BUSS4 and British Airways - a marriage made in heaven
Recommend on Google+
British Airways could easily be the case study business featured in Section A of BUSS4. The story of BA during 2008 and 2009 fits perfectly with the BUSS4 research focus on strategies in a recession, short v long-term planning and the related issue of stakeholder relationships. And if BA isn’t the chosen example by the BUSS4 examiner, then it becomes a superb basis for research and comparison. Just think of the issues that have come up in the last 24 months:
- Collapse in business & first class travel (linked to collapse in US & other financial markets + income elasticity of demand)
- Increased competition on short-haul routes from Ryanair, Easyjet (who have largely bucked the recession in revenue terms)
- Commodity price rises in 2007 fuel oil price surge in 2008 (fuel is 25%-30% of an airlines operating costs)
- Merger with Iberia (defensive/offensive?)
- Massive cost-cutting exercises
- Industrial action
The turmoil experienced by British Airways is illustrated in this tutor2u chart of the BA share price over the last few years - growing strongly during the boom years of 2005 & 2006, but then sent into a tailspin as the oil price rises started to bite and then the credit crunch took hold:
British_Airways_Share_Price.pdf
I have listed below a series of short, relevant BBC videos which would help students research the BUSS4 issues at BA during 2008 & 2009…
BA’s investor relations website also contains many superb presentations and interview transcripts which would help the more adventurous student get more detailed information on recent BA strategy.
BA profits in massive plunge (November 2008)
http://news.bbc.co.uk/1/hi/business/7714996.stm
Key points:
Bleak trading environment
Operating costs - fuel bill rose rapidly, despite actions to reduce risks (hedging)
Fall in exchange rate (sterling v dollar) has increase fuel costs (which are invoiced in dollars)
Business passenger demand well down - turmoil in financial services sector (Lehman etc) means much reduced business traffic
Slump in share price - potentially affecting ability to raise finance or do deals (e.g. mergers)
BA chairman on recession plans (January 2009)
http://news.bbc.co.uk/1/hi/business/davos/7860475.stm
Key points:
Every firm has to look at survival mode & opportunity mode
Merger with Iberia is about both survival and opportunity
Capacity management - BA cut capacity slighty during 2008, but you have to be careful so you dont damage the long-term business
Price cutting? Prices have fallen - but there is no point operating at a loss
BA nosedives into massive losses (May 2009)
http://news.bbc.co.uk/1/hi/business/8063129.stm
Key points:
Global recession = fall in business & first class passenger demand
Recession is not a short-term phenomenon
Strong dollar = higher operating costs (mainly fuel)
Big deficit in pension fund
Cutting jobs
Grounding planes to cut capacity
Promotional offers to remain competitive
The influences that damaged BA most were beyond its control
Airline gives staff tough choice (June 2009)
http://news.bbc.co.uk/1/hi/puffbox/hyperpuff/audiovideo/england/8117876.stm
Key points:
BA asking staff to work part-time, unpaid for a week or take holiday
Frontline staff not happy
Flexible working - maybe the best way to survive the recession?
Should BA staff take a pay cut - like many staff in other industries had to?
BA chief: Worst year for industry (November 2009)
http://news.bbc.co.uk/1/hi/business/8346087.stm
Key points:
BA reports a loss before tax of £292m for the six months to September 2009
All airlines under pressure from falling revenues & the need to reduce costs
A structural change in the way that consumers behave (value for money)
Employee numbers down without strike action - so far
Need to engage with employees
BA and Iberia airlines agree to merge (November 2009)
http://news.bbc.co.uk/1/hi/business/8358036.stm
Key points:
BA and Iberia airlines agree to merge
Merging to improve market share & get more resilience to economic downturns
Will become the world’s thrid largest airline (economies of scale)
Cost savings - $600m per year (cutting duplicated functions)
But is bigger really better? Does it really provide competitive advantage
British Airways cabin crew vote for Christmas strike (December 2009)
http://news.bbc.co.uk/1/hi/business/8412627.stm
Key points:
Cabin crew vote to take industrial action ahead of key seasonal period
Huge potential cost for BA just after it had made record losses
An “overreaction” according to BA management
Impact on BA customers? (stakeholders)
Cabin crew pay - BA want to cut crew numbers
blog comments powered by Disqus
Takeovers in the UK - the long-term trend [5 Feb 2012]
Glenstrata - Glencore proposes merger with Xstrata [3 Feb 2012]
BUSS4 Revision Workshops 2012 - Programme Outline [1 Feb 2012]
BUSS4 2012 - Mergers and Takeovers on the Business Studies Blog [31 Jan 2012]
The Guardian on Takeovers and Mergers [31 Jan 2012]
AQA A2 Business (BUSS4) Research Theme 2012 [31 Jan 2012]
Leadership - Tough decisions to turn Starbucks around [29 Jan 2012]
AQA BUSS4 - Research Toolkit for June 2012 & Jan 2013 [19 Jan 2012]
Still more praise for the “John Lewis model” [17 Jan 2012]
Post-Easter 2012 Revision Workshops for AQA AS & A2 Business Studies [16 Jan 2012]
Tesco takes it ‘easy’, controlling costs in its US operations [11 Jan 2012]
Revision Presentation - Cost Minimisation [3 Jan 2012]
Crisps and exchange rates [27 Dec 2011]
Strategies to revive the High Street: Mary Portas reports [13 Dec 2011]
Stakeholders argue over executive pay [23 Nov 2011]
AQA BUSS4 CPD Briefing Days in 2012 [22 Nov 2011]
AQA BUSS2 & BUSS4 Revision Workshops Spring 2012 [11 Nov 2011]
Consolidation on the cards as IAG claims deal to acquire BMI [6 Nov 2011]
Banana Smoothies & Interest Rates [5 Nov 2011]
Batten down the hatches - strategies for the next downturn [24 Oct 2011]
Car Wars - VW v Greenpeace [17 Oct 2011]
Shoppers switch stores as income patterns change [11 Oct 2011]
Revision exercise - Chantelle’s Jigsaws [1 Oct 2011]
Profits dive and put pressure on liquidity - the Distress Monitor [29 Sep 2011]
Lesson activity - the Dyson Debate [29 Sep 2011]
Stakeholders gripped by the bad news coming from BAE Systems [28 Sep 2011]
CSR - 40 Years of Upsetting Big Business [15 Sep 2011]
The Case for Transformation [29 Jul 2011]
AQA A2 Business (BUSS4) - Exam Topic Tracker [16 Jun 2011]
Shareholder power at Tesco [31 May 2011]
Changing demand in the market for live music [16 May 2011]
AQA BUSS4 CSR Briefing - Review Copies Available [9 May 2011]
Lesson Worksheet - Capacity Utilisation [5 May 2011]
Does reform of corporate governance only mean ticking a list of boxes [5 May 2011]
AQA A2 Business (BUSS4) - Specification Resource Map [22 Apr 2011]
CSR - A responsible company from day one? [21 Apr 2011]
Is the golf business coming out of the bunker? [7 Apr 2011]
Recession? Hair today, gone tomorrow [6 Apr 2011]
Stakeholders - Every Little Helps [2 Apr 2011]
Strategy and bargaining power - food for thought [22 Mar 2011]
Leadership Resource - Every Little Helps [16 Mar 2011]
The UK Economy - Economic Growth GDP [15 Mar 2011]
The UK Economy - Exchange Rates [14 Mar 2011]
The UK Economy - Unemployment [13 Mar 2011]
CSR - All Change at BP: New Era, New Responsibilities [12 Mar 2011]
The Profit Margin Bloodbath of UK Recession [6 Mar 2011]
BUSS4 - Research Theme for 2011 - CSR [26 Feb 2011]
BUSS4 Section A Research Briefing Days - 2011 Research Task [22 Feb 2011]
BUSS4 2011 - Introducing the tutor2u Twelve [20 Feb 2011]
BUSS4 Research - “Beyond e.g.” [18 Feb 2011]
CSR - Avoiding the child labour hotspots [15 Feb 2011]
CSR - The Classic Milton Friedman Clip [5 Feb 2011]
The Year of Corporate Philanthropy [31 Jan 2011]
Emerging Markets Video - The perfect plenary [29 Jan 2011]
Globalisation Video - The perfect plenary [26 Jan 2011]
Euro Disney - an HRM & Finance Nightmare? [24 Nov 2010]
Recession-proof production at Fiat [20 Nov 2010]
JCB - A Great Case Study for Business Students [19 Nov 2010]
Cash flow Clue-doh! The Mystery is Revealed… [2 Nov 2010]
Start-ups - a surge in new businesses post recession [2 Nov 2010]
Leadership in action - A Day in the Life of Willie Walsh [25 Oct 2010]
Google, Profits and Diversification [16 Oct 2010]
The Frost Report does Stakeholders [9 Oct 2010]
AQA BUSS4 Student Research - How Was it for You in Summer 2010? [29 Sep 2010]
Lesson Worksheet - Aims & Objectives of Business [29 Sep 2010]
The Business Scrapbook [25 Sep 2010]
Nissan Goes for it In China [20 Sep 2010]
Who ate all the pies? [17 Sep 2010]
Businesses prepare for the double-dip [13 Sep 2010]
Can small firms shrug off their recession trauma? [2 Sep 2010]
A beginners guide to GDP [30 Aug 2010]
Recession Strategy - Manufacturing Emerges Leaner and Fitter [25 Aug 2010]
Nissan profits from a recovery in demand [30 Jul 2010]
Dark days for the UK nightclub market [21 Jun 2010]
Developing Exam Skills - POMFEO [19 Jun 2010]
AQA BUSS4 Section B Practice Question - British Airways [15 Jun 2010]
Emerging Stronger - How UK Businesses Responded to the Recession [14 Jun 2010]
BUSS4 - Recession Strategy Lessons from Four Female Entrepreneurs [6 Jun 2010]
Gearing Up for BUSS4 [6 Jun 2010]
Are fringe benefits being cut? [5 Jun 2010]
Managing People - Will Staff Turnover Increase as the UK Emerges from the Recession [2 Jun 2010]
Recession Strategy - For Airlines it is all about Unit Costs [2 Jun 2010]
Silence is Golden for the Tesco Nuns [2 Jun 2010]
Emerging from Recession - Manufacturing Leads the Way [1 Jun 2010]
BUSS4 - Dyson’s Success is a Great Example to Use in Section A Essays [27 May 2010]
Sir Richard Branson on Virgin Atlantic Business Strategy [26 May 2010]
Strategy Case Study - Vauxhall/Opel restructuring [24 May 2010]
Airlines founder plans a shareholder revolt [16 May 2010]
BUSS4 - Leadership in a Changing Environment [16 May 2010]
BUSS4 UK Recession - Strategies in a Downturn [16 May 2010]
BUSS4 UK Recession - Data Burn [15 May 2010]
Book wars! [5 May 2010]
UK Recession - Hotels Suffer Despite the Trend towards Staycations [3 May 2010]
Why Coffee Shops did so well during the UK Recession [25 Apr 2010]
A good example to use when explaining what firms do as they come out of a recession [22 Apr 2010]
BUSS4 - Building exam skills [21 Apr 2010]
AQA GCE Business (BUSS4) - Workshop Booklet is Go [17 Apr 2010]
Girl Power [12 Apr 2010]
AQA A2 Business (BUSS4) - Teacher PowerPoint Presentations [7 Apr 2010]
AQA A2 Business (BUSS4) - Revision Quizzes [7 Apr 2010]
BUSINESS TEACHER RESOURCE NEWSLETTER
Get first news of business teaching resources, ideas and other materials from tutor2u. Over 9,400 business teachers from the UK and around the world receive our regular teacher email newsletters. Sign up for free here!
Popular Topic Tags
recession, demand, prices, price, unemployment, profit, economics, costs, investment, inflation, supply, employment, trade, competition, gdp, risk, china, debt, euro, entrepreneur, capacity, production, innovation, downturn, tutor2u, revision, pay, exports, manufacturing, confidence, profits, food, incentives, banks, strategy, globalisation, aqa, expectations, oil, csr, usa, startup, retailers, housing, productivity, sterling, supermarkets, takeover, google, economies of scale, mortgage, cash flow, advertising, quiz, leadership, property, buss4, tesco, economic growth, video, efficiency, enterprise, motivation, stakeholders, apple, deflation, corporate social responsibility, ebea, market share, airlines, pricing, taxation, merger, slowdown, bank of england, acquisition, interest rates, market failure, borrowing, competitiveness, sustainability, product life cycle, credit crunch, budget deficit, aqa business studies, facebook, twitter, aqa business, bbc, nelson thornes, philip allan updates, starbucks, philip allan, monopoly, diversification, recruitment, organic growth, stocks, training, oligopoly, starter activity, shareholders, uk economy, poverty, dollar, emerging markets, government failure, retailing, management, suppliers, buss1, marketing mix, tim harford, cpi, branding, opportunity cost, breakeven, government spending, hodder education, vat, product, customer service, eu, losses, wages, evaluation, india, external growth, wealth, environment, edexcel, location, promotion, technology, information failure, business studies revision, sources of finance, franchise, aqa gce business, elasticity, regulation, spare capacity, welfare, jobs, economic cycle, marketing, zondle, strategic direction, british airways,View all tags for the Business Blog
