Our key performance indicators - British Airways

30 / British Airways 2007/08 Annual Report and AccountsOur key performance indicatorsWe have established a balancedset of performance indicatorsfor our business, both financialand non-financial, to improveour performance over time. Aspart of the business planningprocess, and in line with ouragreed strategic objectives, theBoard sets annual targets foreach of these key performanceindicators (KPIs).

British Airways 2007/08 Annual Report and Accounts / 31The following KPIs were set for 2007/08, with our performance against them detailed on pages 32 and 33.FinancialWe must achieve a consistent, strong financial performanceif we are to continue investing in the future success of thebusiness and reward our shareholders through the paymentof a dividend. Operating margin – which we define as operatingprofit divided by revenue expressed as a percentage – is themain way we measure our financial performance.CustomersCustomer recommendation is a key measure of our success.Our Global Performance Monitor (GPM) survey, an onboardcustomer survey covering all the key stages of the flightexperience, together with a follow-up online survey on thearrivals process, provides monthly insights into customers’views. The survey is carried out by GfK NOP, the independentmarket research company, and involves more than 55,000customers each month.OperationsWe must run a robust operation if we are to meet ourcustomers’ expectations and create a cost-effective business.Having Heathrow at the heart of our operations, with all itsinfrastructure constraints, puts a significant strain on deliveringoperational excellence, day in, day out.Within our business plan we have focused our efforts on fivekey areas of operational delivery – the ‘BA Basics’. Amongthese, departure punctuality is our primary operationalperformance measure. Punctuality ensures other operationalEmployeesProgressive, high performing organisations are increasinglyrecognising that involved employees are more committed toorganisational goals and values, and more willing to embracechange and improve customer service. Last year we startedusing an Employee Involvement index, as measured by an allemployeeSpeak Up! survey. This is run twice a year, with a fullversion in September and a shorter tracker version in March.In 2002 we set ourselves a target of achieving a 10 per centoperating margin through the economic cycle. In 2007/08we set ourselves the goal of hitting a 10 per cent margin forthe year for the first time.The customer recommendation measure is based on thepercentage of customers who, when surveyed, would highlyrecommend British Airways to friends, family or colleagues.Apart from being extremely important in its own right,we believe that this measure indicates how the customerexperience will affect future profitability. Our target for2007/08 was for 63 per cent of customers to be ‘extremelylikely’ or ‘very likely’ to recommend British Airways.processes run smoothly and remains a key factor in whethercustomers would recommend British Airways to other travellers.We call our chosen measure of punctuality ‘Ready to Go’. Thismeasures how many of our flights are prepared for departureat three minutes before the scheduled departure time. Somany issues can have an impact on punctuality, but using thismeasure ensures we focus on the aspects of the departureprocess within our control. The target range for ‘Ready to Go’punctuality for 2007/08 was set at 44-48 per cent.The Speak Up! surveys are conducted and hosted by theindependent research organisation, Ipsos MORI, and arecompletely confidential. As a business we aim to matchthe involvement scores of other leading service sectororganisations, and a target of 73 per cent for EmployeeInvolvement was set for 2007/08.Overview of the year Business review Corporate responsibility Corporate governance Financial statements Shareholder information

32 / British Airways 2007/08 Annual Report and AccountsBusiness review continuedOur key performance indicatorsLinking with our strategy Achievements in 2007/08FinancialDespite weakening economic conditions andincreasing fuel prices in the second half of theyear, we focused on establishing a competitivecost base as part of the BP10 business plan toensure we achieved record profits for the year.We delivered record profits and an operatingmargin of 10 per cent in 2007/08.CustomersBP10 redefined our customer promiseunder the banner of ‘BA Basics and Brilliance’.This focused everyone in the business ondelivering the ‘BA Basics’ to customers day in,day out, and developing products and servicesthat offer ‘Brilliance’ where it really counts.We achieved a customer recommendationscore of 59 per cent during the year. Thisrepresented a fall of 2 points on the previousyear, largely because of a disappointingperformance on the ‘BA Basics’, particularlyat Heathrow.OperationsDelivery of the ‘BA Basics’ as part of thebusiness plan is at the heart of our strategyfor improving our operational performance.Punctuality, baggage performance, aircraftcleanliness, smooth connections and thereliability and product offering of our inflightentertainment systems are the key areasof focus.‘Ready to Go’ performance averaged at34 per cent during 2007/08, with a peakof 65 per cent in January 2008. This wasa disappointing performance, which fellshort of our target for the year.EmployeesAn involved and motivated workforce is akey enabler to achieving the objectives inour business plan. Investing in and developingour people, through training and by ensuringall employees are equipped to do their jobs,is a fundamental building block in supportof our plans.The results of the MORI Speak Up! surveyin September 2007 showed our EmployeeInvolvement Index at 65 per cent.

British Airways 2007/08 Annual Report and Accounts / 332008/09 will be a year of transition as our operations transfer between terminalsat Heathrow. However, we are determined to deliver an improved customerexperience and Terminal 5 will be a significant step in this direction, providing afantastic opportunity for our customers and our employees.Performance over time2007/082006/072005/062004/052003/042007/082006/072007/082006/072007/082006/0710.0%7.1%8.5%6.9%5.4%59%61%34%36%65%70%KPI measureOperating marginCustomerrecommendationPunctuality –‘Ready to Go’Not applicableUnderstanding our KPIs going forwardOperating margin will continue to be our key financialperformance indicator. A more challenging economicoutlook, the continuing rise in the price of fuel, andtransitional costs relating to our move to Terminal 5will all contribute to a reduction in our operating marginin 2008/09.Customer advocacy – the likelihood of customers torecommend travel on British Airways – will continueto be our key customer metric in 2008/09. The moveto Terminal 5, coupled with the continued investmentin our inflight products and customer service on theground, give us the opportunity to deliver improvementin this indicator over the next year.Departure punctuality is key to our operational success,and focusing on the aspects within our control is critical.‘Ready to Go’ performance does precisely that. A keydriver of improved network punctuality over the nextyear is the performance at Heathrow. The move toTerminal 5, with its associated infrastructure andprocess changes, will begin to play a huge role indelivering improvements in this area.We are currently reviewing the appropriate measuregoing forward for determining the level of employeeinvolvement.Overview of the year Business review Corporate responsibility Corporate governance Financial statements Shareholder information