LEADERSHIP AND MANAGEMENT ISSUES REPORT 2022

To write about effective management and leadership provide stability, growth

Running head: LEADERSHIP AND MANAGEMENT ISSUES
Sustainability Issues of British Airways
Name of the Student:
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Author Note:

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Executive Summary:
The report below shows that the transport sector is currently reeling under several threats like
sustainability issues, cost issues, technological issues and competitive issues. The size of the
issues can be judged by the fact that even market leaders like BA are subjected to these issues.
The sustainability issues arise due to the fact that operation of flights results in immense
environmental pollution. The rising competition in the airline market is leading to immense
competition among the top airline companies like BA for customer base and revenue. The
challenge to adapt to the ever changing customer preferences is also an issue. These issues are
further escalated by terrorism, data thefts and Brexit. The management of BA should take serious
steps to deal with these issues.

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Table of Contents
Executive Summary:........................................................................................................................1
Introduction:....................................................................................................................................2
About British Airways:....................................................................................................................3
Location and leadership:..............................................................................................................3
Financial performance:................................................................................................................3
The issues faced by the British Airways:........................................................................................5
Environmental issues:..................................................................................................................5
Cost cutting issues:......................................................................................................................6
Competitive issues:......................................................................................................................7
Customer preferences as an issues:..............................................................................................8
Issues owing to changing macroeconomic conditions like political and economic conditions:. 9
Application of management and leadership perspective in managing the issues:.........................11
Holding meetings with the government officials:.....................................................................11
Secondary listing BA within EU:..............................................................................................11
Creating customer awareness:...................................................................................................12
Conclusion:....................................................................................................................................12
References:....................................................................................................................................13

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Introduction:
The transport sector is facing severe sustainable issues owing environmental factors, cost
factors and safety of the commuters. This is evident from a report published by the World Bank
in which the transport sector has been described as ‘Off Track’ towards achievement of
sustainability
(Worldbank.org.2017). These sustainability issues pertain to mounting fuel costs, environmental
issues, employee-management conflicts and competitive threats from competitors. These issues
pose severe threats to the business companies in terms of revenue generation and holding their
market positions. The rising costs of fuel increase the operating costs while the environmental
issues attract legal actions as well as actions from the customers. The issue of employee-
management conflicts results in jeopardising the operations of these companies either on
temporary basis or even on permanent basis. The need to cater to these fast changing patterns
customer preferences have made it mandatory for transport companies like BA to carry out
continuous innovation in their operations. Even the leading companies like British Airways are
not immune to these challenges. The company is already reeling under sustainability and cost
cutting pressures. Several transport companies in order to achieve cost cutting have resorted to
the strategy to minimising their service provisions. For example, the airline companies are
reducing their operations to cut costs (Forbes.com. 2019). However, as per a report published by
the United Nations the transport sector should aim to become more sustainable instead of
reducing their services (Un.org. 2016). The paper would aim to explore the sustainable issues
faced by the transport companies. Then paper would then go on to explore how management and
leadership strategies can be used to tackle these issues. The company which would form the crux

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of the analysis would be British Airways which is one of the leading international carriers. The
report would be presented before the stakeholders of the airline giant.
About British Airways:
Location and leadership:
British Airways is one the largest airline companies in the world and is based in London,
the United Kingdom. The company operates under the leadership of Alex Cruz, Chairman and
Chief Executive-Officer. The main hub of British Airways is the Heathrow Airport, London.
Financial performance:
British Airways is a public limited company listed primarily on the London Stock
Exchange. The owner of British Airways is the International Airlines Group (IAG) which is
itself a public limited company with its head office in London, the United Kingdom and
registered office in Madrid, Spain. The graph shown below shows that the company has suffered
a severe drop in the share prices in 2019 compared to 2018. This means that the company is
generating lower capital from the market which impacting its overall performances. It is evident
from this fall in share prices that British Airways would reduce its scale of operations in order to
cut costs.

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Figure 1. Graph showing 5 years share prices of British Airways on LSE
(Source: Londonstockexchange.com. 2019)
The table below shows that IAG generated a revenue of €m 24406 in 2019 compared to
€m 22880 in 2017. This means that the company is financially strong. The eighteenth page of the
financial reports of the company for the period 2018 mentions that British Airways aims to
achieve three business goals. They are more investments in customer services, growth in
flight network and sustaining financial growth in the long term. As far as revenue generation
of British Airways succeeded in an earning an operating profit of £m 1952 before tax and
provided a RoIC of 17.3 percent. The report also mentions that British Airways aims to cut its
operating costs (Iairgroup.com. 2019). Thus, it is clear from the analysis that British Airways
aims to achieve sustainability in its operations. The company is financially strong and capable of
taking strong strategies to achieve sustainability.

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Figure 2. Table showing the revenue generation of International Airlines Group
(Source: Iairgroup.com. 2019)
British Airways operates in more than a hundred countries in the world. The aeroplanes
operated by British Airways are permitted to carry passengers, mails and cargos. British Airways
wholly owns BA CityFlyer. The main competitors of BA are other top airline companies in the
world like Qatar Airways and Singapore Airlines (Adams 2019).
The issues faced by the British Airways:
The following are the main issues which British Airways faces while operating in the
global market:
Environmental issues:
British Airways is facing sever environmental issues while operating in the global market. The
aeroplanes while flying give off immense amount carbon dioxide and other poisonous gases
which result in immense environmental pollution. The major airlines companies like British
Airways are pledging to reduce carbon emission and their respective impacts on the

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environment. However, in reality the topic is not emphasised on sufficiently. There also lacks
appropriate parameters to measure the level of pollution caused by aeroplanes and approaches to
curb it. Government and airline companies concentrate on modernisation of fuel in order to
reduce the level of pollution caused by the aeroplanes (Wilkes 2019). However, the initiatives
taken are insufficient to counteract the immense environmental pollution and resultant negative
impacts the pollution causes to the environment. British Airline is also facing similar
environmental issues and the company should take steps to reduce the pollution the flights
operated by it cause. As per Alex Cruz, the CEO and the Chairman of the company, the company
is aiming to reduce the environmental impacts it causes by taking up several strategies. As per
Cruz, the British Airways is investing towards development of environmental fuel made from
recycling wastes (Batchelor 2019). Thus, this analysis shows British Airways is taking up several
steps to reduce the environmental issues it causes. As far as the capabilities of the company is
concerned, it can be established that British Airway would be able to bear the immense
expenditure which would be required to the finance research and development to manufacture
fuel from wastes. This is evident from the fact that the company is itself a listed company
primarily listed on the LSE. This means the company can source the capital which would be
required to fuel the R&D by floating shares in the securities. Secondly, British Airways is owned
by IGA which is also a public limited company capable of raising finance from the securities
market. Moreover, British Airways has succeeded in earning high operating profits in 2019. This
means that the company has a financial strength required to conduct research and development to
achieve higher levels of sustainability in its operations.

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Cost cutting issues:
The second issue which British Airways is facing is cost cutting issues. The airline
company operates in more than a hundred markets in world. British Airways as a result has to
bear immense expenses like paying taxes on the profit it earns from different markets and on
paying salaries it pays to its employees it employs all round the world. The company is also
paying immense amount of expenses for breaching environmental laws. These expenses are
eating into the revenue the company is earning. The company as a result has taken the strategy of
reducing expenses in order to generate higher rates of net profits and give higher returns to
investors.
British Airways can adopt several strategies to reduce its costs of operations and boost its
profit percentages. One of the strategies which British Airways can take in order to reduce its
high costs of operations is replacing its existing fleets of aircrafts with modern aircrafts. These
modern aircrafts would consume less fuel, thus enabling the company to reduce its fuel costs.
British Airways should also operate with flights only after they reach maximum occupancy in
terms of passengers. This would enable the company fly more passengers per flight, thus
reducing per flight operating costs. The company while carrying cargos and mails should also
adopt the similar strategy. The main target consumers of British Airways are the upper class
customers. The company should also cater to the middle class customers which would enable it
to attract more bookings. Larger number of bookings would enable the flight ensure higher level
of occupancy, thus reducing its fuel expenses per flight.
Competitive issues:
The third issue which British Airways is facing while operating in the global market is
competitive issues. The company is facing competition from major airlines companies based in

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each market. For example, the Singapore Airlines and Qatar Airways compete with British
Airways in Singapore and Middle East respectively. These competing airline companies compete
with British Airways for customer bases and in turn succeed in lowering its revenue generation.
The management of British Airways require to take steps to counteract this stiff competition it
faces in the global market.
The first strategy which British Airways should take to reduce competition is to promote
its services more aggressively in the global market. Promoting its services aggressively in the
market would enable British Airways attract more passengers (customers). This would enable
the company earn higher revenue by serving larger numbers of customers in each of its markets.
Moreover, attracting more customers would enable the airline company ensure maximum
occupancy on each flight. This would ensure that the company bears minimum expenses to
operate each flight.
Customer preferences as an issues:
The third issue which British Airways faces in the global market is the challenge to adapt
to dynamic customer preferences. The preferences and expectations of customers are changing
fasts. For example, the customers today expect more cost effective flight packages. Similarly,
they expect more personalised treatments from the on-board crew. They expect foreign
companies to relate more closely to their culture. Moreover, the airline companies to provide
safer flights. These expectations of the customers are putting pressure on British Airways to
carry out continuous research and developments to offer more customer oriented flight packages.
These research and development add to the expenses of the company.
British Airways should take steps to ensure that it is able to align to the changing
customer expectations and needs. The company should bring about changes in its entire

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operational strategies to ensure higher levels of customer satisfaction. First of all, the company
should provide more customer friendly packages. The company should increase the number of
flights and destinations in which it operates. This would enable it to carry more numbers of
customers. The company should employ local employees in different host markets like the
Middle East and India. This would reduce the salary expenses of the company. Moreover, crew
members belonging to particular countries would have more in-depth knowledge about the
cultural perceptions of the passengers originating from particular markets. Thus, those staff
would be able to relate to the passengers culturally and ensure customer satisfaction. The
company should also conduct continuous surveys in its different markets to gain knowledge
about the changing customer preferences. The management of British Airways should
incorporate the feedbacks gained from the surveys while forming future product strategies. This
would enable that the flight packages which the company markets in the global market are more
aligned to the changing customer preferences. The company should also communicate with its
customers on the social media platforms like Facebook and Instagram on regular basis. This
would enable it to gain more in depth knowledge about the changing preferences of the
customers. The company can also adopt the strategy of obtaining customer feedbacks from the
on board crew since they communicate with customers more closely. These strategies would
enable British Airways gain real time information about the changing preferences of customers
which would be incorporated in forming product strategies.
Issues owing to changing macroeconomic conditions like political and economic conditions:
The fourth issue which British Airways face in the global market is dynamic
macroeconomic conditions like changing political conditions and economic conditions. The
company being a global players comes under the preview of legal changes both in the United

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Kingdom, its home country as well as in its host countries. The company should comply with the
legal changes which take place both in its home country as well as in host countries.
One of the political and economic changes which is going to impact the business of BA
hugely is Brexit. The event is predicted to have great impacts on the operations of BA. The
airline giant along with all the other airline companies based in Europe enjoyed free sky permit
as the UK was a part of the EU. Brexit, which officially took place on October 31, 2019 resulted
in the exit of the UK from the EU. This means that BA, based in the UK would not be able to
avail the free sky permits which would require the flights operated by the company to take longer
routes. This would result in increase in the flight operating expenses which would force the
company to increase the cost of the travel packages. The passengers in order to avoid paying the
higher charges which BA would charge would prefer booking flights on the other international
companies. Thus, it can be established that Brexit would not surge the operating costs of the
company but also reduce its revenue, thus eating into the net profits (Adams and Calder 2019).
The Brexit would predicted to have impact the capital generation of BA, since it is a listed
company based in the UK. This is because owing to lowering of the net profits, the Britain based
companies are expected to give lower ROIs. The investors owing this growing insecurity would
likely invest less capital in the shares of these companies (Euronews.com. 2019).This means that
it can estimated that BA would generate lower capital which would impact its operational
capabilities. Thus, it transpires that economic risks like Brexit would weaken BA financially
rendering it less competitive compared to its competitors like Singapore Airlines.
The second political threat which BA has to consider seriously is terrorism. This is
because, the United Kingdom, the home country of the company has been under continuous
threats from terrorist groups and terrorist attacks. The Centre for the Protection of National

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Infrastructure, the Government of the UK clearly mentions that terrorism as one of the main
threats to the security of the country (Cpni.gov.uk. 2019). The threat due to terrorism more of a
concern because the main host countries of BA like the United States are also terrorist targets.
The country has suffered immense losses of assets and people owing to terrorism
(Edition.cnn.com. 2019). Terrorism has already resulted in immense business losses to the
company. The airline company had to cancel operations over Cairo due to terrorist threats. The
company as a result had to stop bookings and suffered immense revenue losses (Knowles 2019).
Thus, it is evident from the analysis that terrorism is a serious threat to the operations of BA.
The third threat which BA should consider is data theft threat. The company has already
paid a fine of £m 183 owing to breach of its data base. The website of the company was
‘diverted’ to a fraudulent website which stole details of as many as 5 million customers
(BBC.com. 2019). Thus it is evident from the analysis data theft threats is one of the main
technological threat which BA is facing. It is also evident from the analysis that data theft risks
not only lead to loss of confidential data but also attract high penal charges towards the
company.
Application of management and leadership perspective in managing the issues:
The management of British Airways should integrate management and leadership with
deal with the issue mentioned above. It is also clear that while issues like cost cutting issues and
competitive issues can be managed by the company by making appropriate strategies, issues like
Brexit, terrorism and data theft would require greater managerial and leadership movement from
the management of the company. It can also be pointed out that the last three issues can actually
result in competitive issues. Thus, it is evident that the the issues of Brexit, terrorism and data

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theft would require application of the leadership position of BA. The following are the strategies
which the management of the company can take in order to deal with the three issues:
Holding meetings with the government officials:
The management of BA should hold high level meetings with the government officials of
both the UK and its host countries. It is often regarded that the money stolen using hacking of
consumers’ data like bank account details is often diverted to finance terrorism (Johnson 2018).
Thus, the company should meet the government officials to hold meetings on both the issues. It
can also be pointed out that these issues are not only threats to BA but also to the other airline
companies (Knowles 2019). BA should lead the industry in holding meetings with the
government officials to seek their support in mitigating these two threats.
Secondary listing BA within EU:
The management of BA should obtain secondary listing in a EU nation and acquire a
subsidiary in the nation. This would enable the company to present itself as a company with a
base in the EU which would in turn allow it to use the facilities like free sky usage. This would
enable the company to reduce its operating costs to function within EU which is one of its
important markets.
Creating customer awareness:
The management of BA should make proactive strategies to create customer awareness.
The customers would be trained on using the official website and the social platforms of the
company while booking flights and giving their feedbacks respectively. This engagement of the
customers would enable the company curtail data theft risks to a considerable extent.

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Conclusion:
The above discussion leads uncovering several facts about BA and its operations. It is
clear that BA in spite of being of the world’s largest airline carrier is not immune to issues like
competitive threats, high costs of operations and sustainability issues. It has also come to the fore
front that Brexit, terrorism and data theft are the three issues which are further escalating these
issues. The management of BA has to take strong steps to manage these issues. It can also be
pointed out that while the issues like sustainability issues and competitive issues can be dealt by
BA to certain extent by forming business strategies. However, the issues like terrorism, data theft
ad Brexit are beyond the control of the company. The company in order to deal with these issues
should apply its leadership and managerial skills. The company should request for support from
government officials and customers to deal with these issues.

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References:
Adams, C. 2019. Independent.co.uk. [online] Independent.co.uk. Available at:
https://www.independent.co.uk/travel/news-and-advice/best-airlines-world-skytrax-qatar-
airways-singapore-emirates-a8964711.html [Accessed 4 Nov. 2019].
Adams, C. and Calder, S. 2019. Independent.co.uk. [online] Independent.co.uk. Available at:
https://www.independent.co.uk/travel/news-and-advice/brexit-flyers-no-deal-31-october-travel-
affect-a9103741.html [Accessed 7 Nov. 2019].
Batchelor, T. 2019. Independent.co.uk. [online] Independent.co.uk. Available at:
https://www.independent.co.uk/travel/news-and-advice/british-airways-alex-cruz-environment-
a350-sustainable-fuel-a9043986.html [Accessed 4 Nov. 2019].
BBC.com. 2019. BBC.com. [online] Available at: https://www.bbc.com/news/business-
48905907 [Accessed 7 Nov. 2019].
Cpni.gov.uk. 2019. Cpni.gov.uk. [online] Available at: https://www.cpni.gov.uk/national-
security-threats [Accessed 7 Nov. 2019].
Edition.cnn.com. 2019. Edition.cnn.com. [online] Available at:
https://edition.cnn.com/2013/04/18/us/u-s-terrorist-attacks-fast-facts/index.html [Accessed 7
Nov. 2019].
Euronews.com. 2019. Euronews.com. [online] Available at:
https://www.euronews.com/2019/09/25/brexit-economic-woes-and-the-rebirth-of-british-airways
[Accessed 7 Nov. 2019].

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Forbes.com. 2019. Forbes.com. [online] Available at:
https://www.forbes.com/sites/mitsubishiheavyindustries/2019/09/18/5-strategies-that-help-
airlines-reduce-the-cost-of-maintenance/#2c23ed902fce [Accessed 4 Nov. 2019].
Iairgroup.com. 2019. Iairgroup.com. [online] Available at:
https://www.iairgroup.com/~/media/Files/I/IAG/documents/annual-report-and-accounts-2018-
interactive.pdf [Accessed 4 Nov. 2019].
Johnson, K., 2018. Be aware, don’t fund terrorism.
Knowles, H. 2019. Washingtonpost.com. [online] Washingtonpost.com. Available at:
https://www.washingtonpost.com/travel/2019/07/21/two-airlines-cancel-flights-cairo-after-
britain-warns-heightened-risk-terrorism/ [Accessed 7 Nov. 2019].
Londonstockexchange.com. 2019. Londonstockexchange.com. [online] Available at:
https://www.londonstockexchange.com/exchange/prices-and-markets/stocks/summary/company-
summary/GB0002634946GBGBXSET1.html [Accessed 4 Nov. 2019].
Un.org. 2016. Un.org. [online] Available at:
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[Accessed 4 Nov. 2019].
Wilkes, W. 2019. Bloomberg.com. [online] Bloomberg.com. Available at:
https://www.bloomberg.com/news/articles/2019-03-10/airline-pollution-is-soaring-and-nobody-
knows-how-to-fix-it [Accessed 4 Nov. 2019].

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Worldbank.org. 2017. Worldbank.org. [online] Available at:
https://www.worldbank.org/en/news/press-release/2017/10/19/transport-sector-is-off-track-to-
sustainability [Accessed 4 Nov. 2019].