British Airways (Hansard, 17 March 1986)

§ 8. Mr. McCrindle
asked the Secretary of State for Transport if he will make a statement on progress towards the privatisation of British Airways.

§ Mr. Ridley
I refer my hon. Friend to the answer I gave to my hon. Friend the Member for the hon. Member for Keighley (Mr. Waller) on 12 March.

§ Mr. McCrindle
Now that privatisation has been postponed, and without prejudice to the current talk of a management buy-out, will my right hon. Friend be able to reassure me that the other principal plank of the Government's aviation policy— the cultivation and encouragement of competition among British airlines on the appropriate routes— is not equally likely to be postponed? Has he any new initiatives to announce in that respect this afternoon?

§ Mr. Ridley
My hon. Friend knows that the policy on competition was settled in the White Paper "Airline Competition Policy", Cmnd. 9366, in October 1984, which was endorsed by the House. I assure him that we will continually watch opportunities for increasing competition in the airline industry, but I have no plans for reopening the whole matter again.

§ Mr. Carter-Jones
Will the Secretary of State give a firm assurance to British Airways, whether publicly or privately owned, that neither he nor any member of his Government will prevent British Airways from ordering and purchasing from now until 1995 the appropriate aircraft to keep it in the lead?

§ Mr. Ridley
Yes, Sir.

§ Mr. Dicks
When will my right hon. Friend look to the wellbeing of British Airways, as he always does for the British Airports Authority? Will he consider positively the proposed management-staff buy-out by British Airways?

§ Mr. Ridley
I am grateful to my hon. Friend. The mystery about the alleged management buy-out proposal is that nobody seems to know who suggested the idea. The chairman of British Airways has written to my right hon. Friend the Prime Minister and in that letter, which is now in the public domain, to coin a phrase, one paragraph says: We would prefer this"— the privatisation— to be accomplished by means of a public flotation and will pursue such intention with much vigour while continuing to work closely with Nicholas Ridley and his Department. Furthermore, we support HMG' s efforts to achieve a successful outcome in the current negotiations with the United States Government over the capacity annex to the Bermuda II agreement. 10 I am not quite clear what all the row was about.

§ Mr. Foulkes
Is the Secretary of State aware that we are grateful to the hon. Member for Harlow (Mr. Hayes) for revealing that Lord King of Wartnaby invited 140 Tory Members of Parliament to a gargantuan beanfeast in the Savoy? Does the right hon. Gentleman think that that is a good way of spending public money? Will he find out what that was all about, and will he do something about it?

§ Mr. Ridley
I am sure that the time will come when the board of British Airways will wish to entertain Labour Members. Now that we have reached a position where all the pressure in the House and in the media is to criticise the Government for not proceeding more speedily with the privatisation of British Airways, the hon. Gentleman might find a way of getting himself a hot, free lunch.

§ Mr. Gerald Howarth
Does my right hon. Friend agree that it is not the purpose of privatisation to give the investor a risk-free investment? Does he not further agree that privatised concerns such as British Aerospace, BP—not to mention the British Airports Authority— are, indeed, subject to the whim of the Government? Moreover, many of us regard it as unacceptable that the flotation of British Airways should be delayed because of an inability to write a prospectus.

§ Mr. Ridley
I am sure that my hon. Friend knows enough about the subject to recognise that the writing of a prospectus places a heavy and important legal responsibility on the vendor and the board to ensure that it contains entirely accurate information about the future, upon which investment decisions can be based. That applies to any company. I regret to say that at present the difficulties involved in doing that are too great. However, I hope that the time will very soon come when we are able to do it.

§ Mr. Robert Hughes
Although we understand the Secretary of State's embarrassment in not coming to the House last week to tell us that, yet again, he had had to postpone BA's flotation, can he be a bit more forthcoming now? Will he tell us plainly that BA's privatisation will be abandoned and that he will have urgent discussions— I gather there will be an opportunity later this afternoon— with Lord King about the development programme and the replacement of BA's fleet? In particular, will the right hon. Gentleman make it clear to Lord King that the privatisation of the helicopter division of British Airways should cease forthwith?

§ Mr. Ridley
I must correct the hon. Gentleman. I have not postponed BA's privatisation. The position before last week was that we hoped that it would be possible to privatise it during the coming financial year. That is still the position. The Government never mentioned a summer date. I have already given the assurance that equipment that is needed by BA, and which passes the viability test, will be sanctioned by the Government. Moreover, I have no intention of interfering with commercial decisions that BA may or may not take on disposing of its helicopter subsidiary.

§ Mr. Higgins
Does my right hon. Friend agree that the success of BA's privatisation is likely to be much greater if outstanding problems are resolved before the publication of the prospectus, rather than afterwards?

§ Mr. Ridley
That is true. As we hope to involve the managers and staff of BA, together with many small investors, it is most important that the prospectus is straightforward and does not mislead them.