37 Related party transactions
The Group and Company had transactions in the ordinary course of business during the year under review with related parties.
| Group | Company | |||
|---|---|---|---|---|
| £ million | 2008 | 2007 | 2008 | 2007 |
| Associates | ||||
| Sales to associates | 43 | 45 | 43 | 45 |
| Purchases from associates | 54 | 105 | 54 | 105 |
| Amounts owed by associates | 4 | 4 | ||
| Amounts owed to associates | 1 | 1 | ||
| Subsidiaries | ||||
| Sales to subsidiaries | 36 | 73 | ||
| Purchases from subsidiaries | 126 | 121 | ||
| Amounts owed by subsidiaries | 116 | 99 | ||
| Amounts owed to subsidiaries | 1,982 | 1,928 | ||
In addition, the Company meets certain costs of administering the Group’s retirement benefit plans, including the provision of support services to the Trustees. Costs borne on behalf of the retirement benefit plans amounted to £3.6 million in relation to the costs of the Pension Protection Fund levy (2006/07: £5.3 million).
Associates
a Iberia, Lineas Aéreas de España, S.A. (Iberia)
During the year, the Group increased its investment in Iberia from 9.95 per cent to 13.15 per cent. Areas of opportunity for cooperation have been identified, and work continues to pursue and implement these. Sales and purchases between related parties are made at normal market prices and outstanding balances are unsecured and interest free. Cash settlement is expected within the standard settlement terms specified by the IATA Clearing House.
As at March 31, 2008, the net trading balance owed by Iberia to the Group amounted to £3.1 million (2007: £0.4 million owed to Iberia).
b Comair Limited (Comair)
Prior to September 30, 2006, the Group’s shareholding in Comair was 18.3 per cent and due to the Group’s ability to exercise significant influence, the investment in Comair was accounted for using the equity method. On September 30, 2006, the Group’s shareholding in Comair decreased to 10.92 per cent and the Group no longer had the ability to exercise significant influence over the investment, at which time the investment was reclassified as an available-for-sale financial asset. Sales and purchases to and from Comair up to September 30, 2006 have been included in the numbers above.
c Other associates
The remaining net trading balances are due to transactions between the Group and Dunwoody Airline Services (Holdings) Ltd.
Subsidiaries
Transactions with subsidiaries are carried out on an arm’s-length basis. Outstanding balances that relate to trading balances are placed on inter-company accounts with no specified credit period. Long-term loans owed to and from the Company by subsidiary undertakings bear market rates of interest in accordance with the inter-company loan agreements.
Directors’ and officers’ loans and transactions
No loans or credit transactions were outstanding with directors or officers of the Company at March 31, 2008 or arose during the year that need to be disclosed in accordance with the requirements of Schedule 6 to the Companies Act 1985.
In addition to the above, the Group and Company also have transactions with related parties which are conducted in the normal course of airline business. These include the provision of airline and related services.
Neither the Group nor Company have provided or benefited from any guarantees for any related party receivables or payables. During the year ended March 31, 2008 the Group has not made any provision for doubtful debts relating to amounts owed by related parties (2007: £nil).
Compensation of key management personnel (including directors)
| Group | Company | |||
|---|---|---|---|---|
| £ million | 2008 | 2007 | 2008 | 2007 |
| Short-term employee benefits | 4 | 4 | 4 | 4 |
| Share-based payments | 2 | 3 | 2 | 3 |
| 6 | 7 | 6 | 7 | |