In the last few years, the commercial fortunes of British Airways and
             Ryanair have been going in opposite directions. It is the objective of this
             paper to study the respective performance of the two airlines with the
             purpose of understanding the key factors underlying this phenomenon.
             British Airways has long been recognized as one of the world's
             premier airlines. Yet, this carrier has had to undergo significant
             reorganization in order to stem losses and get back on the road to
             profitability. Indeed, it is only a number of stringent, cost reduction
             measures that have enabled the airline to post a profit in the fiscal year,
             2003-04: "Group pre-tax profit for the year was 230 million pounds compared
             to 135 million in the previous yearâ€. No interim dividend was paid and the
             Board has decided not to recommend a final dividend." It is important to
             note the board's decision to not pay a dividend, as this is an indicator
             that the airline has yet to gain confidence that it is back on the path to
             growth and profitability. This is evident in the airline's own admission,
             "â€the year's achievement comes primarily from cost reduction in the face of
             considerable downward pressure on revenues and yields." (Annual Report, p.
             4) The fact that British Airways has managed to declare a profit in the
             last couple of years primarily due to cost reductions can also be
             ascertained by the fact that the year 2003-04 actually saw a decline in its
             group turnover by 1.7%; airline operations yield by 4.3%; and passengers
             carried by 5% (Annual report, p. 3).
             Although the airline attributes its performance to external factors
             such as 9/11; SARS; the Iraq war; the continued threat of terrorism; and
             economic recession (Annual Report, p. 4), the fact remains that at least
             one of its competitors such as Ryanair have managed to grow in strength
             during the same period: "Over the pas...