Airline Performance Analysis: Comparing Eastern and British Airways

This report provides a comparative financial analysis of Eastern Airlines and British Airways, utilizing key financial metrics such as gross profit ratio, net profit ratio, current ratio, and interest coverage ratio for the years 2019-2021. The analysis reveals that Eastern Airlines generally outperforms British Airways across these metrics, demonstrating better profitability, liquidity, and interest coverage. The report recommends that British Airways focus on improving marketing, cost control, and balancing current assets and liabilities to enhance its financial performance. The conclusion emphasizes Eastern Airlines' superior financial health and suggests areas for improvement for British Airways to achieve better operational efficiency. Desklib provides students with access to this report, as well as a wide range of past papers and solved assignments, to support their academic studies.

USING YOUR OWN
PREFERRED KEY
FINANCIAL METRICS
COMPARE THE
PERFORMANCE OF THE
TWO AIRLINES,

Table of Contents
INTROPDUCTION.........................................................................................................................3
MAIN BODFY................................................................................................................................3
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTROPDUCTION
Financial analysis is to interpret and analysis the overall financial performance of the
business venture. This project will be discussing the financial performance of the company by
comparing the performance of two airlines company. Further, recommendation will also provide
in this projects that companies may improve the overall performance.
MAIN BODFY
Eastern Airlines
2021 2020 2019
Gross profit ratio 22% (3081 / 14083 *
100)
11.4% (4968 / 43587 *
100)
11% (5125 / 46820 *
100)
Net profit ratio -2% (-292/ 14083 *
100)
20% (8730 / 43587 *
100)
8% (3850 / 46820 *
100)
Current ratio 1.78 (20300 / 11417) 1.42 (24123 / 16944) 1.43 (22167 / 15482)
Interest coverage ratio 11.075 (886 / 80) 18.93 (9217 / 487) 29 (12156 /422)
The comparative assessment about the overall performance entertain by both the
companies such as Eastern Airline and British Airways it is demonstrate as a fact that the gross
profit margin entertain by the organisation is 22% in the year 2021, 11.4% in 2020 and 11% in
the year 2019. The overall gross profit margin of company is increasing in every single financial
year that would support the business venture to enhance the growth and objectives of the
company. The sales of the company has increased in all the thee financial irrespective of that the
organisation has faced the increase in the profit margin. ON the other hand net profit margin of
company is identified as -2% for the year 2021, 20% in 2020 and 8% in 2019. The net profit
margin of the company has been decline in the respective financial year irrespective of the fact
that organisation has witnessed the increasing trend for its gross profit margin in the organisation
(Amankwah-Amoah, Khan and Osabutey, 2021). This is clearly stating the fact that this is not
certain that company will witness the increasing trend in its net profit margin even if the gross

profits are increasing of company in the organisation. This is a crucial fact associated with the
organisation that current ratio of the organisation is identify as 1.78 in the year 2021, 1.42 in
2020 and 1.43 in 2019. The current ratio has also improved for all the three financial year which
depict the fact that the organisation could sustain a right balance between the current assets and
the current liabilities associated with the business venture. The interest coverage ratio of the
company is also identify as 11.075, 18.93 and 29 in the year 2019. The interest coverage ratio
has been reduced which indicated the fact that company's interest liability become aggressive in
comparison to the earning before interest and tax identify by the business venture.
British Airways
2021 2020 2019
Gross profit ratio 34% (2125 / 6252 *
100)
-58% (-2328 / 4001 *
100)
37% (1921 / 5225 *
100)
Net profit ratio 27% (1682 / 6252 *
100)
-87% (-3489 / 4001 *
100)
21.22% (1109 / 5225 *
100)
Current ratio .76 (3687 / 4825) .36 (2093 / 5801) .74 (4720 / 6390)
Interest coverage ratio 5.15 (2587/ 502) -4.5 (-2328 / 517) 2.38 (1338 /562)
The overall performance entertain by the British Airways indicate that gross profit
margin of company is 34% for the year 2021, -58% in the tear 2020 and 37% in 2019. The
performance has improved in comparison to the year 2020 where the negative profit margin has
entertained by the organisation (Wang, 2021). Net profit margin on the other hand is identify as
27% for the year 2021, -87% in 2020 and 21.22% in the year 2019. All the three financial year
has reported the different net profit margin of the company. Current ratio is determined
as .76, .36 and .74 for all the three financial year. Interest coverage ratio is determine as 5.15, -
4.5 and 2.38 for all the three financial years (Bubalo and Gaggero, 2021). The overall
performance of the venture is not as effective as it is expected as the current ratio of company
denote that current assets are getting less effective than the current liability hold by the venture.
Further the interest coverage ratio is very less which indicate that interest burden of the company

is getting more empowered in the company in comparison to earning before interest and tax bear
by the company.
The overall assessment of the company is project that the Eastern Airline Company is
performing more efficiently in comparison to the British Airways. Both the organisation is
operating in the same sector henceforth, the Eastern Airline is performing efficiently in all the
aspect such as gross profit margin , net profit, current ratio and such other areas. All these areas
are considering better performance by the Eastern Airline in comparison to the British Airways.
This can support as a fact that the overall performance of the venture is more efficient for the
business venture. The strategic areas of the organisation is considered to be more effective for
the Eastern Company (Chang, Ji and Arami, 2019). The cost of the company is also well
balanced as the current ratio of the company is more than 1 for all the three financial years. This
demonstrate the fact that the organisation is considering the burden of current liability to be well
managed with the support of current asset hold by the organisation. On the other hand interest
coverage ratio of company also denote that interets burden of the organisation is also well
covered with the use of earning before interest and tax hold by the company,. This can
demonstrate the fact that the organisation get the sufficient revenue that would meet the
company's interest burden in respect to the respective financial year.
The overall performance evaluation of the British Airways indicate that the organisation
is performing less effective in comparison to the Eastern Airline. This has further demonstrate as
a fact that the organisation contain the less efficient performance standard which could result into
the lesser effective performance of the business venture (Liu, 2018). In the overall business
spectrum it can state as a fact that the organisation is considering the lesser efficient performance
in the market.
Recommendation
The British Airways need to take certain steps which can result into better performance of
the entire. Company can give emphasis over the marketing and promotion in respect to the
business venture. This would allow the organisation to attract more number of customer in the
market. Further the business venture will empower the discount practices where it need to keep
the prices low so that better performance and customer engagement can address by the company.
The organisation must give emphasis over controlling the current liability burden as the current
situation is very poor of the company (Law and Breznik, 2018). The current liability is more than

the current asset hod by the company which could further influence the liquidity of the
organisation. This whole situation can change by the company with support of right balance in
between the current assets and current liability maintain by the organisation. IN the business
scenario the liability of company must be less than the asset hold by the company as it provide
the right balance to the business venture. Henceforth, it is indicated as a fact that the company
must hold a proper control to meet the current liability in business.
CONCLUSION
The Eastern Airline is performing better than the British Airways. The organisation
consider better balance of the current ratio, gr9ss margin, net profit and such other areas. On the
other hand British Airways need to take a better control over its operations so that better and
more efficient performance standard can achieve by the organisation.

REFERENCES
Books and Journal
Amankwah-Amoah, J., Khan, Z. and Osabutey, E. L., 2021. COVID-19 and business renewal:
Lessons and insights from the global airline industry. International Business
Review. 30(3). p.101802.
Bubalo, B. and Gaggero, A. A., 2021. Flight delays in European airline networks. Research in
Transportation Business & Management. p.100631.
Chang, V., Ji, Z. and Arami, M., 2019, May. Privacy and ethical issues of big data in the airline
industry. In 4th International Conference on Complexity, Future Information Systems
and Risk (pp. 139-148). SciTePress.
Law, K. M. and Breznik, K., 2018. What do airline mission statements reveal about value and
strategy?. Journal of Air Transport Management. 70. pp.36-44.
Liu, H., 2018. A Strategic Analysis of Chinese Airline Industry under Online Environment: In
the Case of China Southern Airlines. Scientific Research Publishing, Inc. USA.
Wang, Z., 2021. Understanding the strategy used by leading airlines: a case study of Qatar
Airways.
ONLINE:
British Airways Plc Annual Report, 2021. [ONLINE]. Available Through:
<https://www.iairgroup.com/~/media/Files/I/IAG/annual-reports/ba/en/british-airways-plc-
annual-report-and-accounts-2020.pdf>.
Eastern Airways Ltd Annual Report, 2021. [ONLINE]. Available Through:
<https://find-and-update.company-information.service.gov.uk/company/03468489/filing-
history>.