Nationalised by Act of Parliament

British Aerospace was created by statute. The Aircraft and Shipbuilding Industries Act 1977 nationalised the British Aircraft Corporation, Hawker Siddeley Aviation, Hawker Siddeley Dynamics and Scottish Aviation, and on 29 April 1977 merged them into one state corporation. The family tree was extraordinary. Through its parents BAe traced its line to Avro, de Havilland, Hawker, Supermarine, Vickers, Bristol, English Electric and Handley Page’s Jetstream. It inherited Concorde, the Harrier and the Hawk on the drawing board or the production line, and in 1979 it bought a 20 per cent stake in Airbus, building the wings that would carry the European airliner to global success.

Sold to the City

Margaret Thatcher’s government did not want to own an aircraft maker. In February 1981 it sold 51.6 per cent of the shares; the issue was 3.5 times subscribed. In May 1985 it sold the remaining 48.4 per cent, this time 5.4 times subscribed. The state kept only a golden share, worth £1, that allowed it to veto foreign control of the company. BAe was now a private champion with a public duty, the bearer of nearly every British military aircraft programme, and its headquarters eventually settled at Farnborough, the cradle of British aviation.

The Falklands and the whisperjet

In 1982 the Sea Harrier went to war. Flying from the carriers Hermes and Invincible in the South Atlantic, the little subsonic jump jets shot down 20 Argentine aircraft in air-to-air combat without a single air-to-air loss, about 28 per cent of all Argentine air losses in the Falklands War. Meanwhile at Hatfield, BAe was building something quieter. The BAe 146 regional jetliner first flew on 3 September 1981, with four geared turbofans that made it, in its own marketing, the Whisperjet. With the Avro RJ that followed, 387 were built, the most successful British civil jet airliner programme. The Queen’s Flight took three.

Oil for Tornados

On 26 September 1985 Britain and Saudi Arabia signed the memorandum of understanding that became Al Yamamah, the largest export deal in British history. The first phase covered 48 Tornado IDS strike aircraft, 24 Tornado ADV interceptors and 30 Hawk trainers, with Saudi Arabia paying in kind: up to 600,000 barrels of crude oil a day. The deal was worth, on some estimates, up to £20 billion, and its shadow lasted decades. A Serious Fraud Office corruption inquiry was halted in December 2006 on national security grounds, and in 2010 BAE Systems paid a 400 million dollar fine in the United States after pleading guilty to false accounting.

Cars, guns and a near-death experience

The late 1980s were a buying spree. BAe paid £190 million for Royal Ordnance in 1987, and in 1988 bought the Rover car group from the government for £150 million. Heckler and Koch, the German gunmaker, followed in 1991. Then the bill came due. A rights issue of £432 million in 1991 failed, the chairman, Sir Roland Smith, was ousted that September, and in 1992 BAe wrote off £1 billion of assets, the largest write-off in British corporate history at that time. 60,000 of 127,000 jobs went. Under chief executive Richard Evans, Rover went to BMW in 1994, and the business jets, the old de Havilland 125 line, to Raytheon in 1993.

The Marconi deal

Leaner BAe thrived on exports. In the 1990s it was the largest exporter based in the United Kingdom, selling some £45 billion over ten years, about 80 per cent of it defence. It took a 35 per cent stake in Saab and the Gripen, flew the EAP technology demonstrator that cut a year off Eurofighter development, and built Typhoons at Warton. The final move came in 1999, when BAe agreed to buy Marconi Electronic Systems from GEC for £7.7 billion. The deal closed on 30 November 1999, and British Aerospace became BAE Systems, one of the largest defence companies in the world.

Factories

• Hatfield · Hertfordshire — Former de Havilland works; BAe 146 production
• Woodford · Greater Manchester — Avro RJ and ATP assembly
• Chadderton · Greater Manchester — ATP airframe and wing manufacture
• Prestwick · Ayrshire, Scotland — ATP assembly
• Brough · East Yorkshire — Hawk production until 2020
• Broughton and Filton · Flintshire and Bristol — Airbus manufacturing facilities

People

• Sir Roland Smith · chairman — Ousted in September 1991 after the failed rights issue
• Richard Evans · chief executive from 1991, later chairman — Led the 1990s turnaround and the Marconi merger
• David Eagles · executive director of flight operations — First flew the EAP in 1986

Records and firsts

• Most successful British civil jet airliner programme, BAe 146 / Avro RJ, 387 built
• Largest British export deal, Al Yamamah, signed 26 September 1985
• 20 air-to-air victories without an air-to-air loss, Sea Harrier, Falklands 1982
• Largest asset write-off in UK corporate history at the time, £1 billion, 1992
• Largest exporter based in the United Kingdom during the 1990s