§ Mr. Michael Marshallasked the Secretary of State for Trade what were the financial targets set for the British Airways Board and its predecessors, BOAC and BEA, in terms of net assets over the last 10 years; and how well the corporation has done in meeting those targets after interest payments, depreciation and tax have been allowed for.
§ Mr. Clinton DavisBOAC was set a target of 12.5 per cent. per annum return on average net assets for the six years 1966–67 to 1971–72. An average of 10.6 per cent. was achieved. The targets for BEA were 6 per cent. for the five years 1963–64 to 1967–68. and 8 per cent. for the four years 1968–69 to 1971–72. Averages of 5.7 per cent. and 6.4 per cent. were achieved respectively.
British Airways first target was 8 per cent. for the three years 1972–73 to 1974–75 and an average of 6.5 per cent. was achieved. A target of 11 per cent. was set for the four years from 1975–76. So far, the returns have been 1.7 per cent. in 1975–76 and 16.4 per cent. in 1976–77.
The targets are based conventionally on profits after charging depreciation and interest on short-term borrowings, but before charging interest on long-term borrowings and taxation.