British Airways (Hansard, 8 November 1982)

§ 15. Mr. Maxton
asked the Minister for Trade if he will make a statement on the recently published accounts of British Airways for the financial year 1981–82.

§ Mr. Sproat
British Airways' 1981–82 accounts show a pre-interest operating profit for the group of £13 million. After allowing for interest charges of £111 million and extraordinary charges of £426 million, the group made a loss of £545 million. The extraordinary items largely show the results of past mismanagement and misfortunes and do not reflect British Airways' much improved performance. I am confident that British Airways are now making a substantial recovery.

§ Mr. Maxton
In view of the unsatisfactory way in which the accounts were drawn up, can the Minister say whether he or any of his colleagues were consulted by British Airways or by their accountants about the treatment of certain items in the accounts and whether they were asked if they could give any financial assurances about the future operations of British Airways? If they were, what answer was given?

§ Mr. Sproat
The accounts of British Airways are a matter for the board of British Airways and its accountants, Ernst and Whinney. On the other matter, we gave a letter of comfort to British Airways that we would undertake that they could keep going for one more year.

§ Mr. Warren
In his discussions with Sir John King about the accounts, has my hon. Friend had an opportunity, or will he take the opportunity, to discuss the fact that the charges being levied by the Government on domestic air fares in this country are now approaching 40 per cent. of the cost of such fares, which means that the Government are contributing to the apparent loss?

§ Mr. Sproat
I cannot answer that question as fully as I should like, as some of the charges to which my hon. Friend fairly refers are those imposed by the British Airports Authority. As they are currently the subject of litigation, I am precluded from answering that question in the House.

§ Mr. John Smith
As British Airways declared a profit of £60 million in the last year of the Labour Government, will the Minister confirm that the mismanagement to which he referred occurred during the lifetime of the present Government? Will he also confirm that if British Airways are doing so well there will be no need for the taxpayer to finance capital reconstruction before the shares are sold off?

§ Mr. Sproat
The right hon. Gentleman muddles a number of different factors: to be precise, profit and loss 307 and debt. British Airways now have a debt of £1.1 billion. In my view, that shows gross mismanagement in the past. Questions were asked previously about how private airlines are affected. I believe that it is utterly unfair to the private sector that in the past private airlines have had to compete with an airline that could draw funds on an almost bottomless basis, underwritten by the Government. That is a grotesque unfairness to the private sector and to the taxpayer, and we intend to remove it.