Analysing British Airways Annual Report for 2008 Critical Thinking

Introduction

British Airways, the United Kingdom’s largest international airline company flying to over 300 destinations employs nearly 50,000 people. The company was founded in 1935. With the bulk of their work in scheduled airline services, they also engage in carrying mail and freight. (Datamonitor, 2008). A leading innovator in a number of key initiatives, British Airways continues to gain recognition as one of the first companies to print online boarding passes, work on reducing greenhouse gas emissions, and continues to strive to meet its announced goal in becoming the “world’s most responsible airline” as outlined in their annual report from 2008 - http://www.scribd.com/doc/23329171/British-Airways-Strategic-Plan

There are a number of key strategies that British Airways have identified and committed to implementing and these include (taken from the British Airways)

Strategic Plan 2008:

1. Improving the overall customer experience through the incorporation of text and mobile services for those paying for business class travel
2. Update aircraft and make the fleet more modern feeling and looking. Do the same thing with modernization to the services offered by British Airways
3. Take more responsibility on a corporate level through partnerships and overall performance
4. Take responsibility to manage and organize cost base

Part A the following ratios

• Profitability (return on capital employed, profit margin, EBIT margin and EBITA margin etc)
• short term liquidity; long term liquidity (assets turnover, interest cover, gearing ratio, liquidity ratio, current ratio, etc)
• investor ratios (Earnings per share, Dividends per share, return on shareholders funds, Price/earnings or p/e ratio, etc)

It is vital to structure this part of the assignment – use charts or graphs to show the ‘what’. Keep all words for the ‘how’ and ‘why’. When analysing look at information regarding liquidity, profitability and share price movements and see if share price has dropped or not if it has dropped than why it has, give reasons from notes.

When doing the ratios also need to compare with British airways main competitors Air France and Delta.

Perfect example of: simple introduction to the what, followed by how, followed by why.

'Revenue has shown an increase of $4,411m between 2007 and 2008 (38%) due to the merge between Thomson Corporation and Reuters plc creating synergies. This ties in with the company's strategy of achieving growth.'