IMPERIAL AIRWAYS

Otago Daily Times, Issue 23690, 23 December 1938, Page 4

IMPERIAL AIRWAYS

IMPORTANT NATIONAL SERVICE A YEAR OF DEVELOPMENT <From Our Own Correspondent) (By Air Mail) LONDON. Nov. 17. At the annual meeting of Imperial Airways Sir John Reith, chairman, remarked: “ Development to-day is so rapid that any large aircraft is almost out of date before delivery, and to base the provision for obsolescence on anything approaching the real life of aircraft will defeat the aim of air leadership. Indeed, if §uch a policy is to succeed financial support must of necessity be •übstantial.

“ There is still time—though time presses and competition is intense and increasing on every foreign hand—still time to order outlook and procedure so that the ‘ globe-spread net of speeded intercourse ’ shall be of British weaving and that through the seven skies, if seven there be, as once upon the seven seas, British craft may ply supreme.

“ There is to-day a body of opinion actuated not by political considerations but by straightforward problems of efficiency which favours a non-com-mercial constitution for many of the great public undertakings and certainly for those which require in one way or another the support of the State,”'said Sir # John. “Imperial Airways is a national service of the first importance, and it must know where it stands in the political and economic life of the nation. • The present position is neither commercially nor constitutionally satisfactory, The company is neither wholly free nor wholly secure.” Relations with the State were not as they should be. In every activity much depended on the personalities involved, but it was the system far more than anything else which in thL case provoked dissension. ' “Those there ate who on occasion secure, or think they secure, what is termed the best of ' both worlds. Here the boot was on the other foot, and that is where I found it.

“At this stage there are only two observations to be made. The Air Minister (Sir Kingsley Wood) referred to the needs in this company as well as in British Airways for large addi tional capital for development purposes. Apart from any other issues involved, any alternrtive to the Government’s plan would entail either a great increase in share capita] or the creation of obligations with rights ranking in front of the existing shares. The second' comment is that the board, whatever its legal powers under the Articles of Association, will not agree to rny price for the sale of the undertaking without calling another meeting of shareholders.’’ SUPPLY OF AIRCRAFT Sir John Reith alluded to the effects of late delivery of new aircraft, so that the company had to compete with its old aircraft against the new aircraft of foreign companies and of British companies using foreign aircraft. That was why the European services did not expand, and, in the circumstances, it was satisfactory to have carried the same number of passengers on them as in the previous year. He added that whereas the company had hitherto bought only aircraft and engines of British manufacture, the difficulties in obtaining delivery in accordance with contractual terms might force the board to apply for permission to adopt some variation of that policy. By implication he gave the Air Miniiters scheme his blessing. He pointed out that large additional capital was needed by the company and that any alternative to the Government’s plan would involve either a great increase in share capital or the creation of obligations \vith rights ranking in front of the existing shares. The present position was, he said, neither commercially nor constitutionallyj satisfactory. Relations with the State were not what they should be. The company was neither wholly free nor wholly secure. He disclosed for the first time that the subsidy received from the Government for the year ended March 31 was £535,000. as i gainst £380,000 in the previous year. He indicated that a world-wide organisation operating in a score of languages and 25 currencies and growing quickly must almost inevitably have lose ends of organisation here and there. Conditions of employment' were not everywhere in keeping with the standards of well-established businesses. DIVIDEND OF 7 PER CENT. The gross profit of £296,824 was less by £97,217 than that of the previous year. This decrease did not represent a fall in the gross revenue, which for the year under review, including subsidy, amounted . to the sum of £1,980,000, compared with £1,729,000 for the previous year. The gross revenue per ton mile for the year 1937-38, however, at a figure of about ss, compared with approximately 7s for the previous year because of the decreased rate per ton of unsurcharged mail carried. Expenditure on the same ton mileage basis, but before charging obsolescence, was 1937-38, 3s lOd; 1936-37, 4s Bd. The fall in net revenue per ton mile indicated above fully accounted for the decrease in net earnings. The board recommended the payment of a dividend at the rate of 7 per cent, on the ordinary shares of the company. This dividend would absorb £82,738 and leave £5447 to be carried forward to next year. Under the terms of the prospectus issued last year the above dividend applies to the 1,000,000 shares then issued. ■ SOME QUESTIONS At Sir John Reith’s invitation, shareholders asked him questions for nearly an hour. When one shareholder, seeking to learn whether he could regard Sir John as a Government director, inquired how he came to be . a member of the board, Sir John replied: “I came to be here because I was invited to come by Sir George Beharrell and his colleagues. That they may have made a mistake I admit, but that they did invite me and that I responded to their invitation is literally true.” Only once did Sir John allow his Impassiveness to be disturbed. That was when he flashed back a scornful reply to a suggestion that a director’s personal stake in a company would influence his negotiations on shareholders’ behalf with the Government. His only holding in the company, he said, was £SOO. and he added: “I think it is ridiculous that I should have to have anv at all.” Another shareholder eaid: “We should like to know whether it was through pressure of our Government directors that the particulars of the proposal were not given to the public, as they should have been in deference to the directors who preceded you.” He also wanted to know what part the Government directors took in the negotiations with the Government. “ We have not got a free and indersnderh board to make a bargain." he added. Another shareholder said they had looked for some prospect of prosperity under Sir John Reith’s guidance, but those hones, if they had not taken a “ nose dive.” had come to a sudden end. Sir Harrv Brittain said that in the hands of the best-known business men of the country he thought they could fely on getting the fairest possible deal. Amnog the directors re-elected were Sil J. Reith and Sir J. Price, who were returned unanimously.