|Quoting AirEuropeUK733 (Thread starter):|
How did this come about? I thought BCAL was created by a merger with BUA and Caledonian? Did the venture capitalists get involved due to an MBO?
Any info would be much appreciated. I'm sure someone like BCAL could fill me in .
Sorry, I have been off line and just caught up with this post.
It is difficult to pin point exactly when 3i acquired its majority shareholding in BCal, but it was the majority shareholder at the time BCal was sold to BA
British Caledonian was, as you assumed, formed by the merger of Caledonian Airways (Caledonian) and British United Airways (BUA).
Caledonian was formed in 1961 and was a Scottish based international airline with a fleet of DC7s. Fleet modernisation followed with Britannias being introduced, BAC1-11s, and B707s so by the late 1960s Caledonian was fully in the jet age. At that time, its main competitor, BUA, was in financial trouble and looking for a buyer. BUA hoped that they would be brought by BOAC, as BUA was only one of the two serious competitors to the BOAC-BEA monopoly. The other competitor was Caledonian who, to avoid BOAC-BEA having a larger monopoly, successfully bid for BUA. In November 1970, Caledonian brought and merged with BUA and for two years the airline was called Caledonian/BUA. Caledonian raised finance for the purchase through its existing shareholders and on the markets. It is probably at this time that 3i got their fingers in the pie. Another principal shareholder at the time was the British and Commonwealth Shipping Group.
In 1972, Caledonian/BUA was renamed British Caledonian Airways or BCal in abbreviated form. In 1975, BOAC and BEA merged to become British Airways. British Caledonian was then under intense monopolistic pressure as whereas BA
received government assistance and had a monopoly at LHR
, BCal had to rely on its investors and was restricted to operations at LGW
. BCal never received any state assistance, raising all its finance from operations and investors.
For many years, BCal was the sole UK operator on flights between the UK and South America (inherited from BUA who took over the loss-making route from BOAC/BSAA and turned it into a profitable route). They also started international services from LGW
to Houston, DFW
, and Atlanta. Following a review of the UK passenger aviation scene, BCal was designated the second UK carrier. BCal was also forced to swoop over their South American routes to BA
in exchange for BA
's routes to the Gulf. Shortly thereafter, the oil and Gulf crisis started, seriously affecting BCal's business on the Gulf routes causing the airline to report losses, which was not good news for investors. This, coupled with the airline being denied access to LHR
, led to Sir Adam Thompson (BCal Chairman) being forced by investors to sell the airline to BA
for a figure (I believe) of £264m.
MOL on SRB's latest attack at BA: "It's like a little Chihuahua barking at a dying Labrador. Nobody cares."