British Aerospace

British Aerospace came into being on 29 April 1977 as a statutory corporation, in compliance with the aircraft and shipbuilding nationalisation act passed that same year. The British Aerospace Act of 1980 reversed the direction of travel: the corporation was transferred to a limited company and re-registered as a public limited company in January 1981. Privatisation followed in two tranches — the first in February 1981, covering slightly more than half the shares, and the second in May 1985 with the remainder — both heavily oversubscribed, and in both cases the share price closed above the offer price on the first day of trading. The British government kept a one-pound golden share allowing it to veto foreign control of the board.

BAe took over an unusually broad set of live programmes from its predecessors: Handley Page's Jetstream, which it put into production as the Jetstream 31 after the prototype first flew in 1980; Hawker Siddeley's HS 125 business jet, HS 748 turboprop and Harrier; and, at low rate, the BAC One-Eleven, the Strikemaster trainer and Concorde. In 1978 it relaunched the BAe 146, a short-haul regional jet intended to replace the previous generation of turboprop feederliners, which flew in 1982 and from 1993 gave way to the Avro RJ series with higher-thrust engines and a modernised cockpit; the line closed in 2003. On the military side BAe was a leading partner in Panavia Aircraft GmbH, the Tornado consortium, which built close to a thousand aircraft over more than two decades, and it developed several Harrier generations, including the carrier-borne Sea Harrier and, with McDonnell Douglas, the Harrier II.

In 1979 BAe formally joined Airbus with a twenty per cent stake, reversing the British government's withdrawal from the consortium ten years earlier; in time the company became the wing supplier for practically the entire Airbus family. At the 1983 Paris Air Show the Experimental Aircraft Programme was announced, a technology demonstrator that BAe ended up developing largely as a private venture and which became the basis for the Eurofighter. In 1986, alongside Alenia, CASA and DASA, it founded Eurofighter GmbH, and the prototype made its maiden flight in Bavaria in 1994. A year before that, in September 1985, the British and Saudi governments signed the Al-Yamamah deal with BAe as prime contractor: Tornado and Hawk aircraft, Rapier missile systems, infrastructure works and naval vessels, in a package never fully detailed publicly and dogged for years by allegations of improper payments.

Alongside aerospace, BAe went shopping. It bought Royal Ordnance in 1987, the German small-arms maker Heckler & Koch shortly afterwards and the Rover Group from Margaret Thatcher's government in 1988, and moved into property development and telecommunications as well. Recession broke the strategy: in 1991 the share price collapsed, the company issued a profits warning and a boardroom crisis ended with the chairman's removal. In 1992 it wrote off a billion pounds of assets, the largest such write-off in UK corporate history, and cut close to half its workforce, chiefly in the regional aircraft division. Management then dismantled the periphery — Rover was sold to BMW in 1994 — to concentrate on defence and aerospace. Late in the decade, with a pan-European merger widely assumed to be inevitable, BAe was negotiating with DASA; but when Marconi Electronic Systems was put up for sale in December 1998 it chose to buy its British rival instead. The new company was formally constituted on 30 November 1999 under the name BAE Systems, while DASA joined Aérospatiale-Matra to create EADS.