Airline Industry Problems and Suggested Solutions The airline industry has over the past few months gradually been going into recession. This has been due to a number of factors, all affecting the industry in a negative manner at the same time. This has resulted in low profits and poor performance. The decline in the industry sharply increased after the terrorist attacks on the United States, increasing the urgency to clearly identify the causes of the problems faced and to find any solutions available to overcome them. One of the factors contributing to the poor performance has been the global economic slowdown whose effect has not been limited to the airline industry but has extended to many other industries.
They have been known for exceptional customer service, as noted in their mission statement, however in 2014 one headline read, “After decades of prompt departures and arrivals, its punctuality has been abysmal since August” (Southwest Airlines). This unpleasant and unexpected turn came when Southwest attempted to make a change in the time allotted for turnarounds at the airport. Perhaps they became a little too greedy with everything that was going right for them. Their plan was to crunch time and make money by having more flights in less time. Unfortunately, their plan did not work exactly how they had hoped; one delay caused a domino effect and less than 60 percent of their flights were arriving or departing on time (Southwest Airlines).
It is not surprising that the subsequent slump in air travel which began in the USA towards the end of 2000 and slowly spread to other parts of the world (Economist, 2001), corresponded to a change in the economic forces as the knock on effects of the US economic slowdown infiltrated the global economy. One of the main consequences of the g... ... middle of paper ... ... flights and the introduction of ‘World Traveller Plus’ – a new business and economy product. These two markets of business and economy are perceived to be the most demanding and profitable in the future and therefore BA have additionally positioned itself well to take advantage of these developments (Economist, 2002b; BA Fact book, 2002). Therefore, the penetration and consolidation of markets, cost management and refocusing of culture and infrastructure assisted by the collaboration available within its OneWorld Alliance are placing BA in a healthier position to survive the turbulence that lies ahead. FINAL THOUGHTS The future of BA and that of many other airlines is going to depend on the highly volatile political and economic situation facing the world as seen in section 1.
Saddling High Levels of Debt During the 1970’s, the managers of Ling-Temco-Vought, Inc. (LTV)—manufacturers of aircraft and aircraft related electronics, borrowed heavily to exploit the advantage of financing operations with debt. At first the airlines were making profits; their operating income a lot higher than interest expenses. Unfortunately as the business cycle turned, the company was unable to continue making profits, reporting losses. Their expenses were a lot higher than their interest income. This burdened the company with a lot of debt, and hence pushed the company to the brink of bankruptcy.
Contents 1) Executive Summary 2) Background 3) Aspect and issues 4) Body 5) Recommendation 6) Conclusion 7) References Executive Summary The purpose of this report is to show how Qantas was affected by global financial crisis. Qantas is the second oldest airlines in the world. It is one of the tough competitors for other airlines. But Qantas was affected badly during the crisis, the tickets prices went up because the fuel prices went up. I have suggested few recommendations for Qantas to bounce back , what can be done without laying of the employees and have also spoke about cost cutting.
British Airways Financial Analysis The following pages comprise of a financial analysis of British Airways for the financial year ending March 31, 1999. British Airways is a well-established company and has enjoyed high profits for the majority of its existence. However, the most recent accounts that have been published tell a different story of how the year has been. British Airways produced a pre-tax profit of £225 million. This is £355 million less than in 1998 which illustrates the decline in demand for British Airways services.
When Airbus informed public about the delay of A380 EADS lost 1/3 of its value and Airbus CEO had to resign. Market was not happy with the development of A350 either forcing Airbus to redesign it and re-launch almost as a new airplane. Last but definitely not least, weak performance of dollar against euro reduced EADS competitiveness against US peers by approx. 20%. Increasing cost of hedging, additional research and development spending, significant cost of fines paid to A380 customers for the delays caused the FY 2006 financial results to be really bad – worst in the entire history of EADS.
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.
The total revenues increased by 20% from $5.9 billion to $7.1 billion over the last year. To be able to see the extent of Bombardier's operations it is best to look at each manufacturing group separately. Aerospace Aerospace is Bombardier's most important industry. It accounted for 47% of sales and 33% of profit in 1995 and makes Bombardier the fourth largest civilian airplane manufacturer in the world. Bombardier's customers are spread out over the globe.
Infrastructure of aviation industry has been undergoes a drastic development in term of quality and quantity. Nowadays, people could travel by air easily with an affordable price. Based on IATA fact sheet of World Industry Statistics, the total net profits of world airlines have shown remarkable instability over the past 24 years. From 1990 to 1993, due to the Gulf War and subsequent economic recession, the world airline industry announced four consecutive years of losses totaling over $22 billion. In the late 1990s, it returned to record profitability with total net profits in excess of $25 billion being reported by world airlines from 1995 to 1999.