Annual report and accounts 2016
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<strong>and</strong> additional summer aircraft availability<br />
by re-timing retirements <strong>and</strong> planned<br />
maintenance. Baggage performance<br />
will also be improved, especially transfer<br />
baggage, through a new integrated<br />
baggage system <strong>and</strong> increased baggage<br />
capacity in 2017.<br />
Improve capital efficiency <strong>and</strong> have<br />
competitive costs<br />
Through execution of Plan4 management<br />
will reduce non-fuel unit costs over the<br />
next five years. A structural change<br />
programme was started in <strong>2016</strong> <strong>and</strong><br />
will be completed by the end of 2018,<br />
impacting all areas of the business. New<br />
technology will be utilised to automate<br />
areas of the operation <strong>and</strong> back-office<br />
functions, driving increased efficiency;<br />
IAG maintenance strategy <strong>and</strong> call centre<br />
initiatives will deliver significant savings<br />
in areas where there is substantial scope<br />
for functions to be optimised. These,<br />
along with other initiatives, will seek to<br />
streamline <strong>and</strong> simplify our operations<br />
<strong>and</strong> head office. We recently reached<br />
agreement with the NAPS Trustees on<br />
the latest triennial valuation. The low<br />
interest environment has driven up the<br />
deficit by £100 million to £2.8 billion.<br />
However, this new agreement only<br />
addresses past benefits, <strong>and</strong> we need to<br />
address the reality that low interest rates<br />
also mean costs are going to be higher<br />
for future service on defined benefit<br />
pensions. In 2017, we will be consulting<br />
with colleagues <strong>and</strong> the trade unions on<br />
future pension provision.<br />
The weaker pound sterling has made<br />
investment in aircraft, which we buy in US<br />
dollars, more expensive. As a result, we<br />
need to be, <strong>and</strong> we will be, more capital<br />
efficient with our investments. At London<br />
Gatwick, our Boeing 777 fleet will be<br />
reconfigured, with 10 seats in each row<br />
of the World Traveller cabin. The number<br />
of World Traveller Plus seats will also<br />
double to 48 whilst the Club World cabin<br />
will reduce to 32 seats. This will result<br />
in the number of seats increasing from<br />
280 to 332 from 2018 onwards. This will<br />
ensure that we have a more competitive<br />
configuration, particularly at Gatwick, <strong>and</strong><br />
is a more efficient way to continue to<br />
grow capacity.<br />
Our shorthaul aircraft will also be upgauged<br />
<strong>and</strong> densified. The number of<br />
Airbus 319s in our fleet will reduce from<br />
44 to 26 by 2021 (being replaced by<br />
Airbus A320neos <strong>and</strong> Airbus A321neos<br />
from 2018), while Heathrow-based Airbus<br />
A320s will be densified to 180 seats (from<br />
168 seats). Airbus A321s will be densified<br />
to 218 seats (up from 205 seats) starting<br />
from early 2018.<br />
Unleash our true potential<br />
Our people are vital to the successful<br />
delivery of Plan4. We have a number<br />
of people-orientated initiatives, which<br />
will develop leaders at all levels of the<br />
organisation, equipping our colleagues<br />
with the skills necessary to deliver <strong>and</strong><br />
exceed expectations consistently.<br />
Delivering high st<strong>and</strong>ards of customer<br />
service is fundamental to our success.<br />
Our world class training centre, the<br />
British Airways Global Learning<br />
Academy, has continued to thrive, with<br />
84,500 delegates receiving instruction<br />
throughout the year on 9,400 specially<br />
tailored courses to ensure our customers<br />
receive the best possible service.<br />
Digital<br />
Digital underpins British Airways’<br />
business plan. We have a long history<br />
of digital innovation. It is over 20 years<br />
since we introduced ba.com, our first<br />
online selling capability. We created <strong>and</strong><br />
patented the first calendar-led selling<br />
– now a travel industry best practice.<br />
More recently, we introduced a full staff<br />
mobility programme, putting relevant<br />
data in front of our crew to provide a<br />
more tailored customer service. Digital,<br />
data <strong>and</strong> technology will enable us to<br />
transform our distribution l<strong>and</strong>scape<br />
<strong>and</strong> capability.<br />
Conclusion<br />
We have solid fundamentals. The four<br />
pillars underpinning our new business<br />
plan will enable British Airways to deliver<br />
our vision to be the airline of choice<br />
with personalised service, exceptional<br />
reliability, a digital mind-set <strong>and</strong> unique<br />
British style.<br />
Strategic <strong>report</strong> Corporate governance Financial statements Additional information<br />
Fuel efficiency – Our plan, our planet<br />
Fuel efficiency is important to us<br />
from both a commercial <strong>and</strong> an<br />
environmental perspective. In 2014<br />
we set up a dedicated fuel efficiency<br />
team with experts in flight operations,<br />
network operations <strong>and</strong> engineering.<br />
In addition to the fuel savings<br />
achieved with the introduction of our<br />
newer <strong>and</strong> more efficient aircraft, the<br />
team has implemented over 41 fuel<br />
efficiency initiatives saving a total of<br />
83,000 tonnes of fuel, <strong>and</strong> reducing<br />
our CO 2<br />
emissions by 261,500 tonnes.<br />
The range of initiatives introduced<br />
covers all aspects of our operation<br />
including reducing weight on the<br />
aircraft, improving processes on the<br />
ground such as delaying the engine<br />
start <strong>and</strong> applying reduced engine<br />
taxiing, <strong>and</strong> working in collaboration<br />
with air navigation companies to<br />
improve airspace, <strong>and</strong> optimise routes<br />
<strong>and</strong> speeds.<br />
See pages 45 – 51 for more<br />
about Sustainability<br />
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