British Airlines

The purpose of this paper is to analyze the British airways critically. British Airways is a
British airline established after the merger of British European Airlines and British Overseas
Airlines in 1974, Its main hub is at Gatwick Airport and Heathrow Airport, and is also a
founding member of One World, one of the world's aviation alliances. The origin of British
Airways comes from Imperial Airways, which was established in 1924. It was then merged with British Airways Ltd., a limited company, in 1939 and nationalized as British Airways Corporation (BOAC). In 1946, British South American Airways (BSAA) and British European Airways (BEA) fell apart but were re-merged in 1949 and 1974 respectively and reborn as current British Airways (British Airways). With privatization in 1987, British Airlines, which was famous for ignoring customers, has transformed itself into an unrecognizable improvement in customer satisfaction in incompetent and arrogant companies. British Airlines is said to have
been reborn as the world's largest and most consistently profitable international airline because of its dedicated decision to "fighting until achieving the best customer service" by CEO Colin Marshall at the time. On November 12, 2009, British Airlines agreed to merge with Spanish airline Iberian Airlines. Through this agreement, the two airlines became the world's top three airlines in terms of sales, and the two airlines were merged through a final agreement on April 8, 2010. It was established by the International Aviation Group through the merger of the two airlines, but each of the two airlines continues to operate under their brands. Many airlines have implemented policies to operate cargo planes mainly to reduce losses due to COVID-19. British Airways also owned a freight subsidiary in the past. British Airways World Cargo is a subsidiary of British Airways and was the 12th largest cargo airline in the world. British Airways World Cargo had global cargo opportunities through British Airlines' flight routes. British AirwaysWorld Cargo's main model is three Boeing 747-8Fs, and passengers were not available on the route network, using the space of dedicated cargo operated by other operators, as well as global supply systems and aircraft. British Airways World Cargo opened the World Cargo Center at London Heathrow Airport in the late 1990s. An automated cargo handling center capable of handling premium cargo and more than 80,000 tons of cargo per year were handled. British Airways World Cargo has become a partner at major regional airports across the UK through local cargo and handled cargo at London's Gatwick Airport and London's Stanstead Airport. In 2010, BAWC announced the introduction of three Boeing 747-8F models. Three Boeing 747-400F aircraft were ordered to be returned to Atlas Airlines, a U.S. cargo airline. In August 2007, British Airlines conspired to fix air freight prices, which resulted in felony as a result of anti-trust costs in the United States and agreed to convict and pay a fine of $300 million. In 2009, British Air moved its long-distance cargo transport from London's Stanstead Airport to Kent International Airport. Following the cancellation of the contract in 2014, British Airlines currently does not handle cargo.
British Airways operates 277 aircraft from Airbus A319 to Boeing 777. Long-distance models consist of Boeing (777-200ER, -300ER, 787), and short-distance cooperative models consist of the Airbus A320 family. Before the retirement on July 16, 2020, the total number of units before 747 was 28. After the Pandemic, there have been several changes in the fleet of the aircraft carrier, including retired aircraft. Since the COVID-19 pandemic, British Airways has been rushing to retire certain aircraft like other airlines around the world. British Airways has decided to retire the Boeing 747-400 four years ahead of schedule. In addition, the British Airways flight 12 Airbus A380 is currently parked and is unlikely to resume operation until passenger demand returns. Until the aircraft resumes operation, the aircraft is given to long-term storage and causes losses. In addition to the general cost of getting off the plane in long-term storage, British Airways is facing potentially significant cost problems as Super Jumbo resumes. To be competitive, it is necessary to repair the interior design of the cabins and the entertainment system. British Airways has delivered two additional Boeing 787 planes to support long-distance operations. British Airways currently owns 32 Boeing 787 and plans to purchase 10 more. Eight Airbus A350-1000 are currently operating to replace the retired Boeing 747, and although of the same capacity, it offers much improved products, better customer convenience, and better fuel efficiency. The airline also recently ordered eight new A320neos and three A321neos.Starting from London (Heathrow, Gatwick), it is operating on all continents around the world. In particular, there are 21 U.S. destinations. The A380-800 in possession is mainly on London-North America, Singapore, Hong Kong, and Johannesburg routes. The problem is that even in other cities in the UK, there are only routes to London. In fact, in the past, international flights were also operated at Manchester International Airport and Glasgow International Airport, but only London Heathrow and Gatwick Hub have been left since 2001. In particular, among European competitors, Lufthansa is working on two major hubs at Frankfurt Am Main International Airport and Munich International Airport, and Air France is in contrast to the recent trend of increasing short-distance routes in cities other than Paris against low-cost airlines. And for international flights from Manchester International Airport, rival Virgin Atlantic Airlines is expanding. In the aftermath of COVID-19, numerous airlines tried to operate the route normally despite the suspension of the route, but eventually, the route to Incheon, Kuala Lumpur, and Osaka was discontinued. East Asian routes remaining from 2020 are Beijing, Shanghai, Tokyo, and Hong Kong routes.British Airways posted a deficit of £648 million by March 2020. The capacity decreased by 83.5%. It is compared to 2020, which was not significantly affected by the COVID-19 pandemic. By the first quarter of 2020 and 2021, British Airways had taken strong and decisive measures to quickly reduce costs to protect its long-term future. Projects including early exit and restructuring and overlapping programs of all models B747. If these actions did not occur, BA will face a much harder situation today. Many liquidity measures ensure the survival of the business and the long-term future. It was created to improve the balance sheet. In February 2021, British airways received loan of £2 billion. Banks, partially guaranteed by UK export finance. In March 2021, the International Aviation Group (IAG) agreed to secure three $1.8 billion multiple borrowers. BA has a $1.3 billion stake and canceled its previously held revolving credit terms. The total capacity measured by ASKs decreased by 83.5 percent until March this year compared to previous year, and the number of passengers have sharply decreased by 92.6 percent to 630,000. In the first three months of 2021, load factors and capacity decreased notably across all regions, and in 2020, the capacity reduction was limited to the Asia-Pacific region in January and February, and there was a widespread decline across the network from the end of February that year. This translates into £419 million in total profit for the first three months of the 2021. Transport cargo measured in freight ton-kilometers (TCKs) decreased by 25.9%, but in 2020, cargo business was converted to have a positive cash contribution only to cargo flights, resulting in a 57.1% increase in cargo imports to £231 million. In April 2020, the British government introduced the Coronavirus Corporate Financial Facility (CCFF). British Airlines received interest of £298 million under CCFF. £300 million was recognized as a loan on March 31, 2021 and was then fully repaid in April 2021. To mitigate the smash of the COVID-19 on employment, the UK government recommended the Coronavirus Occupational Retention SystemCORS). The system is a provisional system for employers from March 1, 2020 and is currently scheduled to be implemented by the end of September 2021. Employers acquire subsidies from HMRC to fund a low percentage of their regular employee wages as of the date of writing this report or £2,500 per month. They received £70 million from CJRS for three months of 2021. This amount is stated in the employee cost of the consolidated income statement. In February 2021, British Air acquired £2 billion as a five-year export development guarantee facility from
the Federation of Banks. In the beginning of 2021, British Airways acquired £2 billion as a five-year export development guarantee facility from the Federation of Banks. BA is exposed to various financial risks such as fuel price risk, foreign currency risk, interest rate risk, credit risk, and liquidity risk. The group is exposed to fuel price risks. To mitigate such risks, various over-the-counter derivatives are concluded according to the consolidated entity's fuel price risk management strategy. The consolidated entity strategy was to hedge some of the fuel consumption for up to three years within the approved hedging profile. For the three months ending March 31, 2021, the fair value of these fuel derivatives was £78 million in net debt on March 31, 2021, resulting in a net profit of £3.03 million from January 1, 2021. BA is also revealed to foreign currency risks for profits, purchases, and borrowings expressed in currencies other than the group's functional currency. The currencies in which these transactions are made are mainly the US dollar and euro. The consolidated entity has many strategies to avoid foreign currency risk. The GOP strategy is to hedge some of the risks of selling and purchasing foreign currency for up to three years, agreed US dollar capital expenditures, and conversion of US dollar and euro-denominated liabilities within a set limit. On March 31, 2021, the fair value of foreign currency derivatives was a net debt of £23 million, showing an advantageous movement of £42 million since January 1, 2021. Moreover, the group is exposed to fluctuations in debt,lease agreements, and cash deposit interest rates. Interest rate risk for variable rate liabilities is managed through the variable-rate swap. Credit risk is a risk that causes financial losses because the counterparty fails to fulfill its obligations under financial instruments or customer contracts. BA is exposed to credit risks from financial activities such as deposits with foreign exchange transactions, banks and financial institutions and other financial tools. The consolidated entity has strategies and approaches to check risks by signing only transactions with counterparties
with very low credit risk and allocating limits to each counterpart through basic exposure.
British Airways (BA) reported on September 6, 2018, that 380,000 customers were
damaged. But, on October 25, 2018, BA declared that an investigation into hacking revealed that card payment information, including card authentication of 77,000 additional customers, was robbed. BA also announced an additional 108,000 customers had their card data robbed without a card authentication. BA announced on October 25 that it had identified 185,000 potentially damaged cards and that only 240,000 of the 380,000 customers previously said were affected. Both cases have 429,000 people. The UK data protection department, investigated the violation and fined £20 million. On September 11, 2018, cybersecurity company Risk IQ said the attack was committed by hacker group Magecart. They directly damaged the BA website and maintained its intended functionality to avoid detection while delivering payment information to an attacker-controlled server by copying and modifying scripts that support payment forms. The attacker could also suffer damage because BA mobile app users used the same functions as web apps a lot. BA relies on IT systems for most of its major business processes. System control, disaster recovery, and business continuity preparations exist to mitigate the risk of serious system failures. However, the failure of these key systems has led to serious disruptions and loss of profits.Although, British Airways is the world's 10th largest airline in passenger traffic and is a huge airline that forms the second-largest group with Lufthansa and Air France in terms of
international flights alone. For British Airways to develop, it is necessary to promote operation by creating routes for cities other than London. In addition, if short-distance routes are increased to increase profits through competition with rival airlines, it will be able to compensate for the poor profitability of COVID-19. BA needs to explore new destinations and extend flights and
services to those destinations. In the post-covid19 situation, the demand for domestic and foreign travelers to reach new destinations is expected to increase. BA needs to focus on new markets to make short-term profits and secure significant market share. In addition, as cybersecurity is a big issue worldwide, it is necessary to develop new cybersecurity systems and prepare countermeasures against cyberattacks through cooperation with government agencies. BA has been criticized for poor service, delayed management, poor baggage handling, and poor employee relations. People should rebuild their brand image and stakeholder trust by carrying out strategies. BA should focus on investment in developing relationships with employees and customers. Customer relationships are one of the most important points when choosing airlines for journey, which increases the likelihood of high returns. BA should lead this to benefits by strengthening employee relations through employee welfare programs. Recently, environmental problems have been affecting the aviation industry. Consumers are increasingly focusing on the environment, and BA must invest in issues affecting the environment, which will make BA competitive group in the world by ensuring that it responds to environmental changes. Therefore, an improved environmental strategy is needed. Consumers' desire for services is increasing. Increasing long-term profits requires greater improvement in overall services to overcome competition. This will increase the number of passengers in the long run. This will help BA modernize the image. Moreover, BA should focus and implement customized tactics in the business sector to cope with the increased market share of rival airlines. Innovative marketing strategies are needed to gain an edge in market share. British Airways had to retire hundreds of pilots early because of Covid-19. This led British Airways to face a shortage of pilots. In the post Covid-19 situation, BA will experience a more serious pilot shortage. In the short term, the problem can be solved by hiring foreign pilots and returning to retirement pilots, but in the long run, a self-pilot training program will be needed. The UK has a decent general navigation infrastructure. BA should invest in flight schools in the UK and cooperate to train its pilots.

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