral Electric Company, in 1999 to formBAE Systems.
The company has its origins in theAircraft and Shipbuilding Industries Act 1977, which called for thenationalisation and merger of theBritish Aircraft Corporation,Hawker Siddeley Aviation,Hawker Siddeley Dynamics andScottish Aviation. On 29 April 1977, the new entity was formed in the United Kingdom as a statutory corporation.
| British Aerospace Act 1980 | |
|---|---|
| Act of Parliament | |
.svg) | |
| Long title | An Act to provide for the vesting of all the property, rights, liabilities and obligations of British Aerospace in a company nominated by the Secretary of State and the subsequent dissolution of British Aerospace; and to make provision with respect to the finances of that company. |
| Citation | 1980 c. 26 |
| Territorial extent |
|
| Dates | |
| Royal assent | 1 May 1980 |
| Commencement | 1 May 1980 |
| Other legislation | |
| Relates to | |
Status: Current legislation | |
| Text of statute as originally enacted | |
| Text of the British Aerospace Act 1980 as in force today (including any amendments) within the United Kingdom, fromlegislation.gov.uk. | |
Under the provisions of the British Aerospace Act 1980 (c. 26), on 1 January the statutory corporation was transferred to a limited company, which then re-registered as apublic limited company (plc), under the name "British Aerospace Public Limited Company", on 2 January 1981.[2] BAe was privatised in two main phases, the first in February 1981, involving 51.6% shares of the company, during which the public sale was 3.5 times subscribed and at the end of the first day's trading, share prices were 14% above the original offer price.[3] The second phase occurred in May 1985, in which 48.4% shares were sold; this sale was 5.4 times subscribed and the first day closing price was 11% above the initial offer price.[3] The British Government maintained a £1golden share, which allowed it toveto foreign control of the board or company.[4]
British Aerospace inherited a number of live development programmes from its predecessors. Scottish Aviation was working on a project for a 19-seat turboprop airliner, an upgraded version of theHandley Page Jetstream. BAe placed theJetstream 31 into production after the first flight of the prototype in March 1980. At the same time, production of Hawker Siddeley'sHS 125 business jet,Harrier VTOL jet fighter andHS 748 turboprop airliner continued under BAe, as did that of theTrident jet airliner for a short time. Similarly, low-rate production of theBAC One-Eleven jet airliner, theStrikemaster two-seat military jet trainer/attack aircraft, and the iconicConcorde supersonic airliner also continued.
On 29 July 1976, less than a year prior to BAe's formation, the contract for production of the first batch of thePanavia Tornado, an advancednuclear-capable fighter bomber, was signed.[5] It was developed and produced via a multinational company,Panavia Aircraft GmbH, of which BAe was one of several companies to be heavily involved.[6][7] On 10 July 1979, themaiden flight of a production Tornado occurred.[8] On 5 and 6 June 1979, the first aircraft were delivered to the RAF andGerman Air Force respectively.[9] On 25 September 1981, the first Italian Tornado was delivered.[10]
The Tornado would be produced in large numbers, the 500th aircraft to be completed was delivered toWest Germany on 19 December 1987.[11] Production of the Tornado ended in 1998, the final batch being delivered to theRoyal Saudi Air Force, that had ordered a total of 96 IDS Tornados.[12] Aviation author Jon Lake noted that "The Trinational Panavia Consortium produced just short of 1,000 Tornados, making it one of the most successful postwar bomber programs".[13]
In 1978, BAe relaunched theBAe 146, ashort-haulregional airliner that had been previously worked on by Hawker Siddeley. The company marketed it as a quiet and economicturbofan-powered compact airliner that could replace the previous generation ofturboprop-powered feeder aircraft.[14] In 1982, the first completed aircraft made its first flight.[15][16] Upon its launch into service the following year, it was hailed as being "the world's quietest jetliner".[17] In 1993, an upgraded model of the BAe 146, referred to as theAvro RJ series, superseded the original; changes included the replacement of the original LycomingALF 502 turbofan engines by higher-thrustLF 507 turbofan engines, which were housed in redesignednacelles. The Avro RJ series also featured a modernised cockpit withEFIS replacing the analogue ADI, HSI, and engine instrumentation.[18] Production of the Avro RJ ended with the final four aircraft being delivered in late 2003; a total of 173 Avro RJ aircraft was delivered between 1993 and 2003.[19]
BAe developed several advanced models of theHarrier family. In 1978, theRoyal Navy received the firstBAe Sea Harrier of an initial order for 24.[20][21] The Sea Harrier was declared operational three years later, being initially embarked on both the firstInvincible class aircraft carrierHMSInvincible, and the olderHMSHermes.[22] Following their decisive role in the 1982Falklands War,[23] several of the lessons learnt from the conflict shaped a new upgrade programme for the fleet authorised in 1984, resulting in theSea Harrier FRS.2 (later known asFA2). The first flight of the prototype took place in September 1988 and a contract was signed for 29 upgraded aircraft in December of that year.[24] The Sea Harrier FA2 was fitted with theBlue Vixen radar, which was described as one of the most advancedpulse doppler radar systems in the world.[25]
In August 1981, BAe and the American aircraft manufacturerMcDonnell Douglas signed amemorandum of understanding regarding theMcDonnell Douglas AV-8B Harrier II.[26] Under this agreement, BAe was effectively asubcontractor rather than a full partner, receiving 40 per cent of the airframe's work-share in terms of man-hours.[26] Production took place at McDonnell Douglas' facilities in suburbanSt Louis,Missouri, and manufacturing by BAe at itsKingston andDunsfold facilities inSurrey, England.[27] The variant procured for the RAF, which was known as theBAe Harrier II, featured many differences, including avionics fit, armaments and equipment; the wing of the GR5 featured a stainless steel leading edge, giving it different flex characteristics from the AV-8B.[28] In December 1989, the first RAF squadron to be equipped with the Harrier II was declared operational.[29]
In 1979, BAe officially joined the multinational aircraft manufacturerAirbus and acquired a 20% share in the venture,[30][31] the move effectively reversed a decision made ten years prior in which the UK government had withdrawn its support for the Airbus consortium. Airbus' first aircraft, theA300, had been received with little initial demand,[32] but orders for the airliner had picked up in the late 1970s.[33][34] By 1979, the consortium had 256 orders for A300,[35] and Airbus had launched its second airliner, theA310, less than 12 months prior to BAe formally joining the consortium.[31] As time went on, it was becoming clear that Airbus was no longer a temporary collaboration to produce a single design as per its original mission statement; it had become a long-term brand for the development of further aircraft. By the late 1980s, work had begun on a pair of new wide-body airliners, the biggest to be produced at this point under the Airbus name; these would be launched in the 1990s as theAirbus A330 and theAirbus A340.[36][37]
During the 1983Paris Air Show, the launch of theExperimental Aircraft Programme (EAP) to develop and fly an advanced fighter technology demonstrator was announced; at this point, the effort was intended to be a partnership between Britain and several of its European neighbours, including West Germany and Italy.[38][39] The resulting aircraft, theBritish Aerospace EAP, ended up being primarily developed by BAe as a private venture; it formed the basis for the multinationalEurofighter Typhoon. In 1986, in conjunctionAlenia Aeronautica,CASA andDASA, BAe formedEurofighter GmbH for the development and production of the Eurofighter.[40] The multinational organisation's head office was established inHallbergmoos, Bavaria, Germany.[41] Themaiden flight of the Eurofighter prototype took place in Bavaria on 27 March 1994, flown by DASA chief test pilot Peter Weger.[42] On 30 January 1998, the first production contract for the Eurofighter was signed between Eurofighter GmbH, engine manufacturerEurojet and theNATO Eurofighter and Tornado Management Agency, the organisation set up to manage the procurement of the aircraft.[43]
On 26 September 1985, the UK and Saudi Arabian governments signed theAl-Yamamah arms deal with BAe as prime contractor. The contracts, extended in the 1990s and never fully detailed, involved the supply ofPanavia Tornado strike and air defence aircraft,BAe Hawk trainer jets,Rapier missile systems, infrastructure works and naval vessels.[44] The Al Yamamah deals are valued at anything up to £20 billion and still continue to provide a large percentage of BAE Systems' profits.[45][46]
BAe acquiredRoyal Ordnance, the British armaments manufacturer, for £190 million on 22 April 1987. The German armaments specialistHeckler & Koch was folded into this division after BAe acquired it four years later.
In 1988, BAe purchased theRover Group from the British government ofMargaret Thatcher for £150 million. The sale was controversial due to opaque financial arrangements between the government and BAe; however the House of CommonsTrade and Industry Committee was said to believe that "in spite of a catalogue of complaints, the committee concludes that the sale to BAe may well have been the best solution for the government."[47]
In 1991, BAe acquired a 30% interest inHutchison Telecommunications through astock swap deal, where Hutchison was given a controlling stake of 65% in BAe's wholly owned subsidiaryMicrotel Communications Ltd.[48][49][50] In August 1991, BAe formed a naval systems joint venture,BAeSEMA, with theSema Group.[48] (BAe acquired Sema's 50% share in 1998.) That year also saw BAe begin to experience major difficulties. BAe saw its share price fall below 100p for the first time. On 9 September 1991, the company issued a profits warning and later that week "bungled" the launch of a £432 millionrights issue.[51] On 25 September 1991 BAe directors led by CEORichard Evans ousted the Chairman Professor Sir Roland Smith in a move described byThe Independent as "one of the most spectacular and brutal boardroom coups witnessed in many years."[52] Evans described the troubles as a confluence of events:[53]
"our property company [Arlington Securities] was hit with a lousy market. Sales of the Rover Group sank by about a fifth and losses mounted. The government's defence spending volumes underwent a major review. Losses in our commercial aerospace division increased dramatically with the recession in the airline industry."
In mid-1992, BAe wrote off £1 billion of assets, largely as part ofredundancies and restructuring of its regional aircraft division.[54] This was the largest asset write-off in UK corporate history.General Electric Company (GEC), later to sell its defence interests to BAe, came close to acquiring BAe at this time.[54] BAe cut 47% of its workforce (60,000 out of 127,000), 40,000 of which were from the regional aircraft division.
Evans decided to sell non-core business activities, which included the Rover Group, Arlington Securities, BAe Corporate Jets, BAe Communications andBallast Nedam. Although the rationale of diversification was sound (to shield the company from cyclical aerospace and defence markets) the struggling company could not afford to continue the position: "We simply could not afford to carry two core businesses, cars and aerospace. At one point Rover was eating up about £2 billion of our banking capacity."[55] BAe Corporate Jets and Arkansas Aerospace were sold toRaytheon in 1993. In 1994, the Rover Group was sold toBMW andBritish Aerospace Space Systems was sold toMatra Marconi Space. In 1998, BAe's shareholding ofOrange was reduced to 5%.[49] The Orange shareholding was a legacy of the 30% stake in Hutchison Telecommunications (UK) Ltd.
In 1994, BAeSEMA,Siemens Plessey andGEC-Marconi formed UKAMS Limited as part of thePrincipal Anti-Air Missile System (PAAMS) consortium. UKAMS would become a wholly owned subsidiary of BAe Dynamics in 1998. In 1995,Saab Military Aircraft and BAe signed an agreement for the joint development and marketing of the export version of theJAS 39 Gripen. In 1996, BAe andMatra Defense agreed to merge their missile businesses into a joint venture calledMatra BAe Dynamics.[56] In 1997, BAe joined theLockheed MartinX-35 Joint Strike Fighter team.[57] The following year, BAe acquired the UK operations ofSiemens Plessey Systems (SPS) fromSiemens, while DASA purchased SPS' German assets.[58][59]
In the 1990s, BAe was the largest exporter based in the United Kingdom; aCompetition Commission report released in 2005 calculated a ten-year aggregate figure of £45 billion, with defence sales accounting for approximately 80%.[60]
In the late 1990s, European defence consolidation became a prevailing practice; European governments wished to see the merger of their defence manufacturers into a single entity, a European Aerospace and Defence Company.[61] This ambition led to numerous reports linking various European defence groups – mainly with each other but also with American defence contractors. In July 1998, merger discussions began between BAe and DASA.[62] Terms for such a merger had been reportedly agreed between British Aerospace ChairmanRichard Evans and DASA CEOJürgen Schrempp in December 1998.[63][64] However, when the BritishGeneral Electric Company (GEC) put its defence electronics businessMarconi Electronic Systems (MES) up for sale on 22 December 1998, BAe's management opted to abandon the DASA merger in favour of purchasing its British rival.[65][66] During 2004, Evans stated that his fear was that an American defence contractor would acquire MES and challenge both British Aerospace and DASA.[63]
Schrempp was angered by BAe's reversal, and opted to pursue other partner companies for DASA to merge with. On 11 June 1999, the Spanish aircraft companyCASA signed a memorandum of understanding for such a merger.[67] On 14 October 1999, DASA agreed to merge with Aérospatiale-Matra to create theEuropean Aeronautic Defence and Space Company (EADS).[68] 10 July 2000 was "day one" for the new company, which became the world's second-largest aerospace company afterBoeing and the second-largest Europeanarms manufacturer after BAE Systems.[69]
The GEC merger to create a solely British company, compared to the prospective Anglo-German company that would have resulted from merging with DASA, was promoted as having superior prospects for further penetration of the lucrative defence market of the United States. The newly combined company, which was initially referred to as "New British Aerospace", was officially formed on 30 November 1999; it is namedBAE Systems.[70]
There have been allegations that the Al Yamamah contracts were a result ofbribes ("douceurs") to members of theSaudi royal family and government officials. Some allegations suggested that the former Prime Minister's sonMark Thatcher may have been involved; he has strongly denied receiving payments or exploiting his mother's connections in his business dealings.[71] TheNational Audit Office investigated the contracts and has so far never released its conclusions – the only NAO report ever to be withheld. The BBC'sNewsnight observed that it is ironic that the once classified report analysing the construction ofMI5'sThames House andMI6'sVauxhall Cross headquarters has been released, but the Al Yamamah report is still deemed too sensitive.[citation needed]
The 2007 documentary filmWelcome Aboard Toxic Airlines contained evidence that vital data was withheld from a 1999–2000 Australian Senate Inquiry into the health and flight safety issues relating to oil fumes on theBritish Aerospace 146. The film also contains an Australian Senator's speech about money being paid by BAe for silence on the fumes issue.[72]
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