at a fixed rate. This was a necessity as most of its costs were in dollars whereas most of its income was in pounds sterling. The company's growing problems were exacerbated by wrongly anticipating the sterling-dollar exchange rate for the 1981/2 winter season. During all 1980 and the better part of 1981 the rate was 1:2. The pound could buy two dollars because sterling was kept high by Britain's North Sea oil exports and the importance these exports assumed against high crude oil prices. Laker Airways did not anticipate the speed of sterling's subsequent decline. This meant that it needed to pay more for dollars than it had originally budgeted, leading to an outflow of funds at a time of financial crisis. Demise The Skytrain concept was flawed, as it required high year-round loads to make money at discount prices, even though Laker Airways had lower costs and a simpler organisation. The airline began to fail when Pan Am, a transatlantic competitor, decided in October 1981 to drop its lowest economy fares where it was in competition with Skytrain by up to 66%. Laker retaliated by introducing a discounted premium cabin branded Regency Class. Following the end of the 1981/2 winter peak, there was insufficient traffic to support four airlines competing across the North Atlantic between January and March. At this point, state-owned British Airways and TWA, Laker's other transatlantic competitors, dropped their fares by a similar amount. As a result, Laker's loads and cash inflow halved between October 1981 and February 1982. It has also been suggested that Laker experienced a downturn after passengers began avoiding the DC-10 due to the series of high-profile fatal accidents that befell the type at the end of the 1970s. The final blow to Laker Airways came when British Caledonian (BCal) and other European operators operators of the DC-10 warned McDonnell Douglas and GE that if the companies moved forward with a rescue contract with Laker, they would cease all business with those companies. McDonnell Douglas and GE did not move proceed with the rescue, and Laker Airways collapsed in the early morning of 5 February 1982 with debts of £270 million, the largest corporate failure in Britain. Freddie Laker sued IATA member airlines British Airways, BCal, Pan Am, TWA, Lufthansa, Air France, Swissair, KLM, SAS, Sabena, Alitalia and UTA for conspiracy to put his airline out of business by predatory pricing. They