Five-Year Financial Performance of British Airways - Case Study Example

The paper "Five-Year Financial Performance of British Airways" is a good example of a case study on finance and accounting. The airline industry is one of the major industries in current economies that facilitates the evolution of globalization as well as the impact on economic derivatives in major locations such as employment generations and business generation by facilitating trade and investments across countries. The volume of passengers carried by the airline industry on international scheduled services is approximately half-billion with increasing growth by 6% from 1970 (BA Factbook 2007). Originally air travel industry blossomed from business travels. Eventually, leisure travels became a major sector within the industry that compels stiff competition among industry players which resulted in lower airfares and product innovations from airline companies benefiting travelers across the world.

Globalization, deregulation of the airline industry, and the emergence of no-frills airlines changed the landscapes of air travel in recent years. Globalization increase business travels across countries which also increases the tourism industry in the process encouraging leisure travels among households. Deregulation of the airline industry limits the barriers to entry of new players which ended monopolies of pioneering airlines that resulted in stiff competition within the industry. The emergence of no-frills airlines which have been penetrating the United States (US) and European markets as well as in Asia introduced lower airfares and influencing flyers who previously are not willing to fly due to the exorbitant price of airfare (BA Factbook, 2007).

The airline industry, however, is closely affected by economic and political events which make it susceptible to threats from terrorist attacks, health epidemics, and political instability, among others. It incurred huge financial losses during the aftermath of the September 2001 terrorist attacks in the US resulting in the restructuring of the finances of major airlines while smaller airlines went into bankruptcy.

The airline industry of the United Kingdom (UK) is composed of approximately 15 major airlines that regularly report their finances to the Civil Aviation Authority (CAA). Europe is considered as one of the most competitive airline markets in the world due to the traveling mentality of its population which is an opportunity for airlines to offer their services.