An amazing headline in the Independent this morning. “BA fears oil price rise may destroy its profit margins”. The piece that follows makes for really useful reading for A2 business strategy students.
Here is the link to the Independent article on the BA announcement.
There are some stunning figures in the article:
- BA’s fuel bill has risen by £450 million, with fuel now representing a third of its entire cost base.
- Willie Walsh (BA CEO) has abandoned his objective of 10% net profit margin (downgrading to 7%)
- Continued high fuel prices will force fundamental changes (particularly consolidation) in the structure of the airline industry
- In the last year, the market value of BA has fallen by around a half
- BA has increased prices 12 times in the last year, but still can’t recover all the cost increases from customers
All of which makes for a great topical case study for A2 students. We’ll be writing in more detail about this story in Business Cafe next week.
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