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British Airways

Volume 19: debated on Monday 1 March 1982

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asked the Secretary of State for Trade whether he will make a further statement on measures taken by British Airways to improve its financial position.


asked the Secretary of State for Trade if he will make a further statement about the measures taken by British Airways to improve its future financial position, referred to in the Under-Secretary's reply on 4 February, Official Report, column 171.

British Airways made a pre-tax loss of £141 million last year and is expected to make a further substantial loss in the current financial year. Its debts are fast approaching the £1 billion mark. It is clearly the management's responsibility, therefore, to take strong measures to improve its financial performance as quickly as possible. I welcome the determination of Sir John King and the British Airways board to take such measures.

In the interests of fair competition in civil aviation, will my hon. Friend confirm that, despite British Airways' rejection of the description that it is State subsidised, it has received a wide variety of support from the taxpayer over the years? Is it not true that if British Airways were not a nationalised airline, but a private sector company, it would have been declared bankrupt long ago?

In the last part of his question my hon. Friend certainly puts the issue rather brutally, but, many people might think, accurately. It is absolutely right that the House should be aware of the massive support that British Airways has received from the taxpayer by means of the national loans fund and public dividend capital, amounting to £10 million a year, injected over the last five years, on which it has not recently been repaying its dividend. Its private sector debts are guaranteed by the Treasury, which means a preferential rate of interest. It also benefited at no cost to itself from the exchange cover scheme when that scheme was in operation. It has had £160 million of PDC written off. Its Concorde support programme was funded by the Government. There are many other points that I would raise if time were available.

Will the Under-Secretary of State take an early opportunity to withdraw the statement he has made on a number of occasions that British Airways has been subsidised? What were the subsidies? Is he aware that he gave an answer only last Friday indicating that over the last five years British airways had paid £100 million to the taxpayer and received £50 million back. That means that the taxpayer is £50 million up if one takes out of the calculation Concorde, which is a separate operation?

I thought I had made it clear even to the right hon. Gentleman that British Airways has benefited from taxpayers' support by at least ten separate means. If preferential rates of interest from the national loans fund and preferential rates from any private sector borrowing are not benefits, I cannot think what are. In addition, it has benefited from the exchange cover scheme. As for subsidy, it had £160 million written off. Furthermore, Concorde was subsidised by the taxpayer to the tune of £10 million every year. This also existed under the Labour Government.

Does the Under-Secretary of State realise that it is wrong to try to imply that the losses on Concorde result from any commercial mismanagement on the part of British Airways? Concorde is a national project subsidised in France and in Britain. It is the decisions of Governments that have led to subsidies and to losses. Does the Under-Secretary understand that one of the obligations of a Minister of the Crown is to play fair with the industries that he is supposed to support?

I am only too well aware of my duty to play fair. It is precisely because I am playing fair to the taxpayer that I emphasise the massive support that the taxpayer has given to British Airways over the years. I am extremely surprised that the right hon. Gentleman is apparently not aware that British Airways is claiming to make a profit out of Concorde at the moment, that it thinks it will do so in the years to come, and that it is extremely keen to keep it.

On the matter of improving the financial position of British Airways, will my hon. Friend confirm that the baggage handling dispute has improved the service to British Airways' customers and has also reduced the pilferage from those customers—

If this is absolute rubbish, will my hon. Friend say so? If it is true, however, will he encourage British Airways to draw the obvious conclusion and perform accordingly?

I shall encourage British Airways to draw the correct conclusions from what is happening. The manner in which other members of British Airways are acting in this crisis is a splendid tribute to the spirit that still exists within the airline.

Is the Under-Secretary of State aware that the dispute is the fault of British Airways, which will not respond to an ACAS initiative to engage in negotiations with the Transport and General Workers Union? Is he also aware that this is a dispute in which British Airways has locked out its own staff despite guarantees from the executive council of the Transport and General Workers Union to meet some of the negotiating deadlines? If there is a deterioration in British Airways finances as a result of this dispute, it is its own fault.

I certainly do not confirm what the hon. Gentleman says. The details of the dispute and how it is handled must remain matters for the British Airways board.