HC Deb 13 January 1971 vol 809 cc78-9W
Mr. Mather

asked the Minister of Aviation Supply what liabilities Her Majesty's Government has assumed in relation to the purchase of Lockheed Tristar aircraft by Air Holdings.

Mr. Corfield

In 1968, Air Holdings Ltd. ordered 50 Lockheed Tristar aircraft with Rolls-Royce RB211 engines. Air Holdings were given exclusive selling rights outside the United States, and assurances of full marketing support by Lockheed.

If sales could not in the event be achieved, cancellation charges would be payable to Lockheed. On the most pessimistic assumptions, and including interest charges, the total potential liability if no aircraft were sold was estimated at about £15 million.

This arrangement was backed from the outset by Rolls-Royce, who indemnified Air Holdings Ltd. against risk of loss. The previous Administration agreed to underwrite one half of this risk, up to a maximum of £5 million and subject to certain limitations.

In return, the Government will get an appropriate share of the profits.

So far, 11 of the 50 aircraft have been sold, to Air Canada and Air Jamaica. The total potential liability has thus been reduced to £10 million, again on the most pessimistic assumptions.

Negotiations are currently under way with a number of airlines and I understand that further sales are expected in the near future.