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Aviation History
1962
1962 - 2308.PDF
Official Organ of the Royal Aero Club First Aeronautical Weekly in the World Founded in 1909 HURSDAY OCTOBER 11 1962 Number 2796 Volume 82 Editor-in- Chief MAURICE A. SMITH DFC Editor H. F. KING MBE Technical Editor W. T. GUNSTON Air Transport Editor J. M. RAMSD EN Production Editor ROY CASEY Managing Director H. N. PRIAULX MBE In this issue World News 582 Air Commerce 585 Interception a la Russe 593 Analysing the P.1127 595 New Russian Turbine-powered Contenders 598 Sport and Business 603 Straight and Level 604 Letters 605 Final Approach to Aeronautical Inn-signs 607 Missiles & Spaceflight 609 Industry International 615 Service Aviation 618 lliffe Transport Publications Ltd, Dorset House, Stamford Street, London, SE1; telephone Waterloo 3333 (Telex 25137). Telegrams Flightpres London Telex. Annual subscriptions: Home £4 15s. Overseas £5. Canada and USA $15.00. Second Class Mail privileges authorized at New York, NY. Branch Offices: Coventry, 8-10 Corpora tion Street, telephone Coventry 25210. Birmingham, King Edward House, New Street, Birmingham 2; telephone Mid land 7191. Manchester, 260 Deansgate, Manchester 3; telephone Blackfriars 4412 or Deansgate 3595. Glasgow, 62 Bucha nan Street, Glasgow CI; telephone Central 1265-6. New York, NY: Thomas Skinner & Co (Publishers) Ltd, 111 Broadwav 6: telephone Digby 9-1197. © Iliffe Transport Publications Ltd, 1962. Permission to reproduce illustra tions and letterpress can be granted only under written agreement. Brief extracts or comments mav be made with due acknowledgement. BOAC's £64m Day of Reckoning: OST airlines have lost money in their time, and particularly so in the past year or two. But none has ever presented its shareholders with a deficit so prodigious as that revealed this week by BOAC. Even if all the corporation's reasons for its £64m accumulated loss are entirely valid, which is arguable, there can be no excuse for the manner in which the shareholders—Britain's taxpayers—have been suddenly presented with a £33m bill for obsolete aircraft. Vast sums of public money have been entrusted to BOAC to provide a public service, and this they have done admirably. BOAC services are second to none. But should not stewardship of public capital have called for franker warning of the immense reckoning that the management must have known was to come? Instead, over the past few years BOAC have seemed to construe their results to appear better than they have in fact been. Previous balance sheets have carried an obfuscatory footnote, in small print, anticipating "possibly substantial" losses in respect of old aircraft; and that is now seen to have been an understatement. This is BOAC's second capital write-off in three years: the first one, of £5m for aircraft development, was also accounted for in a manner lacking in directness (Flight, October 30, 1959, page 479). Two other big charges, namely interest on capital and the losses of associated companies, have been presented in a way which has blurred the complete BOAC financial picture. It is true that the corporation has to pay interest in lean years as well as in fat ones. But this is the price of relatively cheap State capital; and it is a relief to see that BOAC are no longer describing these payments—£5m this time—as "guaran teed dividends." Certainly any airline with loan capital has to pay for its borrowings just as it has to pay for fuel, maintenance or anything else. The Price of Associated Companies Scarcely less stunning than the amount written off for obsolescence is the £14m now seen to have been lost on associated companies. It is impossible to discover where all this money has gone, because over the years BOAC have published only the most meagre details of their associ ates' accounts. Results of associates have, again, bsen regularly presented as somehow distinct from the main BOAC accounts, as if the primary reason for investing in these companies were something other than to secure markets for BOAC. This should, of course, be an airline's only reason for putting money into associates. The cost is now revealed as the unhappy reckoning for the way BOAC appear, in the past, to have managed the affairs of their associates and subsidiaries. The reasons that BOAC adduce for their immense loss are, essentially, three in number: (1) The premature obsolescence of their older aircraft: (2) the corporation's role as an instrument of national policy, and par ticularly its obligations to the British aircraft industry; and (3) poor traffic growth in 1961-62. The validity of these excuses is examined, and the future discussed, on page 585. It suffices here to observe that, though there are mitigating circumstances, the price of BOAC's excellent public service has been much too high.
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