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Malaysian Airlines Industry-a comparative study
Malaysian Airlines Industry-a comparative study
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Introduction:
Long before one of its Boeing (BA) jumbo jets vanished into the tropical darkness, Malaysia Airlines was struggling to find its financial footing. The carrier has lost money for more than three years, beset by high costs, a proliferation of unprofitable new flying in its network, and two low-cost rivals at its home airport in Kuala Lumpur (Bachman 2014).
The company is said to have lost over $1.2 billion dollars in the past 3 years and that the lost is only increasing every year. It was stated that in 2013 Malaysian Airlines had a negative 4% profit margin while the worlds average airlines profit margins were 5% and up. In the last year the airlines domestic yield performance decreased by seven percent. The company’s losses can be attributed to the expansion which the carrier has been implementing. The carrier’s expansion included adding 21 new aeroplanes as well as boosting their capacity up by 19%. Analysts also criticised the carrier’s decision to buy the Airbus A380. This superjumbo was a waste of money as the company’s current capacity was already struggling to make a profit. The majority of parent company Malaysian Airline Systems (MAS:MK) is owned by the government’s sovereign wealth fund, Khazanah Nasional (Bachman 2014).
Report: Reasons for drop in share price:
Problem recognition is an important factor in the consumers search for a products and service to satisfy their needs and wants. Problem recognition includes many external and internal searches. Problem recognition is when there is a need that needs to be fulfilled, as well as the awareness of this need and strategy to fulfil this need. Problem recognition is the first stage in the five stage decision making process and is seen as one of the most im...
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.../nypost.com/2014/03/12/malaysia-airlines-has-had-a-decade-of-problems/.
Bachman J. 2014. Malaysia Airlines Has Been Missing Profits for Years, viewed 20 May 2014 from http://www.businessweek.com/articles/2014-03-24/malaysia-airlines-was-in-trouble-long-before-flight-370.
Yin W.Y. 2014. If the problem of mismanagement, leakages and corruption cannot be resolved in MAS, let MAS crash without further delay, viewed 21 May 2014 from http://www.freemalaysiatoday.com/category/opinion/2014/02/24/should-mas-bailout-continue/.
Yusuff I. 2011, Malaysia Airlines Suffers Heavy Losses In 2011 On Higher Fuel Cost & Provisions, viewed 20 May 2014 from http://www.malaysiaairlines.com/jp/en/corporate-info/press-room/latest/mas-heavy-losses-2011.html.
The BBC Network 2012, Malaysia Airlines shares dip on 2011 loss, viewed 21 May 2014 from http://www.bbc.co.uk/news/business-17216510.
• Qantas had to make an increased profit and pay a dividend to its shareholders which increased over the years of management
Genevieve Brown, (October 2, 2012). American Airlines: Timeline of Troubles [online]. Retrieved April 11, 2014, from ABC news site: http://abcnews.go.com/blogs/lifestyle/2012/10/american-airlines-timeline-of-troubles/
After September 11th, 2001, the airline industry experienced a significant drop in travel. The reasons for the airline industry downfalls also included a weak U.S and global economy, a tremendous increase in fuel costs, fears of terrorist's attacks, and a decrease in both business and vacation travel.
FOX News, (2013), “Airline profits tipped to soar in 2014, the International Air Transport Association says”http://www.news.com.au/finance/business/airline-profits-tipped-to-soar-international-air-transport-association-says/story-fnkgde2y-1226782047497
According to the International Air Transport Association, 2001 was only the second year in the history of civil aviation in which international traffic declined. Overall, it is believed that the IATA membership of airlines collectively lost more than US$12 billion during this time (Dixon, 2002).
Along with the low stock index numbers of September 17th, the airline industry and travel stocks were also rocked. One of several airlines announcing layoffs, US Airways said that they would be terminating 11,000 jobs. These heavy losses were contributed to airlines “being grounded last week [week of September 11th], plus passengers have been apprehensive to fly, in the wake of the hijackings” (Stock Markets Reopen 1).
These operating costs have not been pasted on to the consumer (Investing Insights, 2015). However, in manufacturing Boeing and Airbus hold a large proportion of the market and with other player joining the market it is unknown at this time if this trend will continue for Boeing and Airbus as consumers may take a benefit with new competitors surfacing (Investing Insights, 2015). The concern and problem extend to government regulations placing local and foreign market competitive constraints along with the future fuel market is yet to yield. In looking into the current trends and future competition as Investing Insights (2015) discusses “consumer confidence is may be as important as any of them.” It may boil down to consumer preference and being on the front line in customer service may in fact be the deciding factor for company growth. According to Wahlen, Baginski, & Bradshaw (2014), assess the financial statements and deduction is that it is evident that Delta Air Lines has a higher shareholder equity as well as cash flow in operations and investments (p. 17). Cash and short term investments have been relatively the same compared to Delta Air Lines showing a growth and double the revenue and less liabilities per capita
Kathleen Hanser, `The Secret Behind High Profits at Low-fare Airlines'. http://www.boeing.com/commercial/news/feature/profit.html [accessed 15 May 2003]
Kingfisher Airlines (KFA) was founded by Vijay Malaya and he is the chairman of United Breweries group (UB group) in the year 2003. Its first airplane was launched from Mumbai to Delhi in 9th may 2005. It started as a premium business class airline company. The airlines have a tag line “Fly the good times”. At the launch of airline, Vijay Malaya said “we are committed to achieving our ambition of making Kingfisher Airlines, India’s largest private airline both in capacity and market share. The airline ushered in a new era of luxury in India’s domestic aviation sector and its brand new aircraft with stylish red interiors, and smartly dressed crew and ground staff. Kingfisher was the first Indian airline to have in-flight entertainment (IFE) systems”. (Malaya, 2005). Kingfisher airlines are one of the seven airlines which were awarded the rating of five stars by skytrax. It operates 400 flights daily including the regional and international services. In 2009 it gave the highest market share in Indian airlines industries, carrying more than 1 million passengers. The main mistake was lack of understanding of customer requirements and luxurious facilities in airlines. Organizations focus on reducing costs and usually just CEO’S and top level managers prefer business class travel. Rest of the staff mostly travels by economy class. Moreover, buying most expensive business class tickets doesn’t go down well, when seniors aim to project the image of walking the talk. Secondly, the company is facing financial crisis since Mid-2008. After merging with Air Deccan in 2007, it is a low-cost airlines, provides minimum frills to customers at reasonable rates. Th...
As Malaysia’s very own national oil company, PETRONAS has grown considerably throughout the years. It has been performing really well financially as their revenues has been steadily increasing every year. Through its financial statements it can be seen that PETRONAS revenue has increased by RM 49,748 million from 2011 to 2012. Besides that, during the FY2012, its Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) and its Cash flow from operations has also increased by 11.1% and 10.32% respectively compared to FY2011. The revenue increased by RM 49,748 million is primarily due to the higher realized prices and favorable exchange rate movements; however the revenue increase was also partl...
The Malaysia Airline System (MAS) reported a loss of over RM1.3 billion for the Financial Year 2005. It was unacceptable to many parties such as the stakeholders and the government especially the announcement was made at the same time as some of MAS regional competitors reported strong profits in the same year.
Evaluation of Criteria 4. Purchase Decision 5. Post Purchase Evaluation Problem recognition is simply the awareness of a need. The need may be perceived or real. The problem recognition process occurs every time consumers decide they need something whether it is toilet paper or a new home.
Boeing Corporation is at an all time high for sales. "For the first time, its commercial-airplane unit earned more than its defense side."(Masters, 2007) "Boeing's backlog of orders increased 47% to a record 208 Billion, more than seven times the units 2006 revenues."(Masters, 2007) This has presented a separate problem for the organization.
However, they winnings were not helping in profit wise. Tiger Airways faced losses for 3 consecutive years as reported by Tan in 2014. Centre of Aviation (CAPA) in 2...
The Singapore Airlines needs to thoroughly understand the plans being pursued by the British Airways, Cathay Pacific, and Virign Atlantic in improving the comfort and quality of service it provides to its customers. The Singapore Airlines needs to continue differentiate itself by examining the strengths/weaknesses, and key points of these and other competitive airlines.