§ Mr. Snapeasked the Secretary of State for Transport (1) what discussions took place between his Department and the Office of Fair Trading regarding the acquisition by British Airways of a substantial shareholding in Brymon Airways;
(2) if he plans to meet the chairman of British Airways to discuss British Airways' acquisition of a substantial shareholding in Brymon Airways; if he will publish details of the transaction with particular reference to the price paid by British Airways; if the acquisition by British Airways of such a shareholding is in accordance with Her Majesty's Government's aviation policy; and if he will make a statement.
§ Mr. Michael SpicerMy officials have informally discussed with the Office of Fair Trading the proposed acquisition by British Airways of a minority shareholding in Brymon Aviation Ltd. The OFT has considered the matter in the light of information supplied to it by Brymon. On the basis that BA's voting shareholding does not exceed 14 per cent., the OFT does not consider that BA will be in a position to exercise material influence over Brymon or that the shareholding will constitute a merger within the meaning of the Fair Trading Act 1973. In these circumstances, the OFT does not intend to pursue the matter further.
My right hon. Friend as shareholder has to approve any significant financial stake BA wishes to acquire in another airline. In view of the OFT's clearance, he has therefore looked at this question purely as a trade investment by BA. He is satisfied that Brymon's capital structure will be such that the return to BA meets the normal financial criteria which he applies in approving its trade investments. My right hon. Friend has consequently approved a trade investment of £1.25 million by BA on the basis that voting 409W rights will be no more than 14 per cent. and capital rights about 40 per cent. In addition, BA proposes to guarantee certain of Brymon's leasing commitments.
I see no need to discuss this matter with BA's chairman.