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Annual report and accounts 2016

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19<br />

<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 />

www.iairgroup.com

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