Impact Of Tough economy On Business Of British Airways Commerce Essay

The global current economic climate is experiencing problems since. There have been notable economic recessions in international business record. These recessions were handled in many ways with regards to the strategies that have been implemented on a business-to-business basis. Each international company have intensified their initiatives in order to create a variety of strategies which are geared towards the execution of business insurance policies and practices directed towards the reduced amount of the impact of economic problems in the performance of their business. Depending on the extent of destruction that the tough economy has caused the financial performance of a specific company, they have differing attempts in terms of redirecting their strategies and goals just to be able to combat the adverse effects of this economic downturn. Some work have became effective. Regrettably, some became not effective which even forged some businesses to shut down or to merge with other businesses to be able to fight the survival of the fittest in the environment of the world's toughest businesses.

In the field of economics, the term economic recession is described for an incident in the problem of any country wherein the gross home product reflects a negative growth in a period of at least two consecutive quarters. Given the fact that america is the global innovator when it comes to the intake of goods and services, once this country experience the phenomena of the downturn, such will send shockwaves to the global current economic climate and will inevitably affect the other countries in the world. When the United States experienced the sensation of the economic tough economy, many countries have been afflicted and their market also experienced a downturn as the financial crisis hit their respected areas and shows effects that are negative to the business.

Furthermore, in a scholastic work posted by Leamer (2008), he mentioned that it is not enough that people only look into the two consecutive one fourth negative progress of the gross local product in order to define tough economy. In his work, he talked about that recession according to the Country wide Bureau of Economic Research refers to that situation wherein "there's a significant decrease in activity spread across the market, lasting more than a few months, visible in industrial development, job, real income, and wholesale-retail trade". Such explanation of the idea of economic recession takes a broader look on the sensation alternatively than paying dedicated attention on the decline of the country's gross home product. You will find other academics works which contest the inclusion of only the gross home product in understanding monetary recession.

The occurrence of downturn is not mostly concentrated only on one sector of the overall economy that is why there's a need to look into economy-wide measures to be able to fully understand the idea which lays beneath such economic activity. The committee also retains that we now have four signals which wil be useful in understanding economic recession including employment, personal income less transfer payments, and volume of sales of the production and trade areas, and industrial creation. This concept strengthens the assumption that understanding the event of economic downturn cannot be full by only considering the gross domestic product, somewhat it also requires a knowledge of other financial variables which may end up being just like useful in understanding tough economy.

The occurrence of each recession in the global market can be seen as a the painful upsurge in the speed of unemployment and a decrease in the non-public income of the individuals of the country. Such aspects shouldn't be disregarded in order to understand the realizable signs to claim that the market is in big trouble and it is in fact exceptional occurrence of recession. In 2001, when economists declare that the United States is experiencing economical recession, such signs have been obvious in their business performance. However the incident of such has been hard to simply accept, there is no way but to do so to go on with global business. As stated earlier, to totally combat downturn, various strategies have been developed in order to boost business performance with the objective of bringing in additional revenue for the business to provide a better living on its employees. Although some efforts have became useful, it is very regrettable that some brought on more trouble and resulted with lots of companies shutting down, especially the tiny ones and those which were barely hit, causing a major volume of employees to acquire lost their careers.

In the span of this newspaper, the researcher will study the concept of recession, like the variety in its definition and the signs which will be indicative of the economic trouble. While learning the principles which underlie tough economy, the researcher will analyze the truth to the problem confronted by the Uk Airways, one of the world's providers for air travel. Just like any businesses, it cannot be denied that Uk Airways also experienced tough economy. The paper will examine how the company encountered these problems, like the strategy which it includes formulated to battle recession as well as the long term result which were as a result of the tough economy.


As what has been brought up, economic tough economy is a global phenomenon. The United States is a worldwide leader running a business, any monetary downturn in the country will send shockwaves all over the world, impacting on every local market. The primary reason for this research is to have a closer look on the effects of global tough economy throughout the market of UK, specifically available performance of English Airways. Throughout the study process, adhering to its main goal, various economic signals will be analyzed to learn how it contributes to the incident of economic tough economy. Furthermore, the core of the analysis will be centered on the business enterprise of British Airways and can check out how recession influences its global business in terms of sales, profitability, and sustainability of the business enterprise in the global market.


To fully understand the analysis, the researcher will be guided with several questions that may shape the building blocks and backbone of the paper. The study questions will guide the researcher to be able to achieve desired results of the study. One of the questions which the research will attempt to answer will be those associated with downturn itself - including how it occurs, historical backdrop, what exactly are the signs or symptoms and signs that the overall economy is indeed experiencing recession, and its own variety of effects on different businesses internationally. Moreover, with much more intensive focus, the research intends to answer question about the business performance and status of British Airways in the global market. The study will answer questions including those associated with the indications that the business of British Airways is definitely affected by economic recession and what exactly are the initiatives including business strategies and redirection of business techniques done by the company to beat the inevitable results as a result of recession. The primary question that your research will consider will include main focus on the significant effects of recession with English Airways in conditions of sales, profit, and sustainability.


The design of research which is employed in the conduct of this study is a conclusive research. The researcher opted for this research design due to perception that such design would be the most useful and most appropriate along the way of gathering relevant information and in provision of the consequences which the event of economic downturn has brought available of Uk Airways. The conclusive research is a formal and set up research in which data will be subjected to quantitative analysis. By quantitative evaluation, the research will make use of display of relevant characters especially those related to sales and income in order to fully grasp the result of recession in the business. Moreover, the type of conclusive research which is utilized in the analysis is descriptive research. Descriptive research is one of both types of conclusive research wherein the major purpose is the explanation of something, which normally refers to market functions or characteristics. Regarding this study, the researcher will explain the characteristics of the marketplace of British Airways as reflected by the evident results of economical recession. This will likely be made possible by providing a picture of the existing situation of the business in the global scenery. The major assumption in which the research will operate is these characteristics are as a result of the inevitable effects of global economic downturn in every international business. It will include the description of various communities related to the critical procedure of the business enterprise like the consumers, salespeople, organizations, and the market areas. By having a description of these relevant organizations, the researcher will find it better to provide a go through the effects of tough economy as shown by the individuals who were affected the mostly by the incident of such situation. Such research design is also expected to provide an association of to until what level is marketing factors associated with such economic situation.

The research strategy will try to answer the 6 W's which are associated with the conduct of your descriptive, conclusive research. The first is concerned as to who had been considered the market of the business enterprise, which concerns the bulk of passengers traveling through Uk Airways. A different one will be what information are relevant and can be acquired on these passengers such as on why, if ever, they no longer take flight the said airline. The research strategy will also attempt to explore when such incident began to occur, where, and just why it leads to such situation. Lastly, the chosen research design will also provide information as to the ways that the company combats the tough economy.


The research methodology includes data collection and research that may provide an improved understanding of the problem at hand. Due to the issue of obtaining first hand information from the organizations which are straight concerned with English Airways including its market of travellers and the specialists or business divisions that are associated in the performance of business, the info will mainly come from secondary sources that will provide the backbone of the analysis. The primary sources of information will be useful in this research because they can provide first hand home elevators the situation because they have got a direct connection to the business enterprise. Nonetheless, such will be hard to acquire and can entail dedicated time for you to be extracted. Recover, the researcher opted to make use of secondary data sources which will also provide the same quality of information as primary data.

The secondary data which is collected in the goal of this study will include those information extracted from secondary sources such as catalogs, educational journal, scholastic articles, and information which will be derived from the website. It will include options such as twelve-monthly company reviews and financial statements which will show relevant quantitative information which will prove the claim that the event of economic downturn has indeed afflicted the business operation of the company. This information were previously accumulated and used for other problems, other than this issue of the researcher. Nonetheless, to be assured that the use of such data is valid, the researcher will see to it that those data were applied to studies that are of the same context as to that of this research. These data will be carefully analyzed, including methods to verify the veracity of the resources and steps to make sure that the info are genuine and even reflective of the problem of the business. There's a need to careful select the sources in order to rest assured of relevant information use. A thorough research of the data will assure the researcher of a more coherent review with findings which are true. The data will be analyzed to derive information relevant to the economic situation and also to input actual factors in business procedure. If these data are not carefully analyzed, a fragile research will direct result. Your, the researcher will put an greatest importance to data evaluation to be assured of reaching the purpose and aims of this analysis as these data make an effort to answer the relevant research questions.


Aside from a careful examination and display of information relevant in the conclusion of the research, the researcher also places an unwavering emphasis on the validity and coherence of the info. Which means that the data which is presented must echo only what is relevant or essential in the analysis - that is, economical recession - and will omit information that are invalid, or those which are related to variables other than tough economy. The info must be coherent with the goal of the analysis to avoid deviance from this issue at hand.


Currently, British Airways is celebrating 90 years of soaring with satisfaction, providing its wide array of clients with excellent services on the flights resulting to ultimate customer satisfaction. To fully understand the current business of English Airways, it is also of utmost importance that we take a closer look at its extensive history. The very start of the rich history of the airline can be tracked back as soon as the start of the annals of civil aviation pioneering on the days after thee First World Warfare. Over time of 90 years since the world's first schedule air service which happened on August 25, 1919, there have been a great deal of changes in conditions of air travel. Each decade was designated by new innovation and advancements which brought English Airways into its current position in the global market. The first ten years of the operation of the business was marked by starting the world's initial international planned air service which flew between London and Paris. The next decade, however, was characterized by the merging of Britain's four major fledging airlines to provide an improved service to the soaring public. On the other hand, the third 10 years was marked by the merging of small air transportation companies in britain to form the Uk Airways Small which became the primary competitor of the merger produced by the four companies during the second century. Furthermore, on the fourth, fifth, and 6th decade up for this of the company's operation, increasingly more innovations have been increasing to make the airlines known in the global market in conditions of provision of excellent air services.

It is said that British Airways is United Kingdom's largest international scheduled air travel with plane tickets to 148 key destinations internationally at best located airports. It is also said to be one of the leading appointed premium international air travel on earth. The principal business of the company is in the international airport in Heathrow, which is one of the premiere international airports in the world and serving a comparatively large geographical area. Through the end of the year 2009, it is said regarding to company reports that they have already flown a total of 33 million travellers in different key destinations internationally. During the same year, the business said that they have earned nearly a total of 9 billion in income that was almost 2. 7% greater than the revenue that they have generated in the last yr. The traffic of traveler is said to have accounted to 87. 1 % of the full total revenue, 7. 5 % is attributed to airline cargo and 5. 4 pr cent is constituted from other business activities of the flight.

The main activities that have been carried out by British Airways in the course of its business operation include undertakings on both local and international appointed air services relating carriage of the traveling consumer, and freight and email and provision of ancillary services. The fleet of the business operates in different places in the global scenery with 38 networks in the America, 9 in the United Kingdom, 67 in Europe, 12 in Midsection East and South Asia, 15 in Africa and 7 in Asia Pacific. These sites of procedure of English Airways only go showing that the business has intensified functions around the world. Such also connotes that once monetary trouble comes along the way of their procedure, it is indeed unavoidable that the global operation on these locations may also be dramatically affected.

The event of global downturn has influenced global markets and brought about bad performance for every global business. One of many years where the recession was experienced in the global market was during the year 2001. When the World Trade Centre bombing took place, the current economic climate of the United States endured and it directed shockwaves to different local economies which influenced the global market as well. The effects as a result of recession did not only last throughout that year. Before present, the consequences of the said recession can still be thought by some while some have already retrieved from the financial downturn in terms of realizable increase on their sales and revenue. During the first month of 2009, it was announced that Britain was experiencing downturn. While some are in fact trying hard to escape the adverse effects of recession, however for Britain its results were highly became aware and very noticeable in their current economic climate. This was said to be one of the very most unfortunate occurrences in the history of the country's market because the 1990's where it experienced the undesireable effects of the episode of economic recession.

When the British economy was declared to be officially in recession during January 2009, any office for National Figures released that the gross local product of the country's economy showed a decline of just one 1. 5 per cent over the last quarter of the year 2008 and a. 6 % drop during the previous quarter. Following the definition of tough economy, which connotes two quarters of consecutive drop in the gross local product of the united states, such statistics would have been enough showing that indeed the English economy is experiencing a recession, exactly like most economies in the global surroundings. Ahead of this incident of recession, the largest drop in the gross local product of Britain is said to be during the 1980's. The downturn caused in Britain is said to be as a result of direct result of the market meltdown in the global market where manifestations were seen and believed as early as August 2007 and seen to be worsening through the fall of 2008. The central problem is reported to be the banks working in Britain which is thought to have spent their reserves into investments which were assumed to be illiquid, unsafe, and worthless. This doubt in the economic situation is reported to be destroying into different businesses in Britain for reasons including: lack of credit opportunities which resulted in to the companies' weakened abilities to hire employees, make new assets, and start impressive tasks. This prompted various economical activities to decelerate and cut back on both main drivers of growth such as investment and occupation.

Although downturn was just declared in Britain through the year 2009, the first effects of such economic incident have recently been felt by Uk Airways during the year 2001 in which the economic downturn in america have dispatched shockwaves towards other economies in the world. During the 2001-2002 Annual Report which was released by English Airways, it acknowledges the fact that they have been on a bad time of procedure as shown by their sales and profit margins. In the declaration of the chairman of the company during that 12 months, it demonstrated that the business incurred a pre-tax loss of 200 million pounds compared to the previous year in which they listed a profit amounting to 150 million pounds. To increase the results of the financial downturn, no interim dividend has been paid and the Table also advised not paying any final dividend because they have been operating over a loss. The unsatisfactory financial record in their annual operation that year did not at all surprised the shareholders for it was slightly expected because of the evident situation in the global overall economy. That time was also thought to be the worst in their operations, although it has not been the most difficult undoubtedly for the management. On that same yr, folks working behind the business were also afflicted. There has been a significant 20 % decrease in the labor force of the company as a result of thee economic crisis. Nonetheless, this reduction was done over a voluntary basis such as through elected severance and early retirement. In addition, also on the twelve-monthly report for the year 2002, the Chief Executive Official of Uk Airways strengthen the assumption that the business is experiencing financial crisis as as a result of the global recession. They considered that yr to be the toughest in the history of the business and they also considered it as a direct effect of the terrorist attack in america affecting the general of the global economies. In their efforts to bring back the business in the panorama of profitability, they may have developed various strategies and procedures which are all geared towards an improved business performance in the future years. They have designed various activities in order to practice cost efficiency and used technology to be able to develop a far more convenient method for the general public to be bale to reserve their plane tickets.

When the economy of Britain was declare to be experiencing tough economy during January 2009, in the Annual Statement released by the Uk Airlines the occurrence of such has also been known as shown by their business performance on that given operating yr. The company also identified that the global airline industry is highly and fiercely competitive subject matter into heavy global regulations, and highly exposed to the changes which were obvious in the patterns and self-assurance of the consuming public. They are really even more challenged with the current economical situation - that can be an economy that was enduring highly from the results of the incident of tough economy. The pointed declines in development may also be highly associated with record prices in petrol and product and the unprecedented financial meltdown bringing about global recession. One of many effects of recession in Uk Airways sometimes appears on the marketplace to which it caters. The most important impact of downturn in the air travel company is shown by its premium passengers who cut back sharply their travel spending to conserve money. Statistics shows a substantial 2. 8 % reduction in the traffic of high grade passengers in British Airways. That is said to last longer because a recent survey confirmed that almost 47 per cent of businesses will incur fewer vacations abroad in order to save. In addition to this, more individuals are opting to spend the holiday season in the comfort of their own homes to lessen on costs.

Furthermore, in a assertion that was released by the Chief Financial Officer of Uk Airways, he acknowledges the fact that through the previous yr that their record profitability has put them into an ailment in which they can battle economical slowdown. However, with the downturn greeting the entire year 2009, it proven otherwise as they have got suffered from dramatic losses in terms of sales and profit making them face the sharpest downturn in the course of the history of their business. When they have incurred income in the previous calendar year, they said they are in a good position to combat monetary downturn and the perpetual upsurge in the price of fuel. Alas such didn't come true and they instead have problems with the results of the indegent condition of the economy in the global landscaping. To be able to control the consequences of recession, measures to be able to beat market, credit, capital, and liquidity dangers have also been put in place. The over-all management of these risks is targeted on the unpredictability of the financial marketplaces as it seeks to reduce the undesireable effects brought about by the occurrence of tough economy. More attempts have been lengthened by the management to be bale to fight the adversity of downturn and to bring back revenue in the operation of the business enterprise of Britush Airways.

The business of British Airways through the turbulent time of monetary tough economy can be better known by taking a closer look at the key performance signals of the business. Because of the unprecedented downturn in monetary conditions, the company was not able to meet their financial target. In terms of the financial operating margin, a damage has been incurred attributed to soaring fuel costs and the financial recession.

In December of 2008, the International Air Transportation Association a 2. 5 billion us dollars in terms of reduction for the flight travel industry to be brought about by reduction in traffic because more folks or travelers are reducing their costs as a result of economic crisis. They were brought about by current economical conditions. Following the economic downturn brought about in 2001, the air travel industry recovered through the season 206 but that will not seem to be to be for long because eon January of 2009, recognizable loss in terms of earnings have been incurred. Many of the worlds leading airlines, including Uk Airways, have been in poor financial health and are not well-equipped to battle the global downturn. The financial reduction for the year 2008-2009 has been very extreme for the company's management and made them formulate strategies to be able to combat the downturn. However, even though they may be experiencing losses, they may have not designed any insurance policy related to increase in air fare. The management believes that doing so will not help increase sales, rather it'll just lower demand.

In the total amount sheet that was released by the Total annual Article of the British Airways, the full total assets for the entire year 2008 totaled to 11, 229, 000 million pounds that was relatively lower compared to 11, 938, 000 million pounds during the year 2008. Additionally, their cash and cash equivalents for the year 2009 only totaled to 219 million pounds as against in 2008 where it was 433 million pounds. These significant declines as reflected in the company's annual financial assertions are enough testimonies to the actual fact that British Airways, exactly like another company in Britain is definitely in the turmoil of economical recession.

The management of British Airways acknowledges the fact that it's been a very difficult yr for the financially nevertheless they are successful financially. For the operating calendar year 2008-2009, the business could incur a reduction before duty amounting to 401 million pounds as compared to its revenue before taxes of 922 million pounds in the previous yea r.

In order to control sustainability of business performance, the business is also geared towards various measures. One of which is to strengthen their name through their brand reputation. Their brand, being of significant commercial value, is considered well care such that it can be avoided from erosion and destruction from the public's point of view. Competition is also highly monitored in order to accomplish sustainability. The management ahs acknowledged the actual fact that indeed competition is very fierce in their industry. With this, they have created conscious efforts to be able to get prior to the competition and find their edge on the market. Additionally, other issues that have been addressed in order to manage sustainability include worker relation, debt financing, management of environmental conditions, fuel prices and currency fluctuation, and deregulation amongst others. To be able to potentially deal with sustainability despite an current economic climate suffering from tough economy, the future direction of English Airways is also intended for environmental related strategies that they hope will also increase their performance. The work of the business are targeted towards adding value and improving their reputation in the global scenery while getting the trust of the shareholders and stakeholders in reaching a sustainable business.

Furthermore, to have the ability to combat the effects of such monetary downturn, it is merely but normal for British Airways and other businesses to get on their intensive and conscious work to bring back profitability to the business. Inside the undeniably incredibly difficult environment where the airline operates, an ardent focus is given towards tugging the business through the immediate crisis as it embarks on immediate preparations for better financial times. They have developed strategies that have been mostly predicated on an upgraded customer service, competitive cost platform, corporate responsibility, perpetual strategies for growth, and other strategies which aim to increase the way they do business.

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