British Airways 2007/08 Annual Report and Accounts

Notes index
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
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25
26
27
28
29
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31
32
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34
35
36
37
38

8 Finance costs and income

Ł million	2008	2007
	Group
a Finance costs
On bank loans*	36	34
On finance leases	70	68
On hire purchase arrangements	31	45
On other loans*	39	23
Interest expense	176	170
Unwinding of discounting on provisions**	10	1
Interest capitalised	(15)	(5)
Change in fair value of cross currency and interest rate swaps	4	2
	175	168

* Total interest expense for financial liabilities not at fair value through the income statement is £75 million (2006/07: £57 million).
** Current year unwinding of discount is on the competition investigation, restoration and handback provisions (see note 29).

Interest costs on progress payments are capitalised at a rate based on LIBOR (London Interbank Offered Rate) plus 0.5 per cent to reflect the average cost of borrowing to the Group unless specific borrowings are used to meet the payments in which case the actual rate is used.

Ł million	2008	2007
	Group
b Finance income
Bank interest receivable (total interest income for financial assets not at fair value through the income statement)	111	129
	111	129
c Financing income and expense relating to pensions
Net financing income/(expense) relating to pensions	34	(18)
Amortisation of actuarial losses on pensions		(1)
	34	(19)
d Retranslation charges/(credits) on currency borrowings	11	(13)

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