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Will BA Achieve Its 10% Operating Margin?  
User currently offlineBAfan From United Kingdom, joined May 2008, 189 posts, RR: 0
Posted (6 years 6 months 2 weeks 4 days 14 hours ago) and read 2317 times:

There has been much emphasis on the problems at Terminal 5, with many analysts suggesting that it will cost BA approximately £16 million to put right. I am just wondering what other peoples thoughts are regarding whether or not BA will still be able to reach its goal of a 10% operating margin.

What do you think?

15 replies: All unread, jump to last
 
User currently offlineAPYu From United Kingdom, joined Sep 2007, 839 posts, RR: 0
Reply 1, posted (6 years 6 months 2 weeks 4 days 13 hours ago) and read 2295 times:

I think 16 million was the first estimate of what the first few days had cost them and this is likely to have risen since, with the extra costs of the delayed move of T4 longhaul.

Unfortunately I dont think they will reach the magic 10% this time. Increased fuel costs, they have been slashing economy fares across the atlantic most of this year and with the T5 costs I think they will just miss it. With clever accounting though im sure they'll come very close.



We'd like to welcome in particular our Executive Club members and those joining us from our Oneworld alliance partners.
User currently offlineBAfan From United Kingdom, joined May 2008, 189 posts, RR: 0
Reply 2, posted (6 years 6 months 2 weeks 4 days 13 hours ago) and read 2252 times:

Its such a shame, I was looking forward to a possible dividend!

I know that BA has anticipated that next years margin will be approximately 7% (from the investor day presentation). However, I have doubts as to whether or not this will actually be achieved as the fuel price continues to rise.

It will be a shame if BA doesn't reach the 10%, not only for investors, but for the employees too, as I understand that they are counting on it to get a bonus.

Results are out on Friday, so we shall have to wait an see!


User currently offlineBastew From Australia, joined Sep 2006, 1028 posts, RR: 2
Reply 3, posted (6 years 6 months 2 weeks 4 days 13 hours ago) and read 2242 times:

The article doesn't mention the 10% margin specifically but 2007-2008 results are expected to be pretty good:

"British Airways is expected to announce record profits of around £870million next Friday, putting the airline on course to hit targets needed to trigger bonuses for directors, senior managers and other staff. "

Full article at:

http://www.dailymail.co.uk/pages/liv..._article_id=565226&in_page_id=1770


User currently offlineCornish From United Kingdom, joined Feb 2005, 8187 posts, RR: 54
Reply 4, posted (6 years 6 months 2 weeks 4 days 13 hours ago) and read 2242 times:

I was at an event last week listening to Willie Walsh speak. I seem to recall that he mentioned at one stage that the 10% margin would not happen given the current operating environment and recent issues.


Just when I thought I could see light at the end of the tunnel, it was some B*****d with a torch bringing me more work
User currently offlineSingapore_Air From United Kingdom, joined Nov 2000, 13745 posts, RR: 19
Reply 5, posted (6 years 6 months 2 weeks 4 days 13 hours ago) and read 2238 times:

This may interest you:




OUTLOOK BA to hit 10 pct FY earnings margin target, may omit dividend
9 May 2008

British Airways Plc. should hit its earnings margin target when it announces full year results next Friday, although it may disappoint investors by failing to pay a dividend.

BA should achieve its targeted operating margin of 10 percent for the full year 2008 despite the 16 million cost of the chaotic launch of Heathrow's Terminal Five, brokers said.

However, analysts at NCB Stockbrokers and Swiss broker UBS raised the possibility that BA may forego a shareholder payout, given what NCB described as 'the bleak outlook for earnings in FY09'.

UBS said BA's achievement of the 10 percent pretax earnings before interest margin was one of the criteria that would enable it to pay a dividend and staff bonus.

'However, BA may believe it more prudent to conserve cash for a potential industry downturn,' UBS said in a note.

Source: AFX News (Thompson Financial News Limited) - no link.



Anyone can fly, only the best Soar.
User currently offlineBAfan From United Kingdom, joined May 2008, 189 posts, RR: 0
Reply 6, posted (6 years 6 months 2 weeks 4 days 12 hours ago) and read 2226 times:

I would be happy for the company to forego paying a dividend to strengthen the balance sheet, it makes business sense because the outlook for the industry isn't looking too great at the moment.

I am looking forward to finding out which aircraft is chosen to replace the LCY fleet, as I heard this is on the table. Do you think they will go to turboprops considering the price of oil? I would really like to see the Embraer 170/175 etc... for the LCY fleet.


User currently offlineEdina From United Kingdom, joined Jul 2003, 746 posts, RR: 9
Reply 7, posted (6 years 6 months 2 weeks 4 days 12 hours ago) and read 2219 times:

Oh dear......poor little Willie won't get his £700k bonus for ruining BAs reputation  Yeah sure


Worked on - Caravelle Mercure A300 A320 F27 SD3-60 BAe146 747-100/200/400 DC10-30 767 777 737-400 757 A319 A321
User currently offlineGDB From United Kingdom, joined May 2001, 13241 posts, RR: 77
Reply 8, posted (6 years 6 months 2 weeks 4 days 8 hours ago) and read 2110 times:

Even if we did, after the T5 debacle, do you really think it would be acceptable to the public?
Never mind it's about the whole year, the press don't do context or fairness.

Question, does BAA have a similar scheme?
After all, it's their fault too.


User currently offlineMutu From United Kingdom, joined Mar 2006, 538 posts, RR: 0
Reply 9, posted (6 years 6 months 2 weeks 4 days 6 hours ago) and read 2053 times:



Quoting Edina (Reply 7):
Oh dear......poor little Willie won't get his £700k bonus for ruining BAs reputation

well that is true enough but, IF analysts consensus of an £870m operating profit is correct, that equates to US$1.7bn and beats SQ (just announ ced US$1.5bn) for same 12 month period.

Now that isnt too shoddy is it!


User currently offlineTheginge From United Kingdom, joined Oct 2006, 1132 posts, RR: 0
Reply 10, posted (6 years 6 months 2 weeks 4 days 5 hours ago) and read 2014 times:



Quoting BAfan (Reply 2):
It will be a shame if BA doesn't reach the 10%, not only for investors, but for the employees too, as I understand that they are counting on it to get a bonus.

I think BA will have to give some sort of bonus to the staff, even if it is small, as there are a lot of people who have been waiting some years for BA to make enough for a bonus. There are a lot of unhapy staff there at the moment.
The bonus for WW is more difficult as even though he may well meet his targets of making BA lots of money if he takes a big bonus it won't go down very well due to the T5 problems.


User currently offlineMMEPHX From , joined Dec 1969, posts, RR:
Reply 11, posted (6 years 6 months 2 weeks 3 days 13 hours ago) and read 1882 times:

How come BA, LH, EK, AF/KLM, SQ etc. can all make good profits yet AA, US, DL, NW etc. etc. all make losses? BA etc. all have to compete with LCCs at least as much as US Airlines. Ryanair, Easyjet, AirBerlin compete very aggressively with the legacies. What is in the business models of BA, LH etc.that makes the business remain profitable? (OK, I know the weak dollar will help with the fuel purchase) did they avoid the rush to the bottom in service that most US airlines went for and still attract premium passengers? Is it labor, meaning staffing structures rather than cost/hour, that is different and adds to the bottom line cost? Overall state of the economy is generally the same in Europe and US. thoughts?

User currently offlineANstar From United Kingdom, joined Nov 2003, 5302 posts, RR: 7
Reply 12, posted (6 years 6 months 2 weeks 3 days 13 hours ago) and read 1877 times:



Quoting MMEPHX (Reply 11):
How come BA, LH, EK, AF/KLM, SQ etc. can all make good profits yet AA, US, DL, NW etc. etc. all make losses?

Lets not forget Qantas as well who made $1B profit last year and are on track to make $1.5B this year!

I think the problem with American carriers has been summed up in previous threads but in short... Americans in general aren't willing to pay for service. There is also the other issue that the (and ver crudely) American premium cabins are mianly filled with points or status upgrades.... SQ, BA, LH, AF/KLM etc do not give comp upgrades to their eleites and thus they need to pay for those pricey seats = more profit


User currently offlineMMEPHX From , joined Dec 1969, posts, RR:
Reply 13, posted (6 years 6 months 2 weeks 3 days 13 hours ago) and read 1864 times:



Quoting ANstar (Reply 12):
There is also the other issue that the (and ver crudely) American premium cabins are mianly filled with points or status upgrades

Thanks AnStar, and that is a good point. Why give away your best product? I don't see BestBuy (US electrical retailer) giving me a free 60" Plasma TV just because I bought a couple of other TV's last year!


User currently offlineAPYu From United Kingdom, joined Sep 2007, 839 posts, RR: 0
Reply 14, posted (6 years 6 months 2 weeks 3 days 9 hours ago) and read 1804 times:

To make almost 900 million and not give some sort of dividend would be very disappointing. Remember its not long since WW was hauled up in front of some of the major shareholders to explain himself - Given this, and the hopefully good results he will want to stay in their good books and could look to share something around the owners of the company.

The staff should definately get a bonus if the financial results are as expected as this is down to the whole company. All except the moron who introduced bloody skybites. If I ate birdseed I fly myself up and down the bloody country. He / She should be sent to work for BAA



We'd like to welcome in particular our Executive Club members and those joining us from our Oneworld alliance partners.
User currently offlineTheginge From United Kingdom, joined Oct 2006, 1132 posts, RR: 0
Reply 15, posted (6 years 6 months 2 weeks 3 days 8 hours ago) and read 1775 times:



Quoting MMEPHX (Reply 11):
How come BA, LH, EK, AF/KLM, SQ etc. can all make good profits yet AA, US, DL, NW etc. etc. all make losses?

Slight thread creep but don;t forget a lot of these US carriers are being propped up by Chapter 11 protection. They should be left to their own devices!!

As I said above it is tricky for BA in the light of what reaction it might get from whether it does or doesn't pay a bonus.

It is stuffed both ways really!


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