BRITISH AIRLINE FINANCIAL RATIOS ANALYSIS

British Airline Financial Ratios Analysis

Table of Content

Introduction3

Company History3

British Airways Financial Analysis4

Ratio Analysis4

Financial Risk Ratios5

Profitability5

Market Value Ratios6

Cost-Volume-Profit Analysis6

Contribution Margin6

Contribution Margin Ratio7

Unit Contribution Margin8

British Airways Financial management9

Sources And Distribution Of Funding11

Accounting as a Decision making tool11

International And Domestic Airfreight11

Conclusion12

References13

Appendix14

British Airways Plc14

British Airways Plc14

British Airline Financial Ratios Analysis

Introduction

British Airways is engaged in the operation of international and domestic scheduled air services for the carriage of passengers, freight and mail and the provision of ancillary services. The company primarily operates in Europe and the Americas region. The company also has its operations spread across Far East Asia, Australia, Africa, Middle East and the Indian sub-continent. At the end of March 2009, the company had 245 aircraft in service, compared to 242 in March 2007. The company divides its business into two segments: airline business and non-airline business. The company's principal base is the Heathrow International Airport, where the company carries an estimated 41% of the airport's passengers. In addition, the company has a second base of operations at Gatwick, London. The company operates offices, maintenance hangars, and other support facilities at Heathrow, Gatwick and other UK airports. The company also occupies space and desks under lease or license in airports throughout the UK including Manchester, Birmingham, Newcastle, Edinburgh and Glasgow.

Company History

British Airways was founded as Aircraft Transport and Travel. After World War I, the company launched its first daily international scheduled air service between London and Paris. Following a UK government review in 1939, British Airways and its competitor, Imperial Airways, were nationalized to form British Overseas Airways (BOAC). BOAC continued to operate long haul services, while continental European and domestic flights were flown by a new airline, British European Airways (BEA).

The company's wholly owned subsidiary, British Airways CitiExpress was renamed as BA Connect in 2006. In the same year, British Airways and Malev Hungarian Airlines signed an agreement to begin code sharing on each other's flights, in 2006. In the same year, British Airways sold its 14.6% shareholding in the WNS Holdings, an India based business services provider. During the same period, British Airways sold its Travel Clinic business, a provider of travel health treatment business to traveling public, to MASTA (Medical Advisory Services for Travellers Abroad). In the same year, British Airways launched a new service from London (Heathrow) to Calgary in Canada. Also in 2006, British Airways reached an agreement to sell the regional operation of its subsidiary airline BA Connect to Flybe, a European regional airline carrier. During the same period, the company purchased American Airline's stake in Iberia Airlines (Greenwood, 1981).

In June 2009, British Airways launched its new subsidiary airline 'OpenSkies', with its first commercial flight from Paris Orly to New York JFK. OpenSkies is the first airline created to take advantage of the EU-US open skies aviation agreement that enables carriers to fly between any destinations in the EU and US. The company will operate daily services between Paris and New York on Boeing 757 ...