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British Airways

Volume 21: debated on Monday 29 March 1982

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asked the Secretary of State for Trade if he will make a statement on his consideration of the Price Waterhouse report on British Airways.

British Airways commissioned a report from Price Waterhouse to help the airline return to profitability. British Airways has sent me a copy of the report. It contains commercially confidential information, and British Airways do not intend to publish it. My right hon. Friend and I shall, however, be discussing with them the report and their response to its recommendations.

Does the Price Waterhouse report make any recommendations regarding the capital reconstruction of British Airways? How much will be required either to pay off the loan debt or to go into equity shares, if that is the way the Minister decides to go? Is there any truth in the newspaper report that that money amounts to about £600 million?

I advise the hon. Gentleman not to believe everything that he reads in the newspapers about the report. I have already said that it is a confidential report commissioned by British Airways and not by us. Therefore, it is not up to us to reveal its contents.

Does the report help my hon. Friend to decide how and when British Airways shares will be made available to the public?

Does the Minister agree that what the Government might or might not do about BA on the taxpayers' behalf is a matter of legitimate concern to the House and the public? Will he confirm that the Government will not write off any loan debt or translate it into equity in a way that involves the taxpayer putting a large amount of money into British Airways before it is sold to private interests?

I was asked about Price Waterhouse, not about British Airways' finances. The Price Waterhouse report was commissioned by British Airways. Therefore, it is not up to my right hon. Friend the Secretary of State or me to reveal its contents to the public. If Sir John King wishes to do so, that is up to him. With regard to future plans about British Airways and its privatisation, the right hon. Gentleman will have to wait and see.


asked the Secretary of State for Trade if he will review his policy towards British Airways to exclude the sale of profitable subsidiaries.

Although the Government's aim has been to sell to the private sector a stake in British Airways as a whole, I would not exclude the separate disposal of a subsidiary if the British Airways board, in the exercise of its commercial judgment, decides that the airline's future interests are best served by such a disposal.

Does it make sense to threaten British Airways with the sale of its profitable and enterprising subsidiaries when the British Airways board is making enormous efforts to get the whole operation back into the black?

I commend strongly the efforts of the British Airways board. I should also like to commend the attitude of many members of British Airways' staff during the present ramp strike. They are showing a splendid spirit for the future. With regard to the future and the sale of subsidiaries, there is no question of a threat. The decision on whether to sell a subsidiary is for the British Airways board. There is no pressure from me that it should do so.

Will the Minister take on board that I was pleased to hear him say a few kind words about British Airways because he seems to spend most of his time denigrating, not assisting it? Surely it would not be beneficial to sell profitable subsidiaries. Will the Minister not take up most of his time making apologies for Laker, who was a bad employer of staff?

It is always pleasant to hear kindly words from the hon. Gentleman. The kindly words that I pushed in the direction of British Airways were well deserved. When criticism is necessary I will give it as equally as I will give praise where that is due.

As the Minister mentioned the ramp dispute, does he agree that the attitude of British Airways management in locking out a section of its staff will hardly enhance its future financial prospects? Will he encourage British Airways to take a more positive attitude, at least towards negotiating in the dispute, or is he standing idly by on the sidelines making critical noises in the hope that the dispute will precipitate the break-up of British Airways?

The answer to the last part of the hon. Gentleman's question is "No, certainly not." The details of the dispute are a matter for the British Airways board.


asked the Secretary of State for Trade if he will make a statement on his proposals to privatise British Airways.

The Government intend to sell a controlling stake in British Airways to the private sector as soon as practicable. I very much welcome the steps which the British Airways board is taking to improve profitability and enhance the propects of an early sale.

What is the earliest date by which my hon. Friend anticipates that British Airways can be back in profit? Is there any chance that the Government will sell a stake in British Airways before then?

I hope that British Airways will be profitable in the next financial year. As I have already said, if the British Airways board decided that it wanted to sell a subsidiary in the meantime, I would not stand in its way.

What sense can it make for the Government to allow British Airways to consider flogging subsidiaries that make a profit of £20 million a year if the Government wish to privatise the airline? Does Price Waterhouse have any bearing on the Government's policy to privatise British Airways? Is it not a scandal that the Government refuse to publish a report that involves potentially hundreds of millions of pounds of taxpayers' money, in a desperate bid to flog a national asset?

There is no scandal. It is not my report to publish. If Sir John King wishes to do so, that is up to him. The selling of subsidiaries in the meantime is for the commercial judgment of British Airways. If they consider that getting the cash in the short term from such sales will be to its benefit, they will do so. If they decide that it is better to sell British Airways altogether in the long term, they will do so. We shall not stand in its way in either direction.

Will my hon. Friend acknowledge that reducing their labour force from some 58, 000 to 43, 000 in just over two years is no mean effort on the part of British Airways? Furthermore, they have pruned 16 international uneconomic routes and reduced their borrowing by some £160 million. Will my hon. Friend acknowledge that and perhaps take this opportunity to pay tribute to British Airways for the efforts that they are making to get their house in order and enable the corporation to write a prospectus for the sale of its shares in due course?

I am grateful to my hon. Friend for giving me the opportunity, which I take yet again, to pay tribute to all the good things that British Airways are doing. However, they are taking that action because they are almost £1 billion in debt and had a trading loss of £141 million last year. I am happy to give praise where praise is due, but the action that British Airways are taking is necessary because of the faults of the past, which must be rectified as soon as possible.

The Minister implies that he has no objection to the Price Waterhouse report being made available. He suggests that the difficulty arises because it is British Airways' report. Will he respond to the interest that has been shown in the House and the high public importance that attaches to this issue by asking Sir John King to make the report available to Members of Parliament and placing it in the Library?

There was no such implication in my remarks. I merely made a neutral statement that Sir John King commissioned the report. It is therefore up to him to make it available if he wishes to do so. I can assure the right hon. Gentleman and the House that if Sir John decided that it was in the interests of British Airways to publish the report, we would not stand in his way.