V-Flyer

How can BA make such a huge profit. I read somewhere that they have made a 21% increase. I know they are a lot bigger and have more routes and equipment however some of their routes they have to fly due to goverment rules (if I have been informed correctly) and a lot of these routes are not making money for BA. Where VS cherry pick the best routs to operate yet we make a tiny profit. Is is the way the airlines are run? Is VS not run as well as it could be?

What 'profit' are you comparing? There are all types of profits (pre and post tax, in(ex)cluding special charges, etc.), different accounting methods (cash, accrual, and others) and different accounting rules.

Looking at BA's annual report auditor's statement (Ernst & Young LLP, London) BA uses IFRS. Personally I would like to see BA state in US GAAP. I will see if I can find there US SEC filings in a bit.

From a flash on e-tid earlier:

British Airways made a pre-tax profit of £289m in the quarter ended 30 June 2007, up from £191m in the year-earlier period.
Overall revenues declined by 2.4% to £2.19bn, with passenger revenues down 1.9% at £1.9bn.

Operating profit improved by 27.7% to £263m, while operating margin increased to 12% from 9.2%.

It is a good question really! I think BA have been working to improve operational efficiency; they are revered by many agents given the pitiful commission paid on sales, where as VS is more generous. I do think that BA's CpS (Cost per Sale) are better given their good embracement of online technology, the BA site on the whole has made the VS website a laughing stock for a long time. When was the last time you saw ba.com down? The booking engine is much better, the FareExplorer view is awesome and offers a snapshot straightaway of the benefits of flying on other dates (if you are flexible), a feature that has only just made it to the VS site. BA charges if you want to make a telephone booking.

Full credit to Rod and Willie for turning BA around.

Thanks,
Richard

Here is the breakdown:
http://bapress.custhelp.com/cgi-bin/bap ... faqid=7379

Originally posted by RichardMannion
When was the last time you saw ba.com down? The booking engine is much better, the FareExplorer view is awesome and offers a snapshot straightaway of the benefits of flying on other dates (if you are flexible), a feature that has only just made it to the VS site.

Can't agree more - VS really need to take note.

We cant just say BA make more profit than VS because of a website can we?

Originally posted by virgin is the best
We cant just say BA make more profit than VS because of a website can we?

Of course not.

With size comes economic benefits, things can be purchased in larger numbers thereby offering better discounts.

Also you need to look at the trans-Atlantic market where BA and VS make most of their money, the number of BA flights is a magnitude higher than VS and the number of J and C seats is many times that of VS's.

One thing that needs to be remembered is that in the great scheme of things VS is a tiny airline.

I've said this before, BA and VS are commercially driven by different motives and different ownership schemes. BA has to satisfy investors hungry for ROI on their shares held, or they'll move their investment elsewhere - and so they structure their reporting, financing, activities et al to suit maximum profit reporting. VS have to satisfy SRB and Singapore Airlines - now we don't really know how they do that but it changes the emphasis. Like him or not, it's reported that SRB operates many devices to reduces his tax burden (like using offshore ownership schemes and banking) and profit also = corporation tax (that's a supposition, nothing more).

I have no doubt however, that BA operates more efficiently than VS and part of that, as Richard says, is because they are smarter in investing in technology to streamline their business processes.

It's probably a very complex thing but I don't think we're comparing apples with apples, so the question may need to be rephrased???