British Airways is the largest international scheduled airline in the United Kingdom. It was founded in 1974 through the nationalization of four UK carriers. The company is strictly focused on the airline business, with different segments being domestic, shorthaul and longhaul, the latter two reflecting international routes. In these businesses, BA competes against a wide range of carriers. EasyJet, Ryanair, Virgin and bmi compete for a large share of the business to and from Europe. Other international airlines with landing rights in London compete for longhaul business. In the 2008/09 report, BA indicated that carriers from the U.S., Africa and India had all established slots at Heathrow. The London longhaul market is also served by charters and by low-cost longhaul operators such as Air Asia. British Airways combats this by entering into alliances that allow it to draw passengers from partner airlines around the world, with the objective of maximizing longhaul capacity in particular (British Airways 2008-09 Annual Report).
The most important recent news concerning BA is the merger with Iberia. It was announced in early 2012 that the first year of the combined airline, which operates under the name International Consolidated Airlines Group, saw profits of €485 million, compared with €225 million in profit in fiscal year 2010. Iberia suffered...
British Airways' traditional strength in the Trans-Atlantic market has helped to drive this success.
The annual report online outlines some of the key accounting policies. Depreciation of plant, property and equipment is calculated as the cost of the equipment less the estimated residual value on a straight-line basis. The carrying value is revisited periodically when events or changes indicate that the carrying value may not be recoverable. Cabin interior investments are depreciated on a straight line basis over five years or the remaining life of the aircraft, whichever is lower.
Inventories are "valued at the lower of cost and net realisable value, using the weighted average cost method. Allowances are made for doubtful receivables. Pension benefits are recorded in line with IAS 19 'Employee Benefits.' Foreign currency translation, which caused a significant negative impact on the current years' earnings, are based on the spot exchange rate at the time of the transaction, and translated at the rates ruling at the balance sheet date. Derivatives are valued in accordance with IAS 39 'Financial Instruments -- Recognition and Measurement.'
In 2009, British Airways saw a 3.1% improvement in passenger revenue and an improvement of 9.4% in…
