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Corporate governance statement

Receipts and returns to shareholders

Dividend

The Board has decided not to recommend the payment of a final dividend (2008: 5 pence per share).

Share issues, buy-backs and treasury shares

The authorised share capital of the Company is unchanged from the previous year. However, there has been an increase in the issued share capital. Details of the current authorised and issued share capital are set out in the sections headed ‘Shares and shareholders’ and ‘Capital structure and shareholder rights’, respectively.

Under UK legislation, the Board can be given authority to allot shares in the Company by the passing of an ordinary resolution at a general meeting of the Company. The Board currently has authority to allot shares in the Company up to an aggregate nominal value of £95 million by virtue of a resolution passed at the annual general meeting of the Company held on July 15, 2008. This authority expires on July 14, 2009, and shareholders will be asked to renew this authority at the 2009 annual general meeting.

Without prejudice to any special rights previously conferred on the holders of any shares or class of shares for the time being issued, any share in the Company may be issued with such preferred, deferred or other special rights, or subject to such restrictions, whether as regards dividend, return of capital, voting or otherwise, as the Company may from time to time by ordinary resolution determine (or, in the absence of any such determination, as the Board may determine) and, subject to the provisions of the Statutes, the Company may issue any shares which are, or at the option of the Company and/or the holder are, liable to be redeemed.

The Articles of Association of the Company can be altered by the passing of a special resolution by the shareholders at a general meeting of the Company.

Rules about the appointment and replacement of directors are set out in the Company’s Articles of Association. The directors’ powers are conferred on them by UK legislation and by the Company’s Articles of Association.

The Company is authorised to conduct share buy-backs up to approximately 10 per cent of the issued ordinary share capital. This is subject to certain limitations relating to the maximum and minimum prices that may be paid for any shares bought back. This authority is only exercised if the Board considers the buy-back to be in the interests of shareholders. The Company has not conducted any share buy-backs since the authority was first obtained. Shareholders will be asked to renew this authority at the 2009 annual general meeting.

Shares, which have been bought back, are held in treasury. They can be sold quickly (subject to insider dealing rules) and cost effectively, giving the Company additional flexibility in the management of its capital base. Whilst in treasury, the shares are treated as if cancelled so that no dividends are paid on them and they have no voting rights. No shares were held in treasury during the year ended March 31, 2009 (2008: nil).

Shares and shareholders

The number of ordinary shares issued and fully paid as at March 31, 2009, was 1,153,628,000 (March 31, 2008: 1,153,105,000). The increase over March 31, 2008, reflects the issue of new ordinary shares to satisfy the share options exercised during the year under the British Airways Share Option Plan 1999 and the vesting of shares awarded under the Performance Share Plan as set out in notes 33 and 34 to the financial statements.

Capital structure and shareholder rights

The authorised share capital of the Company is £378 million divided into 1,512 million ordinary shares of 25 pence each and one special voting share of 25 pence. All ordinary shares have equal rights to dividends and capital and to vote at general meetings of the Company. The rights attached to the ordinary shares, in addition to those conferred on their holders by law, are set out in the Company’s Articles of Association.

The special voting share has no dividend rights, limited capital rights and restricted voting rights. The sole function of the special voting share is to ensure that the votes capable of being cast by the UK shareholders of the Company, taken as a whole, need never fall below a majority. Its voting rights would only be triggered if the number of UK shares represent, or are reasonably likely to represent at the time of the next scheduled annual general meeting, 50 per cent or less of the issued ordinary share capital and if the Board considers that, as a result, any air service operating right which is currently granted to, or enjoyed by, the Company may be materially restricted, suspended or revoked. Once its voting rights have been triggered, the special voting share entitles the holder to such number of votes as, when aggregated with the votes which are capable of being cast by holders of the UK shares, are equal to 50 per cent of the total number of votes which are capable of being cast, plus one. On any resolution, votes cast by the holder of the special voting share may only be cast in the same manner and proportion as the votes cast by the UK shareholders. Full details of the rights attaching to the special voting share are set out in the Company’s Articles of Association. The special voting share is held by The Law Debenture Trust Corporation Plc.

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