...today announced its financial results for the fiscal year ended 31 March 2012 (1 April 2011 – 31 March 2012). Mr. Nalin Patel, Chairman of Air Pacific’s Board of Directors, said that Air Pacific Ltd. and Air Pacific Group both made operating profits and that Air Pacific Ltd. delivered record-breaking revenue. (Air Pacific Group includes the national airline, its wholly owned subsidiary Pacific Sun, and a 38.75% stake in the Sofitel Fiji Resort & Spa on Denarau Island). • • Air Pacific Ltd. reported an operating profit of $16.5m, compared to an operating loss of $3.7m for the previous financial year. Air Pacific Group reported an operating profit of $13.4m, compared to operating loss of $4.3m for the previous year. On a net basis, Air Pacific Ltd. reported an after tax statutory profit of $11.4m and Air Pacific Group reported an after tax statutory profit of $10.7m (versus after tax statutory profits including net income due to cancelled aircraft deliveries of $24.8m net and $25.3m respectively for FY2010/11). Air Pacific Ltd. also recorded its highest ever revenue of $645.9m, an increase of $90.5m in revenue from FY2010/2011, and an increase of $130m compared to FY2009/2010 (the year before airline restructuring and turnaround efforts began). The airline also carried 85,000 more passengers than it did the previous financial year and 122,000 more passengers than it carried in FY2009/2010. Press Release Mr. Patel attributed the airline’s continued financial improvement and successful...
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...same regardless of output. Companies, such as airlines, operating with high fixed costs are faced with many challenges in order to maximize profitability. Airlines will incur the same costs to fly a given route regardless of whether or not the plane is at capacity, yet in the airline industry, there are many factors that affect output. Weather events, labor disputes, seasonal travel trends, as well as events that can impact the industry as a whole like a plane crash or terrorist attack all affect output. Any number of these factors can determine whether or not a scheduled flight is cancelled or whether at takeoff it is 5% full rather than 50% full. As a result of the September 11 terrorist attacks airline travel decreased and fares were lowered in order to lure passengers back. According to an article published in the Transportation Journal in the summer of 2003, load factors for 2002 were estimated at 72 percent but the breakeven passenger load at that time was at 81 percent. Net losses in 2002 were estimated at approximately $9 billion. Airlines have developed several strategies in order to overcome these challenges. One strategy is to reduce fares and increase capacity during slow times while increasing fares during peak months. The idea is to “to increase occupancy by decreasing price during slow times, and to increase revenue by increasing price during busy times with the overall objective of increasing operating profits” (Toh & Raven, 2003). Other strategies...
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...Weightage: 15% Title of essay: On 8 August 2014, Khazanah National announced plans to privatise Malaysia Airlines (MAS) in an attempt to revive the national carrier as it was struggling financially. Without doubt, the twin aviation disasters, MH370 and MH17, have also further contributed negatively towards MAS financials. The former prime minister of Malaysia, Dr Mahathir Mohamad said that the national flag carrier should be privatised as it is running at a loss. The Malaysia Airlines System Employees Union (Maseu), on the other hand, strongly stated that they will only support the privatisation of MAS if there is to be a new management team. In the past 12 years, MAS has undertaken about half-a-dozen restructuring exercises. Considering its current situation, the idea to privatise is seen as a necessity. In your opinion, can MAS turn itself around if it is now to be privatised? Why or why not? Justify your stand and support your arguments with reasons and examples. You should write between 600 and 650 words. Instructor: Mrs Anuratha Murugagoo On 8 August 2014, Khazanah Nasional Berhad (“Khazanah”) proposed an official petition to the Board of Directors of Malaysian Airline System Berhad (“MAS”) to handle a particular capital cutback and refund apply (“Proposed SCR”) of MAS’ ordinary shares. It shows the strategies of Khazanah National to privatise Malaysia Airlines (MAS) in an effort to recover the federal carrier while it was striving financially. Privatisation can be...
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...regardless of output. Companies, such as airlines, operating with high fixed costs are faced with many challenges in order to maximize profitability. Airlines will incur the same costs to fly a given route regardless of whether or not the plane is at capacity, yet in the airline industry, there are many factors that affect output. Weather events, labor disputes, seasonal travel trends, as well as events that can impact the industry as a whole like a plane crash or terrorist attack all affect output. Any number of these factors can determine whether or not a scheduled flight is cancelled or whether at takeoff it is 5% full rather than 50% full. As a result of the September 11 terrorist attacks airline travel decreased and fares were lowered in order to lure passengers back. According to an article published in the Transportation Journal in the summer of 2003, load factors for 2002 were estimated at 72 percent but the breakeven passenger load at that time was at 81 percent. Net losses in 2002 were estimated at approximately $9 billion. Airlines have developed several strategies in order to overcome these challenges. One strategy is to reduce fares and increase capacity during slow times while increasing fares during peak months. The idea is to “to increase occupancy by decreasing price during slow times, and to increase revenue by increasing price during busy times with the overall objective of increasing operating profits” (Toh & Raven, 2003). Other strategies...
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...international airline industry provides service to virtually every corner of the globe, and has been an integral part of the creation of a global economy. The airline industry itself is a major economic force, both in terms of its own operations and its impacts on related industries such as aircraft manufacturing and tourism, to name but two. This sector had its share of heightened challenges during the global financial crisis of 2000-2005 and 2008-09. The airline industry lost billions of dollars and some airlines struggled to remain in business. Today, the global airline industry consists of over 2000 airlines operating more than 23,000 aircraft, providing service to over 3700 airports. In 2006, the world’s airlines flew almost 28 million scheduled flight departures and carried over 2 billion passengers [1]. The growth of world air travel has averaged approximately 5% per year over the past 30 years, with substantial yearly variations due both to changing economic conditions and differences in economic growth in different regions of the world. Historically, the annual growth in air travel has been about twice the annual growth in GDP. Even with relatively conservative expectations of economic growth over the next 10-15 years, a continued 4-5% annual growth in global air travel will lead to a doubling of total air travel during this period. The economic importance of the airline industry and, in turn, its repercussions for aircraft manufacturers, makes the volatility of airline profits...
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...Issue/Decision Despite its industry-leading position, Southwest Airlines was facing new challenges in mid-2008 which threatened its annual growth potential. Historically, Southwest’s seat availability grew at a rate of 5-10% each year; however, 2008’s projected growth was limited to 3% year-over-year. This is a direct result of strengthened competition which weakened Southwest’s competitive advantage, the onset of an economic recession, a high fixed cost structure with high operating costs—particularly fuel which consumed 31% of the total operating costs—and overall market saturation. Strategic Framework Southwest Airlines was built with a strong cost-leadership strategy, focusing on domestic, short-haul (under 500 miles), point-to-point flights (not “hub-and-spoke” network like competitors), using only one type of aircraft and offering a “no frills” approach to service. Its operating efficiencies enable high frequency flights with quick turnaround times. Like all airlines, Southwest faced challenges with the market environmental factors. The industry is notorious for its high fixed-cost structure. With 80% of operating costs fixed, there are limited cost reduction opportunities, which make it low profit-potential industry. The airline industry was faced with pressures of customer dissatisfaction with airline services, increasing costs for aircraft safety maintenance, debt servicing, increased air-traffic delays, financial pressures encouraging mergers, and increased...
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...Southwest Airlines MGMT 420 Abstract Since the early 1980’s the number of passengers travelling via airlines has increased drastically. The airlines all went through a troubling time when the Deregulation Act of 1978 came into effect. It opened doors for more competitive airlines to be built and created a competitive environment for the airlines. Southwest Airlines since it was developed has had numerous challenges to overcome and to operate. Since those challenges have depleted it has risen to be one of the top airlines that offer the lowest air fares for its customers. They also offer their employees the best work atmosphere and culture. Their mission statement is directed to both employees and customers. They have placed multiple strategic plans that has made them successful especially after the effects of 9/11 on the economy and trust of the consumer. Though the employees of the airlines are mostly Union workers, Southwest Airline has only had one strike from their employees during their time of operation. Southwest Airlines utilized promotional tactics such as offering safe, reliable, low cost flights with exceptional service. The company wanted to ensure that it was meeting the needs of both leisure travelers that did not have the funds to pay for expensive flights and for the travelers that were on time restraints and had to get to their location on time. Southwest has successfully done better than its competitors when it comes to cost and respect. Their frequent...
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...Fastjet Airlines Words: Keith Mwanalushi Headwinds over South Africa In the past few years the South African domestic market has had a bumpy ride. The local airline industry has witnessed the demise of 10 out of 11 independent private airlines since deregulation in 1990. This raises the question as to how new entrants will survive. 22 FlightCom Magazine Fastjet; entering South African domestic market. A consistent theme across the global airline industry is one of poor return on investments; protected competition; low barriers to entry and the high status associated with owning an airline; an industry that is a soft target for taxes; volatile costs; labour issues as well as increased regulation. South Africa is no exception. “Airlines operating in the domestic South African market face both demand and cost pressures,” says Carlos Ozores, Principal at aviation consultants ICF SH&E. “On one hand, South Africa’s economy is growing very slowly by emerging market locally the industry is challenged by a small market; inexperienced new competitors with inadequate equipment distorting the market; regulatory oversight; monopoly suppliers; state-funded competition; challenges with fuel supply, as well as skill shortages. “The weak economy and poor consumer spend; high oil prices, excessive supplier charges and the weakening local currency all threaten the growth of local air travel. Controlling costs and increasing business ...
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...FINANCIAL ANALYSIS: Southwest Airlines EXECUTIVE SUMMARY: Southwest Airlines (NYSE: LUV), a major US airline, established in 1967, based out of Dallas, Texas principally operates a point-to-point rather than a hub-and-spoke service. Southwest is the nation's largest carrier in terms of originating domestic passengers boarded, boarding in excess of 100 million passengers each year. The airline also operates the largest fleet of Boeing aircraft in the world. 2013 was Southwest’s 41st consecutive profitable year earning $754 million in net income. Using a model of selecting the most profitable point-to-point routes and operating them efficiently and with great customer service, Southwest has been able to sustain solid growth year after year. Currently the airline serves 93 destinations in 40 states, the District of Columbia, the Commonwealth of Puerto Rico, and five near-international countries, producing annual revenues of over $17.7 billion dollars. As Southwest continues expanding, including the ongoing integration of AirTran’s operations, it is important that they maintain the low cost structure that has made them so successful in the past. As larger and more congested destinations are added to Southwest’s routes, they must focus on customer service as the on-time arrivals and other metrics may be impacted, and they cannot afford to lose market share. Furthermore, if Southwest is to remain profitable, they must adapt AirTran to the point-to-point strategy. Additionally...
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...Title: Low Cost airlines Industry in India An overview of the Indian aircraft industry The Indian economy has grown at an average rate of around 8% in the last decade. The rise in business and leisure travel (both domestic & international) due to this growth, India emerging as a major origin and destination for international travel have all had a significant impact on commercial aviation in India. According to the airports authority of India (AAI), the passenger traffic is expected to grow at over 20% in the next five years. On the supply side, since 2003, when low fare travel in India was ushered in, a number of low cost carriers (LCC) have entered this fast growing market. However, all of the LCC carriers and - with rare exceptions – even the full service carriers (FSC) charging higher fares have been making losses. By and large, operating a commercial airline in India so far has not been a profitable business. In 2007, the industry witnessed a wave of consolidations primarily to stem the tide of red ink. Boom and bust in Indian aviation industry Air India and Indian Airlines retained a monopoly over civil aviation in India till 1992. The deregulation of the Indian economy that started in the mid-1980s, and proceeded more aggressively after the New Economic Policy in 1991, led to calls for opening up of the airline sector. Over the following years, several new airlines including Damania, EastWest, Jet, Sahara, Modiluft and NEPC started operations. However, high...
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...WestJet Airlines WestJet Airlines is a Canadian low-cost carrier that was founded in 1996 by an entrepreneur Clive Beddoe. With an idea to start up a low-fare airline company, Beddoe quickly found a team of like-minded partners and WestJet Airlines was born. The role model for WestJet was Southwest Airlines and Morris Air, both operating in the United States. The main goal of the newfound company was to offer “affordable air travel coupled with good service” (WestJet handout, pg 52). Besides being a very successful low-fare carrier, WestJet has a unique corporate culture that has been built around caring for its passengers. Even though, the image of WestJet Airlines seems perfect for today’s economy, this company faces some issues that will be discussed throughout the paper. The main problem WestJet faces is how to maintain the corporate culture with rapid company growth. The “fun” culture is what WestJet is very proud of and “believed that the culture was the key to their airline’s continued success and they could not afford to mismanage it” (WestJet handout pg 52). In tough economy and market competition, WestJet top management needs to make very important decisions to compete with its competitors while keeping the unique corporate culture. First, the company’s challenges need to be analyzed to decide what the best alternatives are for WestJet future. To begin with the analysis, very important characteristic of the WestJetters is they are so customer oriented and...
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...Classic Airlines and Marketing When a company facing a global downturn, it will try its best to survive and still make a profit. Classic Airlines has been struggling with many problems from both internal and external factors (University of Phoenix, 2011.) Gathering information from internal record and utilizing the marketing intelligence system should reveal the challenges that the Classic Airlines’ management team is facing. By conducting environmental scanning, the marketing managers should identify the areas for improvement. Collecting Information Collecting information is a challenging task that the decision-maker should understand that it is imperative to obtain all crucial info that have the most impact to the company’s operation. Two main categories are the internal records and the marketing intelligence system. Internal Records The manager can collect this internal data from the company’s database. Each department should have records of its past operations such sales, revenues, debt, costs, and product life cycle (Kotler & Keller, 2006.) Conducting general interviewing with employees is another way to gathering some informal information. The management of Classic Airlines should examine the data neutrality to determine appropriate course of actions. Employees’ morale. Many employees complained that they have read the negative reports from public media about declining sales and industrial uncertainty. Consumer confidence. The Classic Airlines rewarding...
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...September 2014 When a crisis becomes a catastrophe: Reflections on the Malaysia Airlines crises and implications for crisis management best practice By Tim Johnson, Chief Operating Officer, Regester Larkin and Jacqueline Ratcliffe, Managing Consultant, Regester Larkin Asia Pacific © Copyright Regester Larkin 2014 All rights reserved. It is every CEO’s worst fear: an event resulting in mass loss of life that becomes indelibly associated with your organisation. Malaysia Airlines experienced two such events in four months. The disappearance of flight MH370 on 8 March 2014 and shooting down of flight MH17 on 17 July 2014 presented an unprecedented challenge to the organisation, pushing it into nationalisation. But these tragic events also posed fundamental questions about the tension between crisis management best practice and the challenges of delivering a response to a dynamic, emotionally-charged situation in which control over partners and access to information is limited. In this thought piece, Tim Johnson, Chief Operating Officer of Regester Larkin Group and Jacqueline Ratcliffe, Managing Consultant of Regester Larkin Asia Pacific, make six observations about Malaysia Airlines’ response to MH370 and MH17. In exploring these issues, they do not seek to judge the actions that were taken; rather they try to draw some conclusions about what these incidents mean for the evolution of crisis management best practice. Before examining the observations in detail, it is...
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...organization selected by the student and give the solutions that can be set by the given company selected by the student. The paper will also illustrate a theoretical framework for organizational decision making. The selected topic for this term paper is organizational leadership. This topic is significant as it addresses organizational problems and challenges that the firms face and tries to give alternative remedies for those challenges. This topic is broad and helps managers in achieving the required level of production that is set for them by the board of directors and the top most managers. Although the majority of the organizations enjoy huge and healthy profits in their investments, optimal profits cannot be attained if they don't invest in organizational leadership (Zaccaro and Klimoski, 2001). This implies that the organizational decisions made by both the middle level and the top managers influence the productivity of the organization to a larger extent. The topic was also selected to give the student a vast knowledge and skills when it comes to the matters of managing organizations and giving out significant solutions for the challenges facing the organizations. Leadership Theory Short overview of Theoretical Framework Short overview of Theoretical Framework The major purpose of this part is to illustrate significant background to enable the student to explore further on...
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...Jacob Dreizin Rudiger Hesse Robert Martinez Lee Vu Hoang Nhat Victor Ka Sing Tsui Executive Summary On September 27th, 2010, Southwest Airlines announced its intention to buy AirTran Airways for $1.4 billion, with the merger being effected within two years. Although by number of planes, AirTran is just slightly more than one-quarter the size of Southwest, the number of routes that each airline presently flies is the same. We anticipate that the intended merger will thus affect the latter far more than might be suggested by the fleet size indicator. Indeed, if the U.S. Government approves the merger, Southwest would become a different entity. It would transform from a primarily regional airline into a national one, becoming America’s third-largest carrier by number of passengers flown. Its fleet would increase by over 25 percent, and it would fly two airplane types—the Boeing 717 and 737—rather than just one. Moreover, having acquired AirTran’s hub operations in Atlanta, currently the world’s busiest airport, Southwest would, for the first time, come into direct competition with Delta, the number two U.S. airline by number of passengers flown, which also claims Atlanta as its main hub. It would also take over AirTran’s Caribbean routes, thus gaining its first international operations. Our analysis will first provide a background of the U.S. airline industry, so as to illustrate the setting for this acquisition.We will then review the sources of both Southwest’s and AirTran’s present...
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