§ Mr. Mellorasked the Secretary of State for Trade if he will make a statement on British Airways' external financing limit for 1980–81.
§ Mr. BiffenBritish Airways' external financing limit for 1980–81 was originally set at £230 million but subsequently reduced to £219 million to reflect payment during the year of a lower dividend on public dividend capital than had originally been assumed.
The volume of worldwide airline traffic in 1980–81 has been adversely affected by the general economic recession and even the modest element of market growth forecast by most operators has failed to materialise. For British Airways this factor, combined with the pressures of international competition and the strength of sterling, will result in a revenue shortfall for the whole year estimated at some £400 million below the figure for which the airline originally budgeted.
The board has therefore taken steps to reduce capital expenditure and operating costs and to raise additional funds by disposing of assets including aircraft. However, in total these measures are still insufficient to meet the whole of this year's revenue shortfall.
With the consent of the Treasury, I have therefore agreed that British Airways' external financing limit for 413W 1980–81 may be increased by £85 million from £219 million to £304 million. The funds are being found from the unallocated contingency reserve within the planned totals of public expenditure.