British airways investment potential report

British Airways Investment Potential Report

Contents Page

1 Introduction

2 Synopsis
2.1 overview of British Airways
2.2 Accounting policies
2.3 Directors report

3 Share Price

4 Analysis
4.1 Interpretation, evaluation and comparison of various ratios
4.2 Vertical, horizontal and common size analysis

5 Recommendations

6 Appendix
6.1 Ratios
6.2 Meeting Records

7Bibliography

1 Introduction
This is a report into the potential benefits or repercussions of investing £1 million into British Airways plc. Various factors will be considered when advising on the investment, such as financial history, current figures as well as external influences of the organizations performance. This could be global economic climate or market trends. The report itself has beenconducted by 5 financial consultants and advisers. The primary source of financial data obtained and analyzed will be the ratios relating to the operational performance of the company.

2 Synopsis
2.1 Overview of British Airways
British Airways Plc.’s main activities are operating international and domestic chartered flights, carrying passengers, freight mail and auxiliary services. As of March31, 2009, the company had 40,627 employees. The Group uses Gatwick and Heathrow as principal bases, with an extensive international scheduled airline route, consisting of 148 destinations in 75 countries. Currently managing an aircraft fleet of 245 aircrafts. (www.corporateinformation.com)
Almost a third of all the bookings are made on ba.com, almost half of all European leisure fares sold viathe website. They’re planning on implementing a new First class cabin, a new comfort focus aircraft, a new London City to New York service and to allow customers to use mobile text and data services.

2.2 Accounting policies
Accounting policies are specific accounting bases selected and followed by a business enterprise in preparing financial statements. There are several options in which theyuse the same economic and business methods, and it would therefore be practical significance in accounting policies, thus in accounting policies, it is existing a choice issue. Therefore, what corporate has chosen in accounting policies, would constitute and important aspect in corporate accounting system.(3 http://www.accaglobal.com)

Some Accounting Policies that British Airways used
RevenueRevenue recognition – mileage programmes
Interest in associates
Cash and cash equivalents
Share-based payments
Taxation
Foreign currency translation
Derivatives and financial instruments
Cash flow hedges
Impairment in financial assets
Impact of new International Financial Reporting Standards
The International Financial Reporting Standards was significantly used by British Airways toauthorize financial statement for the past financial year. It is more efficiently and accurately calculating all the financial figures. It is a new accounting measurement, which is allocated and developed in the world accounting system. Financial statements are prepared based on a number of accounting principles and assumptions. Accountants use their judgment to apply these principles and producefinancial statements for use by management, shareholders, analysts, finance providers, governmental agencies, the general public and other stakeholders.(4 http://www.articlesbase.com)

2.3 Directors report
Based on the last annual report figures and after the difficulties attached to the recession, record oil prices, fall of the currency value, lack of customer confidence and mainly the financialservices. The opening of the new Terminal 5 has shown to be an outstanding facility. 21 million passengers have used the new terminal in its first year with satisfaction ratings rising by 8%. Some 82.5% of flights departure within 15 minutes of their scheduled time and 99.5% regularity was achieved. (5 http://markets.ft.com)
Following the review of the Group’s annual report capital and plans,...