Last year British Airways (BA) appeared to be on its way to becoming a truly global company.
Under the Oneworld banner, BA announced an alliance with American Airlines which aimed to offer customers seamless travel between countries. Also involving link-ups with Cathay Pacific, Canadian Airlines and Qantas, Oneworld’s potential to increase BA’s 183 destinations in more than 80 countries was met with enthusiasm from the City as BA’s shares soared.
But the enthusiasm soon faded as European regulators, US trade negotiators and, unsurprisingly, Richard Branson raised fears about the creation of a monopoly.
BA is now in limbo over its alignment with American Airlines, and has agreed to roll out the deal over a number of years rather than forming an alliance immediately.
BA itself was born out of mergers and alliances. It started in 1924 as Imperial Airways, a state-owned company which, over the next 10 years, grew quickly through mergers. Gathering international links and routes, the company, known by 1939 as British Overseas Airways Corporation, undertook its final merger – with British European Airways to form British Airways – in 1972. In 1987, the UK Government sold BA to the public.
BA’s 14-strong legal team is split between Harmondsworth with 12 lawyers and New York with two. Stephen Walsh, BA’s head legal adviser, leads a team of nine lawyers at the UK base.
Walsh says the New York team’s main focus is managing advice obtained for the whole of Latin America and the Caribbean as well as supporting sales, marketing and operational functions in the US.
On the Oneworld alliance, Walsh worked closely with his US counterpart Paul Jasinski, general counsel in New York, with external advice provided by Sullivan & Cromwell.
Walsh, Jasinski and Alan Buchanan, principal legal adviser, finance, at Harmondsworth, report to Robert Webb QC, who left 5 Bell Yard last year to join BA. Webb also heads three divisions at BA – legal, government and industry, and safety, security and the environment – although the last two departments do not house any lawyers.
The legal department is not divided into any specific groups, apart from two lawyers who specialise in employment issues. Walsh says: “We tend to divide the work up by specialisms, although some of the time it may be by legal specialism or sometimes it is because one of us might have got to know a lot about one particular area of business.”
Much of BA’s work is kept in-house, especially work on the airline’s expansion through alliances.
“With commercial agreements we have tried to do as much in-house as we can,” explains Walsh.
“For arrangements which involve competition or transactions which have stock exchange ramifications – for example, when we bought a stake in US Airlines – we tend to use Linklaters.”
For the legal department the most time-consuming area is the commercial side of the business, although it is also engaged in the airline’s extension into the financial arena through BA Travel Finance.
Employment is another important area of focus for the legal team, with BA’s two specialist lawyers working closely with Denton Hall and Osborne Clark. Walsh says: “If there is a strike we will get outside advice, as with our unions there are issues about collective relations. Also we have our fair share of industrial tribunal claims.”
Walsh is non-committal over whether a team of only 14 lawyers is large enough to cope with such a massive workload. He says: “I think at the moment we are busier as individuals than ideal, but there is always the question of, if you increase the number, will you generate more work to justify it?”
Head of legal
|FTSE 100 ranking||56|
|Legal function||14 lawyers|
|Head of legal||Stephen Walsh|
|Reporting to||Robert Webb QC|
|Main location for lawyers||Harmondsworth, Middlesex|
|Main law firms||Linklaters (IP, company and commercial), Garretts, Simmons & Simmons, Wragge & Co, Slaughter and May (finance), Denton Hall (employment), Osborne Clark (employment), Bristows (IT), Sullivan & Cromwell (US)|