- Leadership & Change

OVERVIEW
BOAC

BA

BEA

Formed in 1974, as a result of the merger of British Overseas

Airways Corporation and British European Airways.
Situation became worse due to conflict between the employees
of the two companies.
BA sign stood Bloody Awful.
In 1980, Awarded airlines to be avoided at all costs.

In 1981, Lord king was appointed as a chairman of BA.

He appointed Collin Marshall as the CEO in 1982.

Reduced staff strength from 58,000 to 38,000.

Set up of new corporate mission.

In 1988 and 1989, BA won the WORLDS BEST AIRLINES

AWARD.
CEO: Bob Ayling in 1996 and Rod Eddington in 2000.

PUTTING PEOPLE FIRST

Approx 40,000 BA Employees went through PPF program.

Main emphasis on Customer service, Communicative skills
of employees, proper Goal setting.

Management & staff members interacted freely.

Grade differences become irrelevant during PPF.

MANAGING PEOPLE FIRST

Developed specially for the 1400 BA managers.

Stressed importance of trust, leadership, vision and
feedback.
Need to motivate the staff and to avoid emotional
burnout.
Public relations, Advertising & sales promotion
campaign
Judgment on a qualitative basis.

CHANGE MANAGEMENT
King and Marshall

Highly Hierarchical Bureaucratic Structure.

Communication Gaps across Organization.

Marshall Reduced the layers of Management.

Reduction in staff strength to reduce cost.

Programs like Putting People First & Managing People

First.

OTHER PROGRAMS

A successful company wide program in 1985 name A

day in the life.

360 degree feedback program.

In 1987 To be the best, Leadership in the service

business, Award for excellence, program to recognize
outstanding contribution.

Brain waves program to encourage suggestion from

employees.

BA also offered a company specific MBA program in

conjunction with Lancaster University in 1988.

ERA OF LORD KING(1981-93)

MISSION:

To restructure BA.
Emphasized on profitability.
Prepare BA for privatization.
Action Plans:
Reduce the staff strength(58,000 to 38,000).
Replace existing directors.
Promote cross functional coordination.
Better utilization of assets.
Training program

BOB AYLING (1996- 2000)

MISSION
Creation of new identity of BA
Efficiency in operation
Communication
ACTION PLAN
Replaced companies traditional design with ethnic
design
Efforts to cut cost and work force Revived PPF to
PPFA
Improved labor relation

ROD EDDINGTON (2000 onwards)

MISSION
To revive BA from losses
To prepare BA for contingencies
Morale boosting
ACTION PLAN
Continue cost cutting
Laid off 5200 employees on top of 1800 job
cuts

EXTERNAL FACTORS

Hike in oil prices.

Gulf war.
Increasing competition.
Terrorist attack : September 11.
Weak economic condition.
SARS

MAJOR COMPETITORS

Lufthansa

Annual
Sales
Employees

UAL

Virgin
Atlantic
Airways

23,140.3

17,379.0

2,575.1

90,673

57,000

7,479

OTHER COMPETITORS
Company
BritishAirways
plc

Symbol

Price

Change

Market
Cap

P/E

BAB

74.99

0.13%

8.52B

20.49

Air France KL
M

AKH

25.79

0.62%

6.84B

5.67

TAM S.A.

TAM

28.25

0.18%

4.25B

14.52

AMR Corp.

AMR

19.40

2.32%

4.13B

N/A

US Airways Gr LCC
oup, Inc.

39.48

1.84%

3.48B

177.84

UAL Corp.

23.72

2.31%

2.47B

0.68

UAUA

COMPARISON
Statistic

Industry

BAB

Leader

Market Capitalization

BAB

8.52B

P/E Ratio (ttm)

LCC

177.84

20.49

2 / 9

PEG Ratio (ttm, 5 yr expected)

UAUA

7.18

0.85

5 / 9

Revenue Growth (Qtrly YoY)

LCC

277.60%

7 / 9

EPS Growth (Qtrly YoY)

AMR

283.90%

Long-Term Growth Rate (5 yr)

ZNH

41.1%

12.50
%
217.4
0%
10.0%

Return on Equity (ttm)

TAM

66.21%

4 / 9

Long-Term Debt/Equity (mrq)

CAL

11.57
%
1.837
N/A

N/A

Dividend Yield (annual)

9.233

BAB Rank
1 / 9

2 / 9
3 / 9

4 / 9

Performance in a Decade
Year ended

Turnover (m)

Profit/loss before tax (m)

Net profit/loss (m)

Basic eps (p)

31 March 2006

8,515

620

467

40.4

31 March 2005

7,772

513

392

35.2

31 March 2004

7,560

230

130

12.1

31 March 2003

7,688

135

72

6.7

31 March 2002

8,340

- 200

- 142

- 13.2

31 March 2001

9,278

150

114

10.5

31 March 2000

8,940

- 21

- 2.0

31 March 1999

8,915

225

206

19.5

31 March 1998

8,642

580

460

44.7

31 March 1997

8,359

640

553

55.7

31 March 1996

7,760

585

473

49.4

RECENT PERFORMANCE
Year

Revenue

Gross
Profit

Operating
Income

Total Net
Income

Mar 06

14,814.4

6,160.6

659.4

257.5

Mar 05

14,680.6

1,272.1

866.2

672.7

Mar 04

13,744.0

925.9

657.4

723.2

COMPANY PERFORMANCE
Company Type

Public

Fiscal Year-End

March

2006 Sales (mil.)

$14,814.4

1-Year Sales Growth

0.9%

2006 Net Income (mil.)

$257.5

1-Year Net Income Growth

(61.7%)

2005 Employees

49,490

1-Year Employee Growth

(4.7%)

CHAIRMAN

MartinBroughton
Non-executive director since May
2000, Deputy Chairman from
November 2003 becoming Chairman
in July 2004. Chairman of the
Nominations Committee. Safety
Review Committee.
Martin Broughton is Chairman of the
British Horseracing Board. Martin is
married with two children. His
interests include National Hunt
racing, golf, theatre and football

WILLIE WALSH PRESENT

BRITISH AIRWAYS CEO

Bright, personable, and well-liked by all in

the industry, Willie is described as singleminded in going after what he wants
Became CEO on may 3, 2005
Emphasizing on what our customer base demands which are quality service
and value for money.
Focusing on improving customer satisfaction and safety
Announced changes to the Leadership Team , reorganization to enhance
information flow.

"If you know your vision you'll find a way to get

there"

FUTURE PLANS

Achieve the goal of 10% operating

margins by the year to March 2008.
Plans to re-structure its business by
March 2008.
To became lowest cost airlines in the
world by 2010.