Document:

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

  

Martin
Broughton Esq

British
Airways Plc

Waterside HBA3

Harmondsworth

UB7 0GB

11 March, 2004

Dear Martin

NON-EXECUTIVE
CHAIRMAN APPOINTMENT

Following
on from the decision of the Board on 5 December, 2003, I am writing to formally set out the
terms of your appointment as a Non-Executive Director and as the next Chairman of the Board
of British Airways Plc (‘the Company’). 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 and as Senior Independent 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 in 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). In addition, the Board appointed you its Deputy Chairman with effect
from 7 November, 2003. Continuation of your appointment is contingent on satisfactory performance and
re-election at forthcoming Annual General Meetings in accordance with
Article 87. As you know, whilst it is unlikely that the appointment of
non-executive directors generally would be extended beyond a third term in
order to comply with the independence criteria set out in Provision A.3.1 of
the Combined Code on Corporate Governance
(July 2003) (the “Combined Code”), this provision does not apply to chairmen. The Code simply provides that a
chairman should on appointment meet the independence criteria, which you
do; thereafter the test of independence is not appropriate in relation to the
chairman.

Board Committees

It is normal practice for all
of the Company’s Non-Executive Directors to also serve on Board Committees. You
currently chair the Audit Committee but will be required to relinquish that
role with effect from the close of the Annual General Meeting 20 July, 2004. In
addition, you currently serve on the Nominations, Remuneration and Safety Review Committees. You should also relinquish
your roles on the Remuneration and Safety
Review Committees with effect from the close of the Annual General Meeting 20
July, 2004 but we would expect you to chair the Nominations Committee with
effect from that date.

	
   

  	
   

  
	
  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

  

	
   

  	
   

  
	
  11 March 2004

  Page
  2 of 5

  	
  

  

Time commitment

Overall we anticipate a time
commitment of one hundred days per year as Chairman with additional time spent during an induction phase. This will include
attendance at all Board meetings and the AGM. 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 Board should be sought before accepting additional commitments that might
affect the time you are able to devote to your role as Chairman of the Company.
The Combined Code requires the Company to include details of your other
significant commitments in each annual report and that changes to those commitments should
be reported to the Board as they arise. The Combined Code also provides that
no individual should be appointed to a second chairmanship of a FTSE100 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.

  

	
   

  	
   

  
	
  11 March
  2004

  Page 3 of 5

  	
  

  

Your Role as Chairman

The role
of Chairman is pivotal in creating the conditions for overall board and individual director
effectiveness, both inside and outside the boardroom. Specifically, it will be your responsibility as Chairman to:

	
   

  	
   

  	
   

  
	
   

  	
  •

  	
  run the
  Board and set its agenda. The agenda should take full account of the issues and the concerns of all board
  members. Agendas should be forward looking
  and concentrate on strategic matters rather than formulaic approvals of proposals which can be the subject of appropriate
  delegated powers to management;

  
	
   

  	
  •

  	
  ensure
  that the members of the Board receive
  accurate, timely and clear information, in particular about the Company’s
  performance, to enable the board to take sound decisions, monitor effectively and provide advice to promote the success
  of the Company;

  
	
   

  	
  •

  	
  ensure
  effective communication with shareholders and ensure that the members of the Board develop
  an understanding of the views of the major investors;

  
	
   

  	
  •

  	
  manage
  the Board to ensure that sufficient time is allowed for discussion of complex or
  contentious issues, where
  appropriate arranging for informal meetings beforehand to enable thorough preparation for the Board
  discussion. It is particularly important that Non-Executive Directors have
  sufficient time to consider critical
  issues and are not faced with unrealistic deadlines for decision-making;

  
	
   

  	
  •

  	
  take the lead in providing
  a properly constructed induction programme for new directors that is comprehensive, formal and tailored, facilitated by
  the Secretary;

  
	
   

  	
  •

  	
  take the lead in
  identifying and meeting the development needs of individual directors, with
  the Secretary having a key role in facilitating provision. It will be your responsibility as Chairman to address the
  development needs of the Board as a whole with a view to enhancing its
  overall effectiveness as a team;

  
	
   

  	
  •

  	
  ensure
  that the performance of individuals and of the Board as a whole and its Committees is
  evaluated at least once a year; and

  
	
   

  	
  •

  	
  encourage
  active engagement by all the members of the Board.

  

Fees

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 is currently paid to
British American Tobacco in relation to your services.
These amounts are paid quarterly in arrears, and will be subject to review from time to time. The level of fees for the
Chairman is determined by the Remuneration
Committee. As Chairman, you will be initially paid a fee of £250,000* gross
per annum. This will be paid to you monthly in arrears, and will be subject to review from time to time. The Company will also
reimburse you for all reasonable and properly documented expenses you
incur in performing the duties of your office. In addition, the Company will
provide you with medical insurance, a suitable car and the use of a full time driver.

*w.e.f. 1.Ï.04 £300,000 

	
   

  	
   

  
	
  11 March 2004
Page 4 of 5

  	
  

  

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 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 Secretary.

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. The Secretary can provide or obtain
advice in relation to these matters.

Induction

As a
serving Board Member, you are 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. I understand
that you have agreed with the Secretary for a further tailored induction
covering various areas of the business. He will also arrange for site visits
and meetings
with senior and middle management and the Company’s Auditor. He will also arrange for you to
meet some of our major investors as necessary.

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
Secretary 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.

	
   

  	
   

  
	
  11 March 2004
Page 5 of 5

  	

  

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 advisers at the
Company’s expense. This should be obtained in accordance with the
Board’s agreed procedure details of which the Secretary will provide in due
course. 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 current and future appointments
and I should be grateful
if you formally confirm your acceptance 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: 11 March, 2004Chairman

  	
   

  
	
   

  	
   

  
	
   

  	
  Waterside (HBB3)

  
	
   

  	
  PO Box 365 Harmondsworth UB7 0GB

  
	
   

  	
  United Kingdom Tel 0870 850 9850

  
	
  Maarten van den Bergh Esq

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

  
	
  British Airways Plc

  	
   

  
	
  Waterside HBA3

  	
   

  
	
  Harmondsworth 

  	
   

  
	
  UB7 0GB

  	
   

  
	
   

  	
  11 March, 2004

  

Dear Maarten

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 16
July, 2002 when you were elected by shareholders for a three
year term which will end at the close
of the Annual General Meeting on 19 July, 2005, 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 on the Audit Committee since 1 January, 2003 and
the Nominations Committee since 16 July, 2002.

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, five Audit Committee meetings
and at least one site visit per year. Currently, three of the Board meetings

	
   

  	
   

  
	
  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

are held away
from the Company’s head office, one each at destinations on the domestic, short haul and long haul 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 £35,000 plus Senior
Independent  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:  11  March,  2004

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