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Note 38: 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 2009 2008   2009 2008
Associates:          
Sales to associates 41 43   41 43
Purchases from associates 53 54   53 54
Amounts owed by associates 1 4   1 4
Amounts owed to associates 2     2  

Subsidiaries:
         
Sales to subsidiaries       26 36
Purchases from subsidiaries       131 126
Amounts owed by subsidiaries       169 116
Amounts owed to subsidiaries       2,106 1,982

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 £3.8 million in relation to the costs of the Pension Protection Fund levy (2008: £3.6 million).

Associates

a  Iberia, Lineas Aéreas de España, S.A. (Iberia)

The Group has a 13.15 per cent investment in Iberia. 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, 2009, the net trading balance owed to Iberia by the Group amounted to £1 million
(2008: £3 million owed by Iberia).

b  Other associates

The remaining net trading balance of £1 million as at March 31, 2009, was due to transactions between the Group and Dunwoody Airline Services (Holdings) Limited.

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, 2009, 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 that 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, 2009, the Group has not made any provision for doubtful debts relating to amounts owed by related parties (2008: £nil).

Compensation of key management personnel (including directors):

  Group   Company
£ million 2009 2008   2009 2008
Short-term employee benefits 4 4   4 4
Share-based payments 1 2   1 2
Termination benefits 1     1  
At March 31 6 6   6 6

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