Friday, September 14, 2007

Back Handed Compliment

In the early 1960’s when Britain still had an aircraft manufacturing industry that could build aircraft without joining a European consortium, the British Aircraft Corporation designed and built the small, 79 seat, twin rear engine BAC 1-11. The aircraft was a major investment programme for the company and they desperately needed a launch customer to purchase the aircraft. At the time British European Airways favoured the Trident, and so their prime target customer was British United Airways whose Managing Director was Freddie Laker.

Negotiations were long and hard fought, especially given Freddie’s tenacity over exacting guarantees from the manufacturer and getting the price reduced at every opportunity. Eventually after months of negotiations a price was agreed of around £10 million for the ten aircraft. Freddie at the conclusion of the last meeting at which the price was settled asked to see the chief BAC negotiator in his office, prior to the signing of the agreement on the following day. At this meeting he asked the BAC Sales Engineering Director, John Prothero-Thomas, what BAC intended to do for Freddie Laker personally, especially given the fact that he had committed so much of his personal energy into concluding the deal. John was put on the spot with this question because Freddie was effectively asking for a back-hander.

John went back to the head of BAC and they agreed he could tell Freddie that they would pay him £10,000 – no small amount in the early 1960s. Freddie was happy. At the signing ceremony later that morning in the BUA boardroom Freddie when presented with the contract showing the previously agreed price. As he was about to sign it he stopped and said. There’s a mistake here, there’s the £10,000 you agreed to pay me, let’s just knock it of the price BUA is paying for the planes.”

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