British Airways (Hansard, 21 June 1982)

§ 11. Mr. Colvin
asked the Minister for Trade how much of British Airways' debt is backed by Government guarantees.

§ Mr. Sproat
As at 31 March 1982, Government guarantees covered £940 million of British Airways' loan and lease finance. This represents almost all of the airline's capital borrowings.

§ Mr. Colvin
In view of the size of British Airways' debt, does my hon. Friend agree that the company is in no position to provide the £50 million to recapitalise International Aeradio Ltd., which was referred to in an earlier question, and that, therefore, it would be in the best interests of that company, those who work in it and the taxpayer, too, if it were sold off to the private sector at the earliest opportunity?

§ Mr. Sproat
I am grateful to my hon. Friend for those remarks. Certainly, if that is the judgment of the British Airways Board, we would support it. I must also congratulate my hon. Friend on bringing out the point that International Aeradio Ltd. may benefit from being freed from the shackles of the rest of British Airways.

§ Mr. John Smith
The Minister told us earlier that his plans for privatisation were "right on target". I think that was the phrase that he used. Will he explain now, since he has been asked a number of times, what the Government propose to do about the moneys owed by British Airways to American banks and others? Are these to be taken off the back of British Airways by the Government prior to privatisation? If not, what does he expect to get from the sale?

§ Mr. Sproat
The right hon. Gentleman said that I had been asked the question many times. He is right: I have. I have given him the answer many times that he must wait and see what the financial position of British Airways is as we approach the date for privatisation. I hope that we will have the strong support of the right hon. Gentleman when the date for privatisation comes.

§ Mr. Robert Atkins
Does my hon. Friend agree that it will be a clear mark of the achievement of British Airways if and when they get down to the target of 43,000 staff? Is there any possibility of that happening within the distant or foreseeable future?

§ Mr. Sproat
I am extremely glad to be able to tell the House that not only is there the prospect of British Airways reaching 43,000 staff, but that they have already gone below that target. It is a great tribute to the grip that Sir John King and the management have now taken on the finances of British Airways that they have managed to do that. That is one of the reasons why I say that British Airways are right on target for privatisation.

§ Mr. Douglas
Does the Minister accept that part of the purpose of giving a guarantee is to enable public corporations, such as British Airways, to borrow more cheaply on the capital market? How many of the guarantees have ever been called up?

§ Mr. Sproat
I am happy to tell the House that so far the Government have not had to pay up for any of the £940 million. However, I remind the House that when Sir Freddie Laker went bankrupt his debts were about a quarter of the debts of British Airways. That is another example of how nationalised industries are protected when they can rely on the taxpayer to support them by guarantees.