asked the Secretary of State for Trade whether he will make a statement about British Airways' financial results for 1979–80 and the airline's failure to make a return consistent with its current financial target.
The reasons for British Airways' poor results in 1979–80 are set out in the airline's report and accounts for the year. The predominant problem was very high increases in fuel costs. Also, the continued strength of the pound reduced the sterling value of revenue earned abroad.I accept that these factors were beyond the control of British Airways. I am confident that the airline's management has done a great deal to minimise the adverse effects of these factors and that it is also taking appropriate action to meet the difficulties which are now affecting the whole of the international aviation industry.Pending a flotation of its shares, British Airways' current financial target requires an average 6 per cent. real return on net assets revalued at replacement cost over the three years 1979–80 to 1981–82. I expect the airline to make continuing efforts to produce results which reflect this required return and recover as much of the ground lost in 1979–80 as may be possible in the remaining two years.In the meantime BA must look beyond the concept of a fixed financial target to its forecast profits and loss account for this period, including any further necessary action to reduce costs, bearing in mind the need to make a successful flotation of its shares as soon as reasonably possible.