Case Study

British Airways hits turbulence

21 pages
August 2008
Reference: IMD-3-2005

Between 1981 and 1996, BA went from a stodgy state-owned carrier – truly one of the worst airlines in the world – to a world-class customer-focused organization. In 1995-96, BA becomes the most profitable airline in the world and wins prestigious industry awards for the 7th year in a row. The company has come to live up to its self-billing as “The World’s Favourite Airline”. This is the moment chosen by Sir Colin Marshall, seen by all as the main architect of this remarkable transformation, to pass the CEO baton to heir apparent Bob Ayling and move to a part-time Chairman position. A clear strategic thinker, Ayling realizes before anyone else that (a) industry conditions are going to become increasingly competitive and (b) that the airline’s cost base is too high for this likely future. As a result, he initiates a demanding efficiency programme hailed by the business press as visionary. Initially viewed as both strategically astute and very personable, Bob Ayling becomes increasingly criticized, and his tenure increasingly marred by tension and conflicts first with employees, but soon after with the press, regulators and politicians, and ultimately most constituencies interested in the airline. The turning point is the cabin crew strike in mid-1997, after which BA’s stock price begins a slide that will see the company lose over half its market capitalisation in two years. The case concludes with Ayling resigning and Marshall explaining that the new CEO would keep pursuing the strategic directions set by Ayling.

Learning Objective

The case is meant to be used to discuss three key leadership issues: 1) The process of change: The case is primarily about the difficulty of trying to lead change in a highly successful organization. 2) The mix of leadership competencies: The case allows a rich discussion of the three core roles of a leader (as strategist, architect and mobilizer), and how leaders can handle weaknesses in their competency profile. 3) The need to self-manage: The case can further be used to explore the issue self-management, particularly in terms of maintaining one’s ability to listen over time. The case can also support a discussion on the importance and determinants of fair process.

Leading Change, Proactive Change, Change Process, Leadership Style, Organizational Culture, Customer Service, Resistance, Communication, Airline, Fair Process
Global, United Kingdom
British Airways, Travel and Leisure, Airlines and Aviation
Published Sources
© 2008
Available Languages
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Teaching note
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