British Airways
Wendy Lenhart
Liberty University
Change can be difficult, but British Airways surely transformed itself during the 1980's.
Reviewing how company life was prior to their decade of change will help gain greater insight
on the enormity of the cultural change that happened as an organization. We will review some of
the steps British Airways took to turnaround their company and how "Re-Energizing the Mature
Organization" is relevant to the British Airways case study.
British Airways
British Airways (BA) suffered grim times prior to the 1980's with pretax losses of greater
than 240 million in 1981 and 1982 (Jick, 2011). The company could not sustain with this type of
loss, so major change was needed for BA to survive. Life at the old British Airways needed an
overhaul and that is exactly what Sir John King did. The steps that took BA from a "bloody
awful image" into "one of the world's most respected airlines" will be reviewed along with
general critical factors for successful transformation (Jick, 2011, p. 36).
Life at the Old British Airways
Productivity rose 67% throughout the 1980's contributing to BA's third year of record
profits in 1990 after it's decade of transformation. They also received accolades such as Airline
of the Year and several other prestigious awards. This was certainly a change from the earlier
announcement stating "our money is draining at the rate of nearly $200 a minute" (Jick, 2011, p.
25). According to Jick (2011), BA knew they were overstaffed but anticipated 8% growth that
never came to fruition due to recession that actually not only stunted growth but decreased
volumes by 4%. Other contributing factors to the financial quandary were the aging equipment
and operational costs of staff and fuel. Change was needed but was going to be difficult because
in the 70's, BA, although inefficient, still turned profits so making changes was not a priority nor
a mindset. BA had acquired the mentality of "if you're providing service at no cost to the
taxpayer, then you're doing quite well" (Jick, 2011, p. 28). This led to suffering productivity,
service, and inefficiencies.
Steps to Change
Sir John King was picked by Margaret Thatcher to run BA and his connections which
were considered "legendary" proved fruitful for the turnaround of BA (Jick, 2011). In 1981, a
survival plan was launched by King and Watts to save the airline. According to Jick (2011), they
warned that the plan would be tough and immediate. Some of the steps taken were staff
reductions by 20% over 9 months, closing of many routes, pay freezes, halting cargo only
services, and administrative cuts (Jick, 2011). Later, in 1982, another 7,000 employees were cut
giving a total staff reduction of 25% by 1983 (Jick, 2011). According to Jick (2011), one factor
that helped with the staff cuts was the generous severance package BA offered allowing many of
the cuts to be voluntary.
King worked on building a team to help with change at BA. He brought in Dunlop as
CFO who made great contributions to the financial survival and rebuild of BA (Jick, 2011). He
also brought aboard Colin Marshall as Chief Executive who proved to be an integral change
agent. Marshall's focus was on Customer Service and he made it his "personal crusade from the
