BEA’s hidden profits (1963)

From the December 1963 issue of the Socialist Standard

In case any of our readers should misunderstand the intention behind the phrase “ . . . B.E.A. pointed out how generous a deal its shareholders have got . . in October’s News In Review, we publish the following clarification.

There are no shareholders or stockholders in B.E.A. or B.O.A.C. so there are no individual investors who have an interest in whether the corporations make a profit or loss.

Under the Air Corporations Act 1949 Sections 9 and 10 the corporations were authorized to issue stock (subject to permission having been given by the Treasury) and the stock carried Treasury guarantee for interest and capital. Both corporations had issues of stock. For example, B.O A. 3% stock 1960/70, B.O.A. 2½% stock 1977/82. However, under a later act, the Finance Act, 1956, the corporations were permitted to raise money by means of loans from the Exchequer with the result that these Exchequer advances have replaced the old arrangements of stock issues.

But, even under the old arrangements there were no investors who had any interest in whether the corporations made a loss or a profit. Though the stock bore the name of B.O.A. or B.E.A., they were fixed interest stocks and the interest and capital were guaranteed by the Treasury. In this respect the air corporations were following the arrangements which are fairly general throughout the nationalised industries.

Editorial Committee.