A.

Profitability (ability at generating profits)

Return on capital employed (ROCE)
ROCE=

Net profit before taxinterest

10 0
Total capital employed

Capital employed=Total AssetsCurrent Liabilites

Capital employed 2015=15376570 0

Capital employed 2015=967 6

Capital employed 2014=13426550 2

Capital employed 2014=792 4

Capital employed 2013=11921462 7

Capital employed 2013=729 4

ROCE 2015=

2628
10 0
9676

ROCE 2015=27.15

ROCE 2014=

859
10 0
7924

ROCE 2014=10.84
ROCE 2013=

300
10 0
7294

ROCE 2013=4.11

B. Liability ratios
Current Ratio (CR)
Current Assets
CR=
Current Liabilites
CR2015=

3400
=0.59:1
5700

CR2014=

3583
=0.61:1
5824

CR2013=

2915
=0.62 :1
4627

Acid Test Ratio

Quick ratio=

Current AssetsInventory
Current Liabilites

Quick ratio 2015=

3400139
=0.57
5700

Quick ratio 2014=

3583133
=0.62
5502

Quick ratio 2013=

2915110
=0.60
4627

Interest cover

Interest Cover =

Profit before interest tax

Interest Expense

Interest Cover 2015=

2628
=17.87
147

Interest Cover 2014=

859
=6.09
141

Interest Cover 2013=

300
=1.70
176

Pestel analysis
Political factors

British Airways is one of the most important international airline company which operates on more
than 400 destinations worldwide. Political factors can have a significant impact on the BA company.
These factors can easily affect the stability of the organization or the perception of safety the
population. A tremendous negative impact has the terrorist attack from Brussel Airport in March
2016. This political factor gave rise to the decline of British Airways owner, International Airlines
Group (IAG), share price by 1.5 per cent. (theguardian.com, 2016)
Furthermore, the airline company seems to be engaged in a political debate for claiming a third
runway at Heathrow Airport from the UK government. The chief executive of BA's parent company
IAG has warned that he could search to expand the company overseas if the Government will not
give them the permission. (The telegraph, 2015)
Economic factors
Currency exchange, inflation rate and the overall economic climate from the UK has influenced
directly the performance of British Airways. The cost

The cost of fuel is another significant economic factor for British Airways, since the
Group used approximately 5.7 million tonnes of jet fuel in 2015 only.[3] For
example, in 2015, British Airways expenses on fuel decreased by 484 million, or
13.8 per cent compared to the previous year despite the increasing scope of
operations[4]. Accordingly, a decrease of the prices of fuel proved to be an
important economic factor that greatly benefited the business.

Moreover, a there is a range of economic factors that have an indirect, yet

significant impact on British Airways revenues. For example, a rapid fall of oil
prices during the last two years has resulted in a drop in corporate customers on key
oil routes, consequently causing a decrease in passenger revenue of GBP 288
million, or 2.8 per cent[
Annual Reports and Accounts (2015) British Airways
Fletcher, N. (2016) Travel and tourism shares sink after Brussels attacks The
Guardian, Available at:
https://www.theguardian.com/business/2016/mar/22/travel-tourism-holidaysshares-sink-tourism-europe
Wilkinson, M. (2015) Stop Heathrow runway dithering or Ill take British Airways
elsewhere, warns Willie Walsh The Telegraph, Available at:
http://www.telegraph.co.uk/news/aviation/12050850/Stop-Heathrow-runwaydithering-or-Ill-take-British-Airways-elsewhere-warns-Willie-Walsh.html