Lord Marshall of Knightsbridge

  	
   

  
	
  Chairman

  	
  Waterside (HBB3)

  
	
   

  	
  PO Box 365 Harmondsworth UB7 0GB

  
	
   

  	
  United Kingdom Tel 0870 850 9850

  
	
   

  	
  Outside United Kingdom Tel +44 (0)191 490 7901

  





Dr M P
Read

British
Airways Plc

Waterside
HBA3

Harmondsworth

UB7 0GB


5 March, 2004


Dear Martin


NON-EXECUTIVE
DIRECTOR APPOINTMENT


As part
of our preparations to secure compliance with The Combined Code on Corporate Governance
(July 2003) (the “Combined Code”), I am writing to formally set out the terms on
which serve on the Board of British Airways Plc (‘the Company’) as a
Non-Executive Director. This letter sets out the terms of your appointment and it is agreed that this is a
contract for services and is not a contract of
employment.


Appointment


Your appointment as a
Non-Executive Director of the Company began on 12 May, 2000 and you were last re-elected by shareholders for a three year term
which will end at the close of the
Annual General Meeting on 18 July, 2006, unless otherwise terminated earlier by and at the discretion of
either party upon one month’s written notice
(but subject always to the provisions of the Company’s Articles). Continuation of your contract of appointment is
contingent on satisfactory performance
and re-election at forthcoming Annual General Meetings. Non-Executive Directors are typically expected to
serve two three-year terms, although the
Board may invite you to serve for an additional period. It is unlikely that the
contract would be extended beyond a third term.


Board Committees


It is
normal practice for all of the Company’s Non-Executive Directors to also serve on Board Committees. You
have served as chairman of the Company’s Remuneration Committee since 11 July, 2000.


Time commitment


Overall
we anticipate a time commitment of fifteen days per year from our Non-Executive Directors
after an initial induction phase. This includes attendance at ten Board meetings, the AGM,
one annual Board away day and at least one site visit per year. Currently, three of
the Board meetings are held away from the Company’s head office, one each at
destinations on the domestic, short haul and long haul


	
   

  	
   

  
	
  Directors:  

  	
  Lord
  Marshall of Knightsbridge (Chairman), M F Broughton
  (Deputy Chairman), R I Eddington (Chief Executive), J F
  Rishton (Chief Financial Officer), M A Street (Director of Customer Service
  & Operations), M A van den Bergh, Dr A S
  Ganguly, Capt M D Jeffery, Baroness O’Cathain OBE, Dr M P Read, A C Reed, Lord Renwick of Clifton

  
	
   

  	
   

  
	
   

  	
  British
  Airways Plc

  
	
   

  	
  Registered
  Office: Waterside PO Box 365 Harmondsworth UB7 0GB

  
	
   

  	
  Registered
  in England No. 1777777

  
	
   

  	
   

  
	
   

  	
  www.ba.com

  












networks.
The Secretary will shortly forward to you a schedule of meetings for 2005. In
addition, you will be expected to devote appropriate preparation time ahead of each meeting. By accepting this
appointment, you have confirmed that you are
able to allocate sufficient time to meet the expectations of your role. The agreement of the Chairman should be sought before
accepting additional commitments that might affect the time you are able
to devote to your role as a Non-Executive Director of the Company.


Role


Non-Executive
Directors have the same general legal responsibilities to the Company as any other Director. The Board as a
whole is collectively responsible for promoting the success of the Company by
directing and supervising the Company’s affairs. All Directors must take
decisions objectively in the interests of the Company. The Board:


	
   

  	
   

  	
   

  
	
   

  	
  •

  	
  provides
  entrepreneurial leadership of the Company within a framework of prudent and
  effective controls which enable risk to be assessed and managed;

  
	
   

  	
  •

  	
  sets the Company’s
  strategic aims, ensures that the necessary financial and human resources are in place for the Company to meet its objectives, and
reviews management performance;
  and

  
	
   

  	
  •

  	
  sets
  the Company’s values and standards and ensures that its obligations to its shareholders and others are
  understood and met.

  



In
addition to these requirements of all Directors, the role of the non-executive
has the following key
elements:


	
   

  	
   

  	
   

  
	
   

  	
  •

  	
  Strategy:  Non-Executive Directors should constructively
  challenge and contribute to the development of strategy;

  
	
   

  	
  •

  	
  Performance:
   Non-Executive
  Directors should scrutinise the performance
  of management in meeting agreed goals and objectives and monitor the reporting of performance;

  
	
   

  	
  •

  	
  Risk: Non-Executive Directors should satisfy
  themselves as to the integrity of financial information, that financial controls are sound
  and that
  the systems of risk management are robust and defensible; and

  
	
   

  	
  •

  	
  People: Non-Executive Directors, through the
  Remuneration Committee, are responsible for determining appropriate levels of
  remuneration of Executive Directors and have a prime role in appointing, and where necessary removing,
  senior management and in succession planning.

  



Fees


As a
Non-Executive Director, you are paid a basic fee of £27,500 gross per annum,* to
include your membership of Board Committees, plus an additional £600 for each major Board Committee
meeting separately attended. These amounts are paid quarterly in arrears, and
will be subject to review from time to time. The level of fees


* w.e.f.
1.Ï.04 £35,000plus  committee
chairman, fee of £7,500 gross per annum.











for our Non-Executive Directors
(other than the Chairman) is determined by the Executive Directors on the recommendation of the Chairman. The Company
will reimburse you for all
reasonable and properly documented expenses you incur in performing the duties of your office.


Outside interests


It is accepted and acknowledged that you have business
interests other than those of the Company
and have declared any conflicts that are apparent at present. In the event that you become aware of any potential
conflicts of interest, these should be disclosed to the Chairman and
Secretary as soon as apparent.


The Board of the Company has
determined you to be independent (i) according to provision A.3.1 of the Combined Code and (ii) for
the purposes of the Corporate Governance
Rules proposed by the New York Stock Exchange (October 2003).


Confidentiality


All information acquired during
your appointment is confidential to the Company and should not be released, either during your appointment or following
termination (by whatever means), to third parties without prior clearance from
the Chairman.


Your attention is also drawn to
the requirements under both legislation and regulation as to the disclosure of price sensitive information.
Consequently you should avoid making
any statements that might risk a breach of these requirements without prior clearance from the Chairman or the
Secretary.


Regulation


As you know, as a result of your
appointment, you became subject to the Company’s policies on Insider
Dealing, Business Conduct and Price Sensitive Information as well as to the provisions of the City Code on
Takeovers, the Listing Rules and the regulations of the two stock
exchanges.


Review process


The performance of individual
Directors and the whole Board and its Committees is evaluated annually. If, in the interim, there are
any matters which cause you concern about
your role you should discuss them with the Chairman as soon as is appropriate.


Insurance


The Company has Directors’ and
officers’ liability insurance and it is intended to maintain such cover for the full term of your
appointment. The current indemnity limit is £100 million in aggregate. The
Secretary will provide you with fuller details on request.











Independent professional advice


Occasions
may arise when you consider that you need professional advice in the furtherance of your
duties as a Director. Circumstances may occur when it will be appropriate for you to seek advice from
independent advisors at the Company’s expense.
This should be obtained in accordance with the Board’s agreed procedure details of which the Secretary will provide as
part of your induction. The Company will reimburse the full cost of
expenditure incurred in accordance with the policy.


Further information


The Secretary will write to
you separately with the additional information referred to in this letter and he will also cover the
other formal matters which have to be dealt with in connection with your
appointment.


I
trust this letter sets out the agreed basis of your appointment and I should be
grateful if you formally
confirm your acceptance of the appointment and agreement to the terms as soon as convenient by signing and
returning the enclosed duplicate letter.


Yours
sincerely,


[Signature Illegible]


I
confirm my agreement to the foregoing.


	
   

  	
   

  
	
  Signed: [Signature Illegible]

  	
  Date: 5 March, 2004