BA results 2007-8

Right, I’m gonna sound completely thick now, but can someone explain to me what all this means.

I know revenue is all the income that a company gets so I know that BA will get it from selling flights for example.

Is operating profit once all the deductions have been made e.g. wages, fuel bill etc?

Finally, what is an operating margin?

OK. Airline economics 101.

Revenue is indeed income, for airlines it comes in two varieties, direct and indirect. The former is what it gets from flying passengers and freight, the latter is what it gets from being an airline (eg, marketing incentives, grants, money made on aircraft/fuel/forex trading etc etc etc)

From profit, take your costs – firstly, taking off the marginal costs of putting passengers on the aircraft (so that is reservation system costs, pax handling etc etc), then direct costs (fuel, landing, parking, nav charges etc).

Operating profit is technically operating revenue minus operating costs, so should be direct revenue minus direct costs (so Willie’s remuneration shouldn’t figure in it, since he is an overhead), but the aircraft standing charges and corporate overheads can get in the mix. All depends on how the airline in question accounts (remember that to a certain degree, the airline decides on how it presents its numbers, so long as they are on a consistent assumption base year on year).

The margin is just an expression of operating profit as a percentage of operating revenue – eg, from BA’s 2006/07 results, revenue was £8,492m, operating profit £602m – a margin of 7.1%. (Note that BA use an overall figure for revenue, rather than the more precise direct revenue measure – this is not uncommon).

Hope this helps.

TA

At least the airline is making a profit which makes them better placef than some airlines out there 🙂 It is good to see British Airways making a profit, a boost in the pay packet for the employees 🙂

Yes Its good to see BA doing well but its just a pity that the rest of the managers havent followed in their leaders footsteps and declinde their bonuses , Its the pepeole at the sharp end who deserve that little bit extra

But like many airlines it could get very tough over the coming months with the onset of spiralling oil prices

Absolutely. There was an interesting article in todays Times stating The City’s opinion that the next yearly results could show a slight loss, due largely to the rising cost of fuel.

I think the year ahead could be interesting for ALL airlines, BA included.

1L.

Great news for BA. But like many airlines it could get very tough over the coming months with the onset of spiralling oil prices and what could be falling demand for air travel in general, but BA looks in much better shape now to face the challenges, I liked the Utopia tails…but then I like the BEA Red Square so what do I know:)

Hi.

I am in ageement here, fantastic results made possible by cutting back on unprofitable routes and being more cost effective.

I am not a B.A.basher and have always been proud of our national airline, and get annoyed when I hear B.A. being called ” London Airways”

B.A. would not be announcing these impressive results if it was still operating regional services out of places like Leeds, Inverness, Liverpool etc, and international flights from Glasgow etc.

Hats off to Wille Walsh for not taking his bonus.

I take it you didn’t approve of the utopia tails either…?:rolleyes:

BA today announced a full year operating profit of £875m, up £273m (45%) on last year.

This gives an operating margin of 10% for the first time in the company’s history, a margin rarely achieved by an airline.

Revenue was up 3.1% to £8.8bn, although fuel costs topped £2bn for the first time ever in a financial year.

1L.

Right, I’m gonna sound completely thick now, but can someone explain to me what all this means.

I know revenue is all the income that a company gets so I know that BA will get it from selling flights for example.

Is operating profit once all the deductions have been made e.g. wages, fuel bill etc?

Finally, what is an operating margin?

Many thanks for answering the above, would be a great help in my degree.

Hi.

I am in ageement here, fantastic results made possible by cutting back on unprofitable routes and being more cost effective.

I am not a B.A.basher and have always been proud of our national airline, and get annoyed when I hear B.A. being called ” London Airways”

B.A. would not be announcing these impressive results if it was still operating regional services out of places like Leeds, Inverness, Liverpool etc, and international flights from Glasgow etc.

Hats off to Wille Walsh for not taking his bonus.