Report and Accounts to December 2010 2 British Airways Report and Accounts to December 2010
Total Page:16
File Type:pdf, Size:1020Kb
Report and Accounts to December 2010 2 British Airways Report and Accounts to December 2010 Where we fly December 2010 British Airways: Principal Activities Statement one of the world’s The main activities of British Airways Plc and leading global its subsidiary undertakings are the operation of premium airlines international and domestic scheduled air services for the carriage of passengers, freight and mail and the provision of ancillary services. 65 9 Europe UK 8 44 Asia Pacifi c Americas 15 17 Middle East Africa & South Asia This is illustrative. Please see ba.com for a full list of where we fl y to. Who we are British Airways is the UK’s largest international scheduled airline. We fl y our customers at convenient times to the best located airports across the world. We are one of the world’s leading global We also operate a worldwide air cargo We support the UK economy by premium airlines. Our principal place business, largely in conjunction with providing vital arteries for trade and of business is London with signifi cant our scheduled passenger services. investment, meeting the demand for presence at Heathrow, Gatwick and Operating one of the most extensive business travel and leisure travel for London City. Some 20 million people international scheduled airline route holidays and family reunions. In the nine live within commuting distance of these networks, together with our joint months to December 2010, we earned airports, on the doorstep of the City of business agreement, codeshare and £6.7 billion in revenue. Passenger London, the world’s largest premium franchise partners, we fl y to more than traffi c accounted for 87 per cent of travel market. 400 destinations worldwide. In the nine this revenue, while 8 per cent came months to December 2010, we carried from cargo and 5 per cent from other over 24 million passengers. activities. We carried 570 tonnes of cargo to destinations in Europe, the Americas and throughout the world. At the end of December 2010 we had 240 aircraft in service. British Airways Report and Accounts to December 2010 3 Contents 6 Highlights and achievements Overview 8 Financial and operational highlights 9 Chairman’s statement 11 Directors’ report Directors’ Report and Business Review Report Directors’ 18 Our strategy and objectives Our business 19 Our business plan 20 Our Key Performance Indicators 22 Principal risks and uncertainties 24 Business review 32 Board of Directors governance Corporate 34 Corporate governance 40 Report of the Audit Committee 42 Report of the Nominations Committee 42 Report of the Safety Review Committee 43 Report of the Remuneration Committee 52 Responsibility statements Financial statements 53 Independent auditor’s report 56 Group consolidated income statement 57 Statement of other comprehensive income 58 Balance sheets 59 Cash flow statements 60 Statements of changes in equity 61 Notes to the accounts The Directors present their Report and Accounts for the period 112 Operating and financial statistics ended 31 December 2010, which includes the Business Review as per Section 417 of the Companies Act 2006 and DTR 4.1.8 of 114 Principal investments the Disclosure and Transparency Rules (DTRs) of the UK Listing 115 Glossary Authority and the corporate governance statement as per DTR 7.2. The financial statements are set out on pages 55 to 111. 116 Subsidiary undertakings 4 British Airways Report and Accounts to December 2010 Our fleet British Airways already operates a large and modern fleet, and we’re continuing to invest in the most technologically advanced aircraft. In 2010 we took delivery of our first three new longhaul Boeing 777-300 aircraft. These are quieter and more fuel-efficient than their predecessors, as well as having much improved cabins throughout. 240 Aircraft (Fleet in service at 31 December 2010) 50 Boeing 747s 49 Boeing 777s 21 Boeing 767s 19 Boeing 737s 4 Boeing 757s 40 Airbus A320s 33 Airbus A319s 11 Airbus A321s 2 Airbus A318s 11 Embraer – E-jets British Airways Report and Accounts to December 2010 55 Overview Overview Contents 6 Highlights and achievements 8 Financial and operational highlights 9 Chairman’s statement 11 Directors’ report 6 British Airways Report and Accounts to December 2010 Highlights and achievements There was much to be proud of in 2010 – we’re improving the way we run our business, forming strong alliances to secure our future, and supporting the businesses and local communities that we serve. Joint Business Agreement Our merger ba.com An extensive transatlantic A highly complementary network 1,600 years – the total network built around 433 fit worldwide, combining British amount of time spent by destinations in 105 countries Airways’ strong presence in North customers on ba.com with 5,178 departures. America, Asia Pacific and Africa with during 2010. Iberia’s leadership in Latin America. Training Training 9,000 British Airways staff and 4,000 American Airlines / Iberia staff to support the new Joint Volunteer Business Agreement. programme To keep our programme flying during the cabin crew dispute, British Airways operated a company wide volunteer programme. Mixed Fleet Community relations Cargo During 2010 British Airways launched Our Flying Start Cargo revenues for the nine a new cabin crew ‘Mixed Fleet’ partnership with months to December 2010 which significantly increased our Comic Relief raised were £531 million. new entrant training. nearly £335,000. British Airways Report and Accounts to December 2010 7 Overview Community Diversity London 2012 3,335 retired and current Diversity at British Airways British Airways employees British Airways employees is about inclusion of all our are gearing up for the London donated over £600,000 to their colleagues and ensuring that we 2012 Olympic and Paralympic chosen charities through our utilise their different knowledge Games through British Airways’ Giving Scheme during the year. and perspectives. employee programme. Engineering Launched first Heathrow engineering apprentice Relief scheme for 16 years. Over 100 engineering mission technical and support to Haiti students started their Supported relief apprenticeships mission to Haiti, in October. preparing a Boeing 747 and joining colleagues to deliver 50 tonnes of aid for earthquake victims. Environment New destinations Mobile apps Joint business agreement British Airways announces British Airways new destinations Since the relaunch of British An extensive transatlantic network partnership with Solena include London City to Ibiza, Airways’ mobile app, over built around key hubs of London to build Europe’s first Palma, Copenhagen and Chambery. 100,000 customers have used Heathrow, Madrid, New York, Miami, biomass to jet fuel plant. London Gatwick to Cancun and their device as a boarding pass. Dallas, Chicago and Los Angeles. London Heathrow to Gothenburg. 8 British Airways Report and Accounts to December 2010 Financial and operational highlights Financially, we achieved an operating profit for the first time since 2007/08. Our performance would have been even better without the exceptionally severe weather and other disruptions. Revenue £6,683m Profit before tax £157m Operating profit £342m Group revenue for the 9 months to Group profit before tax for the Group operating profit for the December 2010 was £6,683 million, 9 months to December 2010 was 9 months to December 2010 was compared with £7,994 million in the £157 million, compared with a loss £342 million, compared with a loss year to 31 March 2010. before tax of £531 million in the year of £231 million in the year to 31 to 31 March 2010. March 2010. Basic earnings per share 13.6p Ready to Go 55% Shortlanded baggage Group earnings per share for the Network-wide Ready to Go Shortlanded baggage at Heathrow 9 months to December 2010 was performance for the 9 months to for the 9 months to December 2010 13.6 pence, compared with a loss December 2010 was 55 per cent, was 22.2 bags per 1,000 passengers, per share of 38.5 pence in the year compared with 59 per cent in the compared to 24.7 for the same period to 31 March 2010. year to 31 March 2010. in the previous year. 1,107 Geographical areas by area of original sale Total revenue Ready to Go 2010 £ million £ million Network punctuality % 9 mths to 9 mths to 6,683 55% Dec 2010 Dec 2010 2009/10 7,994 2009/10 59% 2008/09 32,058 8,992 2008/09 53% 2007/08* 8,758 2007/08 34% 0 2 4 6 8 10 0 10 20 30 40 6050 UK 44% * Restated for the adoption of IFRIC 13 & 14 The Americas 22% Continental Europe 15% Africa, Middle East & Indian sub-continent 11% Far East & Australia 8% British Airways Report and Accounts to December 2010 9 Chairman’s statement 2010 was the end of an era for British Airways. It was our final year as Overview a separate, publicly quoted plc as on 24 January 2011 we merged with Iberia to create International Consolidated Airlines Group S. A. (IAG) and a powerful new force in the global aviation industry was born. “We believe that the merger with Iberia and the creation of IAG will make us a stronger, more competitive airline that gives better service to customers. But in one important respect it changes nothing: the British Airways brand will continue. The new corporate structure will ensure that the distinctive British Airways and Iberia brand identities can flourish as part of a strong group that participates in the consolidation that is currently reshaping the airline industry.” The sky’s the limit Ours is an intensely competitive industry where margins are low and operations uniquely vulnerable to disruption – as we saw in 2010. It is only through partnerships such as IAG that British Airways and airlines like it can survive and prosper.