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Note 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 2010 2009   2010 2009
Associates:
Sales to associates 36 41 36 41
Purchases from associates 47 53 47 53
Amounts owed by associates 1 1 1 1
Amounts owed to associates 2 2 2 2

Subsidiaries:
Sales to subsidiaries 65 26
Purchases from subsidiaries 123 131
Amounts owed by subsidiaries 236 169
Amounts owed to subsidiaries       3,283 2,106

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 £3.3 million in relation to the costs of the Pension Protection Fund levy (2009: £3.8 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.

During the year the Company contracted with Iberia to purchase five new Airbus A320 aircraft, the commitment arising has been included in note 15.

As at 31 March 2010 the net trading balance owed to Iberia by the Group amounted to £1 million (2009: £1 million).

b  Other associates

There was a remaining net trading balance under £1 million as at 31 March 2010 due to transactions between the Group and Dunwoody Airline Services (Holdings) Limited (2009: under £1 million).

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 31 March 2010 or arose during the year that need to be disclosed in accordance with the requirements of Sections 412 and 413 to the Companies Act 2006.

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 31 March 2010 the Group has not made any provision for doubtful debts relating to amounts owed by related parties (2009: £nil).

Compensation of key management personnel (including Directors):

  Group   Company
£ million 2010 2009   2010 2009
Short-term employee benefits 4 4 4 4
Share-based payments 1 1 1 1
Termination benefits   1     1
At 31 March 5 6   5 6

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