...Depreciation Accounting 1 Types of Long-Lived Assets • Tangible asset • Asset with physical substance • Property, plant, and equipment = fixed asset. • Intangible asset • Intellectual property. • No physical substance • Examples are patent rights, copyrights 2 Amortization • View capital asset as bundle of services • Similar to prepaid expenses, cost is expensed as company benefits from the services • • • • Land - no depreciation Plant and equipment - depreciation Natural resources - depletion Intangible assets - amortization 3 Depreciation Methods • • Straight line method • (original cost - residual value) /service life Accelerated methods • Declining balance methods • Sum of the years’ or years’ digits methods 4 Declining Balance Method • Depreciation = book value * depreciation rate. • Double declining balance method = book value * 2 * straight line rate. • Straight line rate = 1/(life of asset in years). 5 Impaired Assets • • • An asset for which its remaining benefits, as measured by the sum of future cash flows the asset’s use will generate, is less than its book value If entity expects to hold asset • Write asset down to fair value If entity expects to sell asset • Write asset down to lower of cost or fair value less cost of disposal. 6 Group Depreciation n Group depreciation • Treats all similar assets as a “pool” or group rather than calculating for each item separately. • No gain or...
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...Delta Airlines Company Info and Overview: • Currently serves over 160 million customers/yr • Headquartered in Atlanta, Ga • Over 80,000 employees • Currently investing more than $2billion through 2013 in airport facilities and global products • Almost 5,000 daily flights with a current mainline fleet of 700+ aircraft • Current stock price $10.99/share with a market cap of 9.23B Singapore Airlines • • • • • Operates a fleet of over 100 airplanes 22,000+ employees Fly the most modern fleet and are the world’s largest operator of Boeing 747s Company has been profitable every year since 1948 Current share price $10.86 with a market cap of 12.98B Case Overview • • Delta and Singapore Airlines use base their depreciation methods on very different assumptions Entire airline industry struggling in the 1990s • • • • Competition from low cost carriers such as Southwest Iraq’s invasion of Kuwait and the corresponding oil crisis American recession From 1990-1993 the airline industry loses 12.8B and Delta is particularly hard hit. Singapore takes a hit as well but still manages to make 1.6B during the downturn Case Overview • • • • The average age of Delta’s aircraft was 8.8yrs at this time (low compared to its US competitors) while Sing air was operating the youngest fleet in the world 5.1yrs In 1993 Delta has approx. 412m more in total assets than Sing Air Delta is the 3rd largest carrier in the world and...
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...GLOBAL AVIATION GROUP 2013 Airline Disclosures Handbook Financial reporting and management trends in the global aviation industry kpmg.com KPMG’s Global Aviation practice KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 156 countries and have 152,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Through its member firms, KPMG has invested extensively in developing an experienced aviation team. KPMG’s understanding of the aviation industry is both current and forward looking, thanks to KPMG’s global experience, knowledge sharing, industry training and use of professionals with direct experience in the aviation industry. KPMG member firms serve many of the market leaders within the airline sector. We are leading providers of external audit services with 33% market share of the top 50 airlines by revenue. We also provide other services to over half of these top 50 airlines. KPMG member firms’ strength lies in our professionals and their knowledge and experience gathered from working with a large and diverse client base. KPMG’s airline industry experience helps the teams understand both your business priorities and the strategic issues facing your company. KPMG’s Global Aviation practice’s presence in many international markets, combined with industry knowledge, positions KPMG...
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...Affairs This portion of the paper will include key information about Delta Air Lines, Inc. (Delta): (a) history; (b) culture; (c) important leaders over the years; (d) current products and service offerings: (e) target markets; and (f) methods of product and service delivery. History This section describes the history of Delta. The company was founded in Macon, Georgia, in 1924, as the world’s first crop-dusting service, Huff-Daland Dusters. The company moved to Monroe, Louisiana, in 1925. In 1928, field manager C. E. Woolman and two partners purchased the service and renamed it Delta Air Service after the Mississippi Delta region it served. Delta was the first international mail and passenger route on the west coast of South America. Delta operated its first passenger flights over route stretching from Dallas, Texas to Jackson, Mississippi, via Shreveport and Monroe, Louisiana. Also, Delta was awarded a US Postal Service contract in 1934 to fly from Fort Worth to Charleston via Atlanta (Hoover’s, 2011). In 1941, Delta relocated to Atlanta. Woolman became the president in 1945 and he managed the company until his death in 1966 (Delta, 2011). Delta offered its first night service in 1935, using the Stinson Model A; the first Delta aircraft with two pilots. Douglas DC-2 and DC-3 service was introduced and the introduction of flight attendants, called “stewardesses,” added to flight crews. Delta contributed to the war effort by modifying 1,000 plus aircraft, over-hauling...
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...i Richard Ivey School of Business The University of Western Ontario IVEy 9A98A005 DELTA GRAND PACIFIC HOTEL s Tom Gleave prepared this case under the supervision of Professor John Kennedy solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation The authors may have disguised certain names and other identifying information to prefect confidentiality. Ivey Management Services prohibits any form of reproduction, storage or transmittal without its written permission This material is not covered under authorization from CanCopy or any reproduction rights organization To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Management Services, c/o Richard Ivey School of Business, The University of Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail cases@ivey uwo.ca. Copyright © 1998, Ivey Management Services Version: (A) 2003-02-03 In July 1996, Ross Cunningham, Director of Sales and Marketing for the Delta Grand Pacific Hotel in Bangkok, Thailand, needed to devise a marketing strategy that would ensure the hotel’s success in its very competitive market. Specifically, Cunningham wanted to ensure that the hotel maintain and eventually increase its two key benchmarks of performance, namely, occupancy rates and average room rates, by milking the Sukhumvit Micromarket to...
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...Continental Holdings, Inc. Business Analysis The airline industry has had a few disappointments at the market with the economy fluctuations. Since September the 11th, the airlines are struggling to recover from all the destruction that the terrorist did to the airline industry. Customer’s confidence, high fuel prices, environmental problems, and customer service issues are just a few things that have affected the airlines popularity in the public’s eye. With all that said, how would a mutual fund investor feel about investing in an airline? The mutual funds manager is looking at United Continental Holdings, Inc. as a future investment. The mutual funds investor will being with a complete business analysis of the airline. He will investigate how well the airline is doing. He will look at their annual business reports (balance sheet, statement of cash flow, and income statement); complete a SWOT analysis showing the strengths, weakness, opportunities, and threats, global strategies and their technological advantages. After completion of those items, he will check how well the airlines operational processes and procedures are, the airline practices, and how the airlines product and services compare to their competitors. The mutual funds manager will need some background information on United Continental Holdings, Inc. In 2010, an historic merger among equals, United joined with Continental. Together the two airlines create the world’s most comprehensive global route...
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...Exploring Corporate Strategy CLASSIC CASE STUDIES Chaos in the skies – the airline industry pre- and post-9/11 Gary J. Stockport The case provides an opportunity to analyse the Airline Industry both pre- and post-9/11. It shows how one major event in the business environment can reshape many aspects in both the macro and competitive environment of an industry. In turn this requires a reshaping of strategies for most of the individual companies in the industry in order to cope with this new environment. It also provides an opportunity for students to recommend how airlines might better plan for, as well as react to, disruptive events such as 9/11 happening in the future. ● ● ● This is a true story from the many stories of 11 September 2001. It was a typically routine early morning flight home. United flight 890 had left Narita Japan several hours earlier, and the sun would be coming up any minute. Captain Jim Hosking was looking forward to getting home to see his wife in LA. Suddenly a message from the cockpit teleprinter came in from the US Federal Aviation Authority (FAA). Such messages were routine, advising of bad weather or maintenance requirements. However, this message was different and it read: UA890 NRTLAX – –MESSAGE FROM CHIDD– THERE HAS BEEN A TERRORIST ATTACK AGAINST UAL AND AAL AIRCRAFT. WE ARE AT HIGH ALERT. WE ARE ADVDa THERE MAY BE ADDTLb HIGHJACKINGS IN PROGRESS. SHUT DOWN ALL ACCESS TO FLIGHT DECK. UNABLE TO ELABORATE FURTHER. a b ADVD – Advised...
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...9 -7 1 4 -4 3 2 JANUARY 29, 2014 JUAN ALCÁCER JOHN CLAYTON Emirates Airline: Connecting the Unconnected Introduction Late afternoon was fading to dusk as Tim Clark, President of Emirates Airline, gazed out at the large crowds mingling outside at the 2013 Dubai Airshow. Front and center at the event was the official program launch of the Boeing 777X, a massive new hit thanks to Emirates’ record order of 150 new planes. Valued at $76 billion at list prices, this was the largest airplane deal ever inked. Letting his thoughts drift, he noted, he imagined with pride these planes joining the collection of widebodied Emirates planes assembled on the tarmac of Dubai International Airport, ready to ferry passengers from Europe, Asia, Africa, the Americas and the Gulf to their respective destinations. This is the face of the global economy, he thought to himself, as he marveled at his company’s success. Emirates was indeed a global success story. In just twenty-five years the airline had grown to become the third-largest airline globally by capacity and the largest by number of international passengers.1 (See Exhibit 1). Twenty-three new routes were added in 2012 and 2013,2 and capacity growth was expected to increase by 18.4% in 2013 thanks to deliveries of new aircraft, including the new A380s deployed to over 20 destinations.3 Emirates anticipated that its meteoric growth would continue and was building its fleet accordingly: with 41 A380s integrated into its fleet thus far...
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...an industry are defining a new agenda for business and marketing strategy development. Companies are adopting market-driven strategies guided by the logic that all business strategy decisions should start with a clear understanding of markets, customers, and competitors.1 Increasingly it is clear that enhancements in customer value provide a primary route to achieving superior shareholder value.2 Consider, for example, Southwest Airlines’ market-driven strategy that has achieved a strong market position for the U.S. domestic carrier. The airline’s growth and financial performance are impressive. Although Southwest is the fourth largest U.S. airline, its market capitalization is greater than the total capitalization of AMR (American Airlines), Delta Airlines, and UAL Corp. Southwest’s revenues will approach $7.5 billion in 2002, compared with $4.2 billion in 1998. Net profits also are displaying strong records during this five-year period. Southwest uses a point-to-point route system rather than the hub-andspoke design used by many airlines. The airline offers services...
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...* Word count or equivalent: 1000 (500 per answer) * Assessment criteria: * To identify the nature of operations management * To analyse the processes of operations management * To analyse management approaches to operations management * To apply operations management to gaining customers and competing * To examine the operational processes and life cycles * Knowledge/understanding of concepts (40%) * Ability to collect, synthesise and apply information (20%) * Ability to generate appropriate conclusions (10%) * Logical structure (10%) * Communication of information/literacy (20%) Introduction * What the question going to be answered is about * This essay aims to answer… and will refer to… and apply examples from the… industry * Body * Begin each paragraph with the main idea/ topic sentence * This tells the reader what the paragraph will be about * Make sure your reader understands the main idea by EXPLAINING or giving a definitions How to.. * Give some EVIDENCE to support your main idea – the evidence should be a direct quotation or paraphrase and supported by a REFERENCE. * CONCLUDE your paragraph by either * linking back to your main idea * linking forward to the main idea in the next paragraph Conclusion * Conclusions are often hard to construct as you want to do more than just repeat everything you have just answered. * Ensure that you reach an overall conclusion...
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...External Environment analysis Summary There have been turbulent times for the Australian airline industry. It has been confronted with the marked decline in international tourism in the aftermath of the September 2001 terrorist attacks in the US and, more recently traffic loss attributable to war in Iraq and severe acute respiratory syndrome (SARS) outbreaks in part of Asia and Canada. And off course, the global financial crises in 2008. While the domestic airline industry is largely deregulated, Australia’s international airline industry remains quite deregulated at the commonwealth level, as it is subject to the detailed capacity controls of airline service agreements (ASAs) that underpin the industry. These agreements control the amount of airline seat capacity which may be deployed on scheduled services over individual country to country routes; they are general of treaty status and are enforceable in international law. In another move to free up the international side of the industry, the Commonwealth adopted a policy of allowing more than one Australian owned international airline to operate scheduled services to and from Australia. However the September 2001 failure of the Ansett Airlines group brought an end to Ansett International's short-lived operations. Although Qantas is once again the only Australian flag carrier, Virgin Blue has signalled its interest in operating in some international markets in Australia's immediate region, such as the trans-Tasman market...
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...Significant Events 018 The Year in Review 020 Network 021 Fleet Management 022 Products and Services 026 People Development 030 Environment 031 Supporting Our Communities 032 Subsidiaries 036 Selected Awards 038 Statement on Risk Management 039 Corporate Governance Report 065 Financials 201 Notice of Annual General Meeting On the Cover: Flight Stewardess Nur Surya Ambiah is featured with the Dendrobium Singapore Girl Orchid. THE SINGAPORE AIRLINES GROUP ACHIEVED A NET PROFIT ATTRIBUTABLE TO EQUITY SHAREHOLDERS OF $379 MILLION FOR THE FINANCIAL YEAR ENDED 31 MARCH 2013. THIS WAS DESPITE RECORDING A LOWER OPERATING PROFIT AMID PERSISTENTLY HIGH FUEL PRICES AND LOWER YIELDS DUE TO WEAK GLOBAL ECONOMIC CONDITIONS. The 2012/13 financial year was one of significant development for the SIA Group, with numerous initiatives to strengthen the three main pillars of our brand promise, namely Service Excellence, Product Leadership and Network Connectivity. 002 SINGAPORE AIRLINES STATISTICAL HIGHLIGHTS Financial Statistics R1 2012-13 The Group Financial Results ($ million) Total revenue Total expenditure Operating profit Profit before taxation Profit attributable to owners of the Parent Financial Position ($ million) Share capital Treasury shares Capital reserve Foreign currency translation reserve Share-based compensation reserve Fair value reserve General reserve Equity attributable to owners of the Parent Return on equity...
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...Contents South West Airlines 4 Goals and Objectives 5 Their Mission and Vision Statement 5 Strengths 6 Weaknesses 6 Opportunities 8 Threats 8 Analyzing company’s external environment 9 Analyzing the nature and strength of competitive forces 11 Competitive pressure stemming from bargaining power of buyer: 16 Determining whether the collective strength of the five competitive forces is conductive to good profitability: 17 Competitive pressure from seller of substitute products 18 Sign that competition from substitute is strong 19 Competitive pressure stunning from supplier bargaining power 20 PESTEL ANALYSIS 24 SCENARIO PLANNING 56 SCENARIO NO.1 58 SCENARIO NO.2 59 SCENARIO NO.3 59 SCENARIO NO.4 60 SCENARIO NO.5 60 SCENARIO NO.6 60 SCENARIO NO.7 61 SCENARIO NO.8 61 Competitors Objectives 62 Competitor's Current Strategy 63 Competitor's Resources and Capabilities 64 Competitor’s Assumptions 66 Regional Factors 67 Value chain activities: 68 Key competitive advantages: 72 Solutions: 82 Weights of Key success factors in five airlines: 86 COMPETITIVE ADVANTAGE 92 FIVE GENERIC COMPETITIVE STRATEGIES: 92 LOW COST PROVIDER STRATEGIES: 92 DIFFERENTIATION STRATEGIES: 95 BEST-COST PROVEDER STRATEGIES: 96 FOCUS (MARKET NICHE) STRATEGY: 96 STRATEGIC ALLIANCE AND PARTNERSHIP: 97 MERGER AND ACQUISITION STRATEGIES. 98 VERTICAL INTEGRATION. 98 OUTSOURSING. 98 OFFENSIVE...
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...___________________________________________________________________________________________ English - Or. English DIRECTORATE FOR FINANCIAL AND ENTERPRISE AFFAIRS COMPETITION COMMITTEE DAF/COMP(2014)14 Unclassified AIRLINE COMPETITION -- Background Paper by the Secretariat -18-19 June 2014 This document was prepared by the OECD Secretariat to serve as a background note for Item IX at the 121st meeting of OECD Competition Committee on 18-19 June 2014. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the Organisation or of the governments of its member countries. More documents related to this discussion can be found at http://www.oecd.org/daf/competition/airlinecompetition.htm. English - Or. English JT03358883 Complete document available on OLIS in its original format This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. DAF/COMP(2014)14 TABLE OF CONTENTS Introduction ................................................................................................................................................. 3 1. Features of the airline industry ............................................................................................................. 4 1.1. Liberalisation of the air transportation industry .......................................
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...1.0 Introduction Airlines industry faces substantial strategic, financial, operational and hazard risks due to the nature of the operating environment. Financial risks create uncertainties about future cash flows due to changes in economic conditions as well as changes in revenues, operating expenditure and financing costs. Firms are urged to minimise these risks to have higher predictability on future cash flows in order to meet various obligations, for instance shareholders’ required rate of return and debt repayment. This report looks into Air New Zealand in particular to study two of the risks that are significant for an airline company, namely foreign currency risk and fuel price risk. Section 2 of this report gives an overview of the relationships between the operation of Air New Zealand with both the risks. Besides, discussions and suggestions on Air New Zealand risk management approaches are presented in Section 3. Finally, a brief summary and conclusion is included in the last section. 2.0 Risks Description 2.1 Fuel Price Risk The Nature of Fuel Price Risk Fuel price risk is the risk of fluctuations in fuel prices which could adversely affect the financial performance of Air New Zealand as jet fuel is a critical input factor for airlines. Fuel prices are affected by the supply and demand, oil price futures and the downside or upside movement in the US dollar against NZ dollar. In particular, the increase in jet fuel prices adds a significant amount to Air...
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