Document:

PO Box 365 Harmondsworth UB7 0GB

  
	
  United Kingdom Tel 0870 850 9850

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

  

	
   

  	
   

  	
   

  
	
   

  	
  Direct Dial Tel Nos:

  	
  020 8738 5107/5105 

  
	
   

  	
  Facsimile

  	
  020 8738 9801

  

	
   

  	
   

  
	
  STRICTLY
  CONFIDENTIAL

  	
   

  
	
   

  	
   

  
	
  Ms Alison
  Reed

  	
   

  
	
  

  	
   

  
	
  

  	
  3 November,
  2003

  

Dear Alison

NON-EXECUTIVE DIRECTOR APPOINTMENT

Subject to the recommendation of our Nominations Committee and formal
approval by the Board on 7
November, 2003, I am writing to formally invite you to join the Board of British Airways Plc (‘the Company’) as a
Non-Executive Director. Assuming this goes ahead, your appointment will
be announced to the London and New York Stock Exchanges at the same time as the
half year results announcement on 10 November, 2003. 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 will be for a co-opted period commencing on 1
December, 2003 until the close of the Annual General Meeting on
20 July, 2004 followed by an initial term of
three years ending at the close of the Annual General Meeting in 2007, 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. On appointment, we would like you to serve
on the Audit Committee and additionally to take over the Chairmanship of that
Committee with effect from the close of the Annual General
Meeting 20 July, 2004. The Company Secretary
will provide you with the current terms of reference of the Board Committees separately.

/2...                 

Directors: Lord Marshall of Knightsbridge
(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, M F Broughton, Dr A S Ganguly
Capt M D Jeffery, Baroness O’Cathain OBE, Dr M P Read, Lord Renwick of Clifton

British Airways Plc

Registered Office: Waterside PO Box 365
Harmondsworth UB7 0GB

Registered in England No. 1777777

www.britishairways.com

Time commitment

Overall we
anticipate a time commitment of fifteen days per year after the induction phase. This will include attendance at ten Board
meetings, the AGM, one annual Board away day, five Audit Committee meetings
and at least one site visit per year. Three
of the Audit Committee meetings are normally held on the same day as Board
meetings and one is held on the same morning as the AGM. Normally, 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 networks. The Secretary will forward
to you a schedule of meetings for 2004. 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.

  

3/...

BRITISH AIRWAYS

Fees

You will be 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 will be paid quarterly in arrears,
and will be subject to review from time to time. The level of fees 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 Company 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 on Corporate
Governance (July 2003) 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 Company Secretary.

Induction

As a result of your appointment, you will become 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.
Immediately after appointment, therefore, the Secretary will arrange for a
comprehensive, formal and tailored induction covering these and other areas. He will also arrange for site visits
and meetings with senior and middle management and the Company’s
auditors. Should it be deemed appropriate, he will also arrange for you to meet some of our major investors in the first
twelve months of your appointment.

/4...

BRITISH AIRWAYS

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 as part of your induction
programme.

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]

  
	
  Lord
  Marshall of Knightsbridge 

  
	
  Chairman

  

I confirm my agreement to the foregoing.

	
  Signed:

  	
[Signature Illegible]

  	
  Date: 3 November, 2003 

  

BRITISH AIRWAYSMartin Broughton 

  Chairman

  

  19 July,
  2005

  

  Mr Ken
  Smart

  	
  

  

  Waterside
  (HBB3)

  PO Box 365 Harmondsworth UB7
  0GB

  Tel +44 (0)20 8738 5107

  Fax +44 (0)20 8738 9801

  

Dear Ken

NON-EXECUTIVE DIRECTOR
APPOINTMENT

As
discussed, I am writing formally to confirm the terms of our offer to you to
join 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

You will
be recommended by the Board for election by shareholders at the Annual General Meeting on 19
July, 2005 for an initial term of three years ending at the close of the Annual
General Meeting in 2008, 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. On appointment, we would like you to serve on and
chair the Safety Review Committee. We
would also like you to serve on the Audit Committee. The Company Secretary will provide you with the
current terms of reference of the Board
Committees separately.

	
   

  	
   

  
	
   

  	
  Directors:  M F
  Broughton (Chairman), R I Eddington (Chief Executive), W M Walsh (Chief
  Executive Designate), 

  
	
   

  	
  J F
  Rishton (Chief Financial Officer), M A Street OBE (Director of Customer
  Service & Operations), 

  
	
   

  	
  M A van
  den Bergh, Dr A S Ganguly, Capt M D Jeffery, D P B Kingsmill CBE, 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

Time commitment

Overall
we anticipate a time commitment of fifteen days per year after the induction phase. This will
include attendance at eight Board meetings, the Annual General Meeting, one annual Board away day, the
meetings of the two Board Committees and at
least one site visit per year. In recent years, up to three of the Board
meetings have been held away from
the Company’s head office, one each at destinations on the domestic, short haul and long haul networks.
The Company Secretary will forward
to you a schedule of meetings for the remainder of 2005 and for 2006. 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

You
will be paid a fee of £35,000 gross per annum, to include your membership of Board Committees plus an additional £7,500
per annum for your chairmanship of the
Safety Review Committee. Initially, this will be paid quarterly in arrears, and
will be subject to review from time to time. The level of fees 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 Company 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 on Corporate
Governance (July 2003) 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 Company
Secretary.

Induction

As a result of your appointment,
you will become 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. Immediately after appointment, therefore, the
Company Secretary will arrange for a
comprehensive, formal and tailored induction covering these and other areas. He will also arrange for
site visits and meetings with senior and
middle management and the Company’s auditors. Should it be deemed appropriate, he will also arrange for you to meet
some of our major investors in the first twelve months of your appointment.

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.

Indemnity and Insurance

The
Company Secretary will arrange for the execution of a deed of indemnity in your
favour in relation to
this appointment. 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 Company Secretary will provide
you with fuller details as part of your induction programme.

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
Company 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
Company 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: 19 July, 2005

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