§ Mr. Idris Owenasked the Secretary of State for the Environment if he will make a statement about the sale of Lunn-Poly by the Transport Holding Company.
§ Mr. PeytonThe T.H.C. has now, in pursuance of the policy already announced and with my consent, signed Heads of Agreement for the sale of Lunn-Poly to Cunard.
The T.H.C. first acquired a 51 per cent. holding in Lunn-Poly on 1st January, 1969, and a further 20 per cent. in July, that year, for a total of about £400,000. At the time of purchase, it guaranteed the new air charter arrangements which Lunn-Poly had undertaken in 1968 to replace those which it had previously had with British Eagle.
In the 10 months to October, 1969, the losses were some £130,000 and in the year to October, 1970, £658,000. Since then losses have continued. The company has incurred total trading losses estimated at over £1.2 million since the T.H.C. acquired its interest, and the overall cost of the venture to the T.H.C. will have been about £1.6 million. The prospect of continuing losses and the outstanding liability on the air charter guarantees underline the soundness of the decision by the T.H.C. to sell the company.
Cunard has agreed to pay a purchase price related to net asset value and expected to be about £100,000. While Cunard is confident that Lunn-Poly can, when combined with its other tour operations, quickly be restored to profitability, it seemed right that the Government should seek to avoid further risk to public funds.