Study corporate social responsibility in Pearson Edexcel A Level Business through ethical sourcing, environmental strategy and exam evaluation of costs, reputation and profit.
Extract A British Airways: a cash cow British Airways (B A) is the second largest airline in the UK and is part of a larger group of airlines. BA merged with Iberia in 2011 to create International Consolidated Airlines Group (IAG), which has since taken over Aer Lingus, as well as Vueling and Level, two low-cost airlines.
Financially, IAG outperforms Europe's other big airlines. BA is the main reason for this. Its return on capital has grown and it provides the largest share of IAG's operating profits.
Extract B Selected data for an Airbus A350-1000 aircraft
Extract C IAG buys Air Europa for €1bn IAG is spending €1bn to buy Air Europa, another Spanish airline. Air Europa serves 69 destinations. Air Europa is the third largest Spanish airline after Iberia and Vueling - both of which are already owned by IAG.
In 2018, Air Europa made an operating profit of €100m. It had a revenue of €2.1bn from 11.8 million passengers. It serves many niche destinations in South America including Paraguay, Colombia and Iguazú on the border of Argentina and Brazil.
Extract D Angry passengers as tens of thousands affected by systems failure In August 2019, BA had many angry passengers as more than 500 flights were cancelled or delayed as a result of an IT systems failure. It affected the travel plans of tens of thousands of people with holiday and business plans travelling from London's Heathrow, Gatwick and City airports. This was not the first time BA has had IT failures.
In 2017, 75,000 passengers were stranded around the world when BA was forced to cancel more than 700 flights over three days due to IT systems failures. A data breach in 2018 affected 400,000 customers and led to a fine of £183m. BA claimed it regularly carries out detailed risk assessments of its IT systems and IT infrastructure. It is dependent on IT systems for many of its key business processes.
Extract E BA to offset domestic flight emissions from 2020 BA will offset all domestic flight emissions from 2020, after its owner IAG became the first airline group to commit to net zero-carbon flying by 2050. IAG is responsible for about 3\% of global aviation's emissions. Offsetting allows businesses to invest in environmental projects to balance out their own carbon footprints.
Chief executive of IAG, Willie Walsh, said that the company would reach the net zero-carbon target through offsetting but it already has a strong environmental policy that significantly reduces its environmental footprint by recycling and cutting waste from aircrafts.
Walsh said B A is replacing older, less fuel-efficient aircraft. He said the new Airbus A350-1000, which has just entered service on the transatlantic route to Toronto, would typically use 43 instead of 70 tonnes of jet fuel to carry a similar number of passengers.
Assess the likely strategic benefits for B A of reducing its environmental impact.