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The impact of the financial crisis on the British Airways company - Research Paper Example

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The Impact of the Financial Crisis on the British Airways Company Name Macro & Micro economics December 2, 2012 Contents Contents 2 1.0 Introduction 3 2.0 Impacts of Financial Crisis on British Airways Company 3 2.1 Airlines alliances break up and consolidation 3 2.2 Decrease in cargo traffic 5 2.3 Decrease in passengers travel 5 Fig 1…
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The impact of the financial crisis on the British Airways company
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The impact of the financial crisis on the British Airways company

Download file to see previous pages... In a span of 5 years, 2005 to 2009, the airline progression in passenger and cargo traffic had picked up, only to be drastically pulled down after the recession. The passenger load factor and overall load factor dropped from 79.1 to 77.0 and 73.4 to 72.0 percent respectively, passengers and tones of cargo carried dropped from 34613 to 33117 and 805 to 777 (000s) respectively (“Operating and financial,” britishairways.com). 6 2.4 Profit downturn 7 Following the decline in travels and cargo flow, British Airways revenues dropped substantially, which was associated with the high reliant on the premium tickets. The shift of passenger demand to other airlines was because of the extra fuel surcharge, which the British Airways charged its customers after the fuel price increase; together with the 300 million euro fine in 2008, by the British department of justice, it was easy for the airline to slip into financial struggles. The trend of revenue generation in 2008 and the previous years to 2005, aimed at the 10 percent operating margin which was possible in the period of 2007/08; the only problem was that the growth in revenue generated come 2009 would be used to cover the increasing operational cost, hence profit turning into a loss (“Financial performance of British,” ukessays.co.uk). ...
7 As of 2009, the airline recorded a pre- tax loss of 401 million pounds, experiencing a negative growth of passengers by 4.4 percent, compared to 2008 profits of 922 million pounds, (Welham and Wang xinhuanet.com). A company with huge amount of stock, had to suffer loses again since the exchange rates of the stock market were altered to accommodate the economic situation in Europe and the rest of the world, where it is a share holder. The share price of British Airways was in its climax during between 2006 and 2007 in the last decade, which later declined to its lowest mark in 2009 in the event of the crisis. (See fig. 2) It was a period that the company took a strategic decision of selling some of its convertible shares to avoid going bankrupt. Each share was worth 6.60 Euros in 2007, but by 2009, it had declined to 1.34 Euros; however, it has survived through the difficult time to recover though in a slow development (“Financial performance of British,” ukessays.co.uk). 8 British Airways | IAG share prices 8 2.5 Employment issues 9 3.0 Conclusion 10 1.0 Introduction British Airways Company is one of the major European airline service providers, to the numerous numbers of the passengers within the local and international dimensions. It is a company that has long history since World War I, when air travelling was more of an adventure compared to the modern society. The company has evolved over time to meet customers’ demands and overcome the economic challenges that also change unexpectedly. It is a company known to have formed mergers with other companies and engaged in privatization to reach where it is today. However, the global financial crisis that began in late ...Download file to see next pagesRead More
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