Skip to content

Note 30: Provisions for liabilities and charges

  Group
£ million Insurance provisions Onerous lease contracts Restoration and handback provisions Restructuring Litigation Other Total
At April 1, 2008:              
Current     29 7 134   170
Non-current 22 11 83   84 10 210
  22 11 112 7 218 10 380
Arising during the year 10   15 81 (9) 35 132
Utilised   (3) (29) (64) (10) (32) (138)
Release of unused amounts   (1) (7) (3)     (11)
Exchange   2 19   42   63
Unwinding of discount     1   11   12
At March 31, 2009 32 9 111 21 252 13 438
Analysis:              
Current     24 21 137   182
Non-current 32 9 87   115 13 256
  32 9 111 21 252 13 438
  Company
£ million Onerous lease contracts Restoration and handback provisions Restructuring Litigation Other Total
At April 1, 2008:            
Current   29 5 134   168
Non-current 11 80   84 10 185
  11 109 5 218 10 353
Arising during the year   12 81 (9) 35 119
Utilised (3) (29) (62) (10) (32) (136)
Release of unused amounts (1) (7) (3)     (11)
Exchange 2 19   42   63
Other movements (5)         (5)
Unwinding of discount   1   11   12
At March 31, 2009 4 105 21 252 13 395
Analysis:            
Current   22 21 137   180
Non-current 4 83   115 13 215
  4 105 21 252 13 395

Insurance provisions relate to provisions held by the Group’s captive insurer, Speedbird Insurance Company Limited, for incurred but not reported losses. Such provisions are held until utilised or such time as further claims are considered unlikely under the respective insurance policies.

The onerous lease provision relates partly to the sub-lease of one Jetstream 41 aircraft to Eastern Airways and six Avro RJ100 aircraft to Swiss International Air Lines. This provision will be fully utilised by October 2011. In addition, the provision includes amounts relating to properties leased by the Group that are either sub-leased to third parties or are vacant with no immediate intention to utilise the property. This provision will be fully utilised by April 2037.

Restoration and handback costs include provision for the costs to meet the contractual return conditions on aircraft held under operating leases. The provision also includes amounts relating to leased land and buildings where restoration costs are contractually required at the end of the lease. Where such costs arise as a result of capital expenditure on the leased asset, the restoration costs are also capitalised. This provision will be utilised by March 2051.

The balance remaining on the Group restructuring provision was £21 million at March 31, 2009, mainly relating to targeted voluntary severance costs expected to be paid during the next financial year.

There are ongoing investigations into the Group’s passenger and cargo surcharges by the European Commission and other jurisdictions. These investigations are likely to continue for some time. The Company is also subject to related class action claims. The final amount required to pay the remaining claims and fines is subject to uncertainty. A detailed breakdown of the remaining provision is not presented as it may seriously prejudice the position of the Company in these regulatory investigations and potential litigation.

Included in the amount arising during the year for litigation is a £22 million reduction in the competition provision relating to a change in the net present value of the provision arising from changes to the expected payment profile, offset by a £12 million increase in the provision as a result of the accrual of legal fees.

Other provisions include staff leaving indemnities relating to amounts due to staff under various overseas contractual arrangements.

back to top