CITY AND SUBURBAN
British Airways, middle-class equivalent of the frostbite fiver
CHRISTOPHER FILDES
Fasten your ejector-seats and prepare for take-off. British Airways shares are accelerating down the runway, heading for a handsome premium over the price at which they are offered. Barring sudden disaster, the successful applicants can look forward to an instant profit, and Ark Securities recommends them to take it. British Airways, says Ark, will suffer from freer competition on its European routes, which account for two fifths of its revenue. In America, the survivors of freer competi- tion and deregulated markets will merge and emerge, to tighten their grip on the transatlantic routes. At the same time, nasty bills will come in for new aircraft 16 jumbos to he leased in two years' time, and after that, replacements covering one third of the fleet. The shares are bound to show a reasonable short-term profit, says Ark, but beyond that will not be a wise investment. This is not the way for Ark's bright sparks to get themselves free rides On Concorde, and I do not expect one myself, for I, too, would rather have these shares than hold them. They are shares in a franchise operation, whose vital assets are a set of routes and permissions allocated by governments, and in those governments' gift. (They should be allocated by tender, and one day they may be.) There is a right Price for a share in such an operation, but why wait and see what it is, if you can pocket your profit and wait for the next one? These privatisation issues — TSB, Gas, now Airways — are beginning to look like the middle-class equivalent of the Pensioners' bonus at Christmas and the frostbite fiver for the deserving poor. They leave a nice, warm, effortless glow in the pocket, and with luck it will last until the election. They are, though, a poor way to encourage individual share ownership, if the owner does best (as Ark and I think) to own the shares for the shortest possible time. When the big private-sector com- panies come on, as they will, with offers of shares directed at the individual investor, they will need ways to make sure that the shares are his to have and to hold.
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