HC Deb 24 May 1939 vol 347 cc2281-2
33. Mr. Pethick-Lawrence

asked the Secretary of State for Air whether he is aware that out of the total nominal assets of British Airways, Limited, shown as £689,138, in the latest available balance sheet, £363,587 stands to development account corresponding to no tangible assets; that the company itself and its subsidiaries have made annual losses; and what was the basis for fixing the total effective purchasing price of this company at £573,500?

The Secretary of State for Air (Sir Kingsley Wood)

The value of the tangible assets of British Airways at 30th September, 1938, was found to be roughly equivalent to advances by shareholders amounting to £311,000. The further sum of £262,500, which is included in the proposed purchase price, represents the amount which, after negotiation, was attributed to the value of the organisation built up by the company and the experience which it had gained, account being also taken of the fact that the company had reached a stage in its growth when it could reasonably expect to obtain some return for its past expenditure on development.

Mr. Pethick-Lawrence

Do I understand the right hon. Gentleman to say that the excess amount is upon goodwill, and is not the goodwill, in fact, the promise of the Government to pay money to the company; and, further, is the right hon. Gentleman aware that before the announcement was made a few days ago, the 5s. shares of Hillman Airways, which, in fact, own a certain amount of shares in British Airways, stood at is. 6d. and that after his announcement they rose to approximately 2s., which is, in fact, their value under the agreement?

Sir K. Wood

As regards the first supplementary question, I stated that the amount of £262,500 was attributable to the value of the organisation built up by the company and other matters referred to in the answer. As regards the second supplementary question, the right hon. Gentleman will recall my statement with regard to his other question last week, that—and I do not think he will disagree with me—in dealing with this kind of question, the market price of the shares is not a suitable guide.

Mr. Shinwell

Will not the right hon. Gentleman give this action its proper name? Is it not a ramp?

Sir K. Wood

No, Sir.

Sir William Davison

May I ask whether my right hon. Friend's statement is affected by the fact that "Blue Peter" has won the Derby?

Mr. Bellenger

Were not all the factors enumerated in assessing the value of these shares taken into account by the market, and is not the market value a better indication of the real value of the shares than the Government actuaries?

Sir K. Wood

No, Sir. I ventured to point out on the last occasion that the prices of Imperial Airways shares on the market have varied very considerably. I do not think anyone who was responsible for this transaction would desire to base the value to be paid by the Government on the actual quotations for the time being on the Stock Exchange. They vary from time to time.