Year ended 31 December 2012
Company registration number: 1777777
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Officers and professional advisers 1
Business review and Directors’ report Business review Management review Financial review Internal controls and risk management Directors’ report
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Directors’ responsibilities statement in relation to the financial statements
Independent auditors’ report
Group financial statements Group consolidated income statement Group statement of other comprehensive income Balance sheets Cash flow statements Statements of changes in equity Notes to the accounts Operating and financial statistics Fleet table Principal investments Glossary Subsidiary undertakings
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British Airways Plc Officers and professional advisers
Directors Sir Martin Broughton Alison Reed Keith Williams Nick Swift Andrew Crawley Frank van der Post Enrique Dupuy de Lôme Ken Smart Gavin Patterson Garrett Copeland Julia Simpson Secretary Kulbinder Dosanjh
(Chairman) (Deputy Chairman) (Chief Executive Officer) (Chief Financial Officer)
Registered office Waterside PO Box 365 Harmondsworth UB7 0GB
Parent company International Consolidated Airlines Group S.A. Calle Velázquez 130 Madrid, 28006 Spain
Independent auditors Ernst & Young LLP 1 More London Place London SE1 2AF
British Airways Plc Business review and Directors’ report The Directors present their annual report and the audited financial statements for the year ended 31 December 2012.
British Airways (‘BA’ or ‘the Group’) is the UK’s largest international scheduled airline and one of the world’s leading global premium airlines. The Group’s principal place of business is London with significant presence at Heathrow, Gatwick and London City airports. BA also operates a worldwide air cargo business, largely in conjunction with its scheduled passenger services. Operating one of the most extensive international scheduled airline route networks, together with its joint business agreements, code share and franchise partners, BA flies to more than 400 destinations worldwide. BA’s vision is to be the most admired airline across the world’s key cities. The business review is presented in the following three sections: Management review; Financial review; and Internal control and risk management.
2012 was a good year for British Airways. The acquisition and integration of bmi was a significant achievement, introducing 1,400 new colleagues to BA, strengthening our presence at Heathrow and outperforming against our financial expectations. The Olympics proved to be a great opportunity to showcase the UK to the world and we were pleased to be so closely associated with its success, resulting in record improvements in our brand engagement. Customer satisfaction reached all-time highs and our levels of colleague engagement showed marked improvement. The Group continues to operate in a challenging environment of elusive economic growth and high oil prices, but we have seen the benefits of our customer focus translate into a solid operating and financial performance for the year.
BA acquired British Midland Limited (‘bmi’) from Deutsche Lufthansa AG (‘Lufthansa’) in April 2012 and completed the full integration of the mainline operation into BA by the end of 2012 with minimal customer disruption thanks to the dedication of both bmi and BA colleagues. The acquisition has already enabled BA to operate 20 new routes from Heathrow for the winter 2012 season. The coming years will see the airline further optimise its network by converting some of the former bmi slots from short-haul to long-haul operations to forge links with emerging economies.
Outstanding service and customer insight
Customer satisfaction and brand bonding improved in 2012. This reflects the airline’s renewed...