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British Airways: Sale Of Shares

Volume 413: debated on Monday 13 October 1980

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3.51 p.m.

My Lords, with your Lordships' permission I will make a Statement concerning the offer for sale of shares in British Airways.

In view of the present difficulties in the international civil aviation market which have adversely affected the financial performance of all airlines, including British Airways, it is now clear that it will not be possible to launch a successful flotation in 1981.

It is the Government's firm intention to change British Airways' status to that of a private sector company in which shares will be offered to the public—but we have always avoided giving any firm commitments as to the timing of a flotation. Meanwhile, British Airways face a large capital investment programme to modernise their aircraft fleet, and part of the necessary expenditure will have to be funded by external borrowings.

I have today tabled an Amendment to the Civil Aviation Bill, which your Lordships are to consider in Committee on Thursday, increasing the airline's borrowing powers to ensure the integrity of this programme. Such borrowings are already included in published Government forecasts of nationalised industries' financing and therefore do not represent any addition to public expenditure.

My Lords, in response to the Statement made by the noble Lord, I am glad that the Government have at last acknowledged the reality of the present financial uncertainties affecting the profitable operation of all airlines. I am surprised that they did not acknowledge this earlier. To many of us it has been apparent for some time. I think it certainly must have been apparent to the Government at Committee stage that this was so and, in my view, it should have been apparent to them when the Bill was first introduced. This inevitably leads one to the conclusion that the introduction of this Bill was based more on political considerations than on the economic facts about the air transport industry. My view is that this Bill could well have been postponed for a year, and it would seem to be another example of the Government's undue haste to bring in irrelevant legislation.

My Lords, I should like to thank the noble Lord for making this Statement. As has been said, this news comes as no surprise to us, but we have a feeling that the Government knew about it a long time ago, and we regret very much that they did not make this information available until today. Doubtless we shall have time and opportunity to go into it more deeply during the Committee stage on Thursday.

My Lords, as the noble Lord, Lord Ponsonby knows, the airline industry is a very cyclical one, and I can assure him and indeed the noble Earl, Lord Amherst, that the announcement has been made as soon as practicable after the decision was taken. Parliament was not sitting until the beginning of last week and I tabled the relevant amendment to the Civil Aviation Bill as soon as an opportunity presented itself. We have gone out of our way to emphasise, during the passage of this Bill, in the other place and so far in your Lordships' House, that no decision had been taken on the precise date of the flotation, and that remains the position.

My Lords, the noble Lord has said that it would not be possible to launch a successful flotation in 1981: that brings us to 1982. In all probability there will be a general election in 1983. Does the noble Lord seriously think they can float a company like this with all the uncertainties that a general election would bring forth?

My Lords, if I may say so I think the noble Lord is running somewhat ahead of himself. By my calculations, the election is not due until 1984 and in any event I do not see that this has any bearing on the date of this flotation.

My Lords, may I suggest that the noble Lord will probably find himself mistaken on that point. I should like to ask a further question. In the Statement there is a reference to the flotation of the company: the powers in the Bill, of course, provide for the transfer of assets to a nominee Government company. Is it intended to transfer these assets in that way or will that be left open?

My Lords, may I ask the noble Lord and perhaps, through him, the noble Lord the Chief Whip, whether he is aware that since we were told only this morning that the Secretary of State would make a public announcement of his decision, we are gravely disturbed at the disrespect shown to this House, in that, although we have a Committee stage on the Bill on Thursday, the public statement would not have been made in this House? Is he further aware that the whole House now knows that the Statement would not have been made in Parliament unless we, the Opposition, had asked for it? Is he further aware that, in view of the almost overwhelming pressure put upon your Lordships' House to implement the Government's unreasonable programme in this overspill, we should particularly like to ask the noble Lord whether in future he will consider the physcial as well as the—I was going to say "moral" but perhaps I had better not say that—pressures put upon this House? Since the Government may have known eighteen months ago, and certainly should have known at Second Reading three months ago, I suggest that the Committee stage of this Bill in this House in this overspill was unnecessary.

My Lords, I am not going to pretend to your Lordships that the House is not at this moment under considerable pressure. I have said before, and I will say it again, that the way in which this House has stood up to the pressure is in the very best spirit that it has always shown and I am quite determined that the House should not be under so much pressure again. That is the general remark.

As regards this Statement, the noble Baroness the Opposition Chief Whip was good enough to see me this morning and tell me about her misgivings. Since then I have done my best to find out exactly what would have happened if another place had been sitting at this moment and in what way the Statement would have been made. I can tell the House that the best I have been able to find out at the moment is that the Statement would have been made in the same way, as a press statement. I have given strict instructions that—and I do not want to take this on myself, because I have in fact given those instructions, but independently my noble friend the Leader of the House did it himself beforehand—whenever anything happens, when this House is sitting alone, that would have been the cause of a Statement in another place, a Statement will be made in your Lordships' House. That is an undertaking for the future. I know that we are under severe pressure. My understanding is that the actual decision which has been announced has not been known a long time ahead. It could possibly have been made a matter of days ago, but not, as has been suggested, a long time ago.

My Lords, the whole House knows that the noble Lord himself always treats the House with consideration and kindness, but on this occasion I must ask him to accept that the whole House—and certainly the Opposition—has been astonished by this performance. It is really astonishing that the Government should have had no intention of announcing in this House something which is essential to what we are going to debate on Thursday.

Perhaps I had better say something a little more gracious. The noble Lord in his usual skilful way has apologised to the House without actually saying so, because he could not; but we accept what is an apology for the way the Government have treated your Lordships. Perhaps I may further say that if the Government really did not know until a few days ago what the situation was, that is simply a token of their whole muddled approach to the economy of the entire country.

My Lords, the noble Baroness the Opposition Chief Whip is very kind to say that she does not blame me personally; but, of course, if the Government are at fault in a matter of administration the blame is mine and mine alone in this House, so I must not shelter under anyone else. But without commenting on the other remarks of the noble Baroness, I think perhaps we could leave it there for the moment.

My Lords, before we return to the Local Government Bill, may I correct one thing that I said to the noble Lord, Lord Beswick. I understand it is not intended to transfer the assets of the existing British Airways to a new company until nearer the flotation date.