BRITISH AIRWAYS FINANCIAL DECISIONS

managing Financial Resources and Decisions



Introduction4

Background Commentary4

Analysis6

Marketing Mix Strategies7

product Mix7

Price Mix8

Place Mix8

Promotion Mix9

Target Market Segmentation Strategy9

Communication Strategy10

Corporate Strategy11

International Expansion Strategies of the Organisation12

Suggested Business Strategy13

Low Cost Leadership14

Objective of the Research16

Data Sources16

Research Methodology17

Analysis of Financial Statements18

Balance Sheet18

Asset Growth18

Total Assets:18

Total Current Assets:19

Property/Plant/Equipment:20

Cash & Short-Term Investments:21

Goodwill, Net:22

Liabilities & Equity Growth23

Total Liabilities:24

Total Equity:24

Retained Earnings:24

Financial Structure Analysis25

Income Statement26

Income Statement Growth26

Total Revenue:27

Costs of Revenue:27

Gross Profit:27

Operating Expenses, Total:28

Total Common Shares Outstanding:28

Net Income Before Taxes:29

Net Income:30

Income Statement Margins30

Total Cost of Revenue:31

Other Operating Expenses, Total:32

Depreciation/Amortization:32

Operating Income:32

Provision for Income Taxes:32

Cash Flow Statement33

Total Cash from Operating Activities:33

Total Cash from Investing Activities:33

Total Cash from Financing Activities:34

Ratio Analysis35

Liquidity Ratios35

Current Ratio:35

Quick Ratio:36

Asset Management Ratios37

Receivables Turnover:37

Inventory Turnover:37

Total Asset Turnover:38

Debt Management Ratios38

Debt Ratio:38

Profitability Ratios40

Profit Margin:40

Return on Assets:41

Return on Equity:42

Market Value Ratios42

Per share data42

Dividend Yield:42

Pay Out Ratio:43

Market value ratios43

Price/earnings (P/E) Ratio:44

Earnings per share:44

Price to Book:45

Price to Cash Flow:46

Price to Free Cash Flow:46

Other important values47

Tax Rate:47

Weighted Average Cost of Capital (WACC)48

Economic Value Added (EVA)48

Market Value Added (MVA)48

Bonds48

Stock Price50

Macroeconomic Variables:50

Cross Reference Analysis52

1.Key issues to understand wild cat strike:52

Recommendations53

Conclusions55

Projections57

Recommendations58

References60

British Airways

Introduction

British Airways is the national flag carrier in the UK. In terms of international destinations, fleet size and the number of destination, it is the largest airline in the UK. British Airways is the merger of Cambrian Airways, BOAC, Northeast Airlines, and BEA. This merger took place in the year 1974. The company got sold as a part of the privatization policy after thirteen years of remaining a public company (BA 2010, p. 2). The major carriers of British Airways come from Boeing. It is planning to merge with Iberia which is the Spanish flag carrier airline. The merger of the two will make the airline the second largest in the region and third largest in the world in terms of revenue. British Airways is involved in the business of air freight, air mail, carriage of passengers, and other ancillary services. The company also has a very large marine network. The company covers 41 destinations in America, 9 destinations in UK, 67 in Europe and over 16 in Africa. The company is one of the national flag carrier in the UK. In terms of international he leading airlines in the UK. The financial highlights of the company are given hereunder.

Background Commentary

Demand

Despite the fact that the demand for air travel has slightly picked up, the confidence in the airline industry is still shaky. Recovery, if at all, will remain slow. Comparing the UK and the US, we can see that the recovery in the US market was faster than the recovery of the UK market. This growth was all the more unprecedented in the last three months of the year 2009. Similar trend has been observed in the emerging economies that have come back stronger. For instance, the Chinese government has provided massive support to its airline industry. The demand for companies that have proven their contribution with respect to corporate social responsibility is far more than the demand for other companies, as the socially responsible companies have a better relationship with their valued customers than the former (Appadurai, ...