...have learned from the posts from CBC done on Air Canada since 1991, it has been a battle for the organization. Many factors have influenced Air Canada's position in the market. Political factors that Air Canada has always dealt with is the fact that it is Canada's national airline. Out of the $160 million dollars the industry received, Air Canada received $100 million (CBC). It seems Air Canada is sightly shielded from the marketplace as the minister of transport believes it should be the national airline carrier. In 1991 (check!) the merging of Canadian Airlines and Air Canada showed that although government tried to split resources for both Canadian airlines, they could not offer enough support for both. During the economic downturn, it became a luxury to fly. The recession had a major impact on the amount of unnecessary flying the public did. In conjunction with soaring fuel costs, it was difficult for Air Canada to keep their prices low (coupled with the recession, that does not equal more flying). Global Health Threats (such as SARS) and terrorism (9/11 and various scares) does not translate to customers wanting to jump on planes. Also, as the media does not portray Air Canada accurately (as per last video) and prices are exactly accurate across all airlines (with meticulous monitoring) there has to be another way for Air Canada to differentiate itself. As mentioned earlier, the sociocultural attitude towards Air Canada is not positive. Though this may be media influence...
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...Air Canada Evaluation Executive Summary Air Canada is a full service airline company with the largest market share in the Canadian market making it the largest airline in Canada and 15th in the world. I don’t recommend lending Air Canada due to: * Weak industry conditions * Poor historical performance/financial health * Risk factors assessment * Poor credit ratings Summary of Main Points The airline industry is a very volatile industry with a lot of uncertainties. Based on Porter’s five forces, companies in the airline business are faced with challenges such as threat of new entrants, high buyers power, high suppliers power, availability of substitutes, and intense competition. Historical operating results are poor. The company has been having continuing losses since 2008. Also, financially it is not healthy. Air Canada leverage ratio is very high, and obligated to significant debt due to pension fund, employees’ benefit, and orders of new crafts. Labor strike is a major risk factor. Recently, the company was faced with several strikes that caused many flights delays or cancelations. Negotiation is taking place between the company and labor unions. Outcome this negotiation might result in higher labor cost preventing the company from enhancing its cost structure. According to S&P, Air Canada credit rating is B-, which is a non-investment grade. Also, Moody’s downgraded the company from B3 to Caa1 due to its debt obligation and high...
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...ANNUAL REPORT 2013 1. HigHligHts Fourth Quarter Full Year $ Change 55 88 (34) 54 54 54 8 0.1 pp 3.0 pp (6) 76 (0.4) pp 2.4 pp 346 (255) 214 3.1 pp $0.20 $0.03 % Change 2.5 3.5 (0.9) pp (0.6) (1.7) (1.6) (1.8) (2.3) 0.2 0.3 (0.2) (1.8) 1.1 0.3 0.2 3.0 The financial and operating highlights for Air Canada for the periods indicated are as follows. (Canadian dollars in millions, except where indicated) Financial Performance Metrics Operating revenues Operating income Non-operating expense (1) Income (loss) before income taxes and discontinued operations Net income (loss) from continuing operations Net loss from discontinued operations – Aveos Net income (loss) Adjusted net income (loss) (2) Operating margin, excluding the impact of benefit plan amendments % (3) Operating margin % EBITDAR, excluding the impact of benefit plan amendments (3) (4) EBITDAR (4) EBITDAR margin, excluding the impact of benefit plan amendments % (3) (4) EBITDAR margin % (4) Unrestricted liquidity (5) Free cash flow (6) Adjusted net debt (7) Return on invested capital ("ROIC") %(8) Diluted earnings (loss) per share Adjusted net income (loss) per share – diluted (2) Operating Statistics (9) Revenue passenger miles (millions) ("RPM") Available seat miles (millions) ("ASM") Passenger load factor % Passenger revenue per RPM (“Yield”) (cents) Passenger revenue per ASM (“RASM”) (cents) Operating revenue per ASM (cents) Operating expense per ASM (“CASM”) excluding the impact of benefit plan amendments...
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...ANNUAL REPORT 2014 1. HIGHLIGHTS The financial and operating highlights for Air Canada for the periods indicated are as follows. FOURTH QUARTER CANADIAN DOLLARS IN MILLIONS, EXCEPT WHERE INDICATED 2014 2013 FULL YEAR $ Change 2014 2013 $ Change FINANCIAL PERFORMANCE METRICS Operating revenues 3,104 2,894 210 13,272 12,382 890 106 135 (29) 815 619 196 (206) (141) (65) (710) (617) (93) (100) (6) (94) 105 10 95 67 3 64 531 340 191 3.4% 1.8% 1.6 pp 6.1% 4.3% 1.8 pp 3.4% 4.7% (1.3) pp 6.1% 5.0% 1.1 pp 319 277 42 1,671 1,433 238 319 359 (40) 1,671 1,515 156 Operating income Non-operating expense (1) Net income (loss) Adjusted net income (2) Operating margin, excluding the impact of benefit plan amendments % (3) Operating margin % EBITDAR, excluding the impact of benefit plan amendments (3)(4) EBITDAR (4) EBITDAR margin, excluding the impact of benefit plan amendments % (3)(4) EBITDAR margin % (4) 10.3% 9.6% 0.7 pp 12.6% 11.6% 1.0 pp 10.3% 12.4% (2.1) pp 12.6% 12.2% 0.4 pp Unrestricted liquidity (5) 2,685 2,364 321 2,685 2,364 321 Free cash flow (6) (366) (276) (90) (560) (231) (329) Adjusted net debt (7) 5,132 4,351 781 5,132 4,351 781 Return on invested capital (“ROIC”)...
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...integral to the growth of the company over the past several years. Situation Analysis Porter Airlines operates in a fiercely competitive airline industry, where competitors compete based on price, service, and comfort of passengers, and frequently engages in predatory practices to squeeze out smaller players in the market. The performance of the company depends on external environment factors, such as economic factors of oil and fare prices that will influence margins, or political factors impacting the future bridge and accessibility improvements to the city center airport. Porter’s competitive advantage is linked to the convenience of the Toronto City Center Airport, such as proximity to business core and expedited security and check-in times. Additionally, a critical success factor for Porter is to maintain the commercial exclusivity on the airport, to take advantage of cost savings as a result of being the owner, tenant, and operator. Competitive advantage is also a result of operating a single class of aircraft that has significant cost and operational efficiencies. Alternatives and Recommendation ------------------------------------------------- Several alternatives were provided for Porter to continue its growth, including a focus on refining competitive advantages and improving the TCCA, expanding the destination portfolio to include additional local destinations as well as Western Canada destinations, and the possibility of joining a strategic alliance, which are...
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...Air Canada is Canada’s largest domestic and international full-service airline and the largest provider of scheduled passenger services in the domestic market, the transborder market and each of the Canada-Europe, Canada-Pacific, Canada-Caribbean/Central America and Canada-South America markets. Passenger transportation is the principal business of the Corporation and, in 2009, represented 87% of its total operating revenues. During 2009, Air Canada, together with Jazz, operated, on average, approximately 1,331 scheduled flights daily and carried almost 31 million passengers. In 2009, Air Canada and Jazz provided direct passenger air transportation to 156 destinations and, through commercial agreements with other unaffiliated regional airlines referred to as tier III carriers, to an additional 11 destinations, for a total of 167 direct destinations on five continents. The Corporation’s primary hubs are located in Toronto, Montreal, Vancouver and Calgary. Air Canada also operates an extensive global network in conjunction with its international partners. Air Canada is a founding member of the Star Alliance Network, the world’s largest airline alliance group. The Star Alliance Network includes 26 member airlines. Through its strategic and commercial arrangements with Star Alliance members, Air Canada is able to offer its customers access to approximately 1,077 destinations in 175 countries, as well as reciprocal participation in frequent flyer programs and use...
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...Financial Statement Analysis Learning Team B Victoria Boykins, Vanny Manea, Justin Rogers, Princess Tillman ACC/561 June 20, 2011 Financial Statement Analysis Through the analysis of three companies from the manufacturing, service, and retail sales sectors, Team B will discuss how three differences in the industries and different IASB and FASB measurement conventions affect presentationsdifferent sectors: manufacturing, service, and retail sales. The team will analyze the companies based on the computations of the quick and current liquidity ratios, the DuPont ratio, profit margin, asset utilization, and financial leverage of each company. These values , which are computed using publicly available financial statements. We The team will also discuss differences in industries, IASB and FASB measurement conventions, and determinante differences in the cash basis versus the accrual basis accounting that affect presentations. Financial Information Coca Cola, INC. According to the Yahoo Finance website (2011), The Coca-Cola Company is a manufacturing company that distributes and markets soft drinks and syrups worldwide. The company primarily sells its beverages to distributors, fountain wholesalers, and fountain retailers. The company was founded in 1886 and has been standing strong for years. Its major competitors are Pepsi, Dr. Pepper, and a French company called Groupe Danone. WAL-MART, INC. According to the Yahoo Finance website (2011), Wal-mart Stores, Inc. Wal-Mart...
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...Report about Airline Industry 1. Introduction Airline is a large and growing industry. It facilitates economic growth, world trade, international investment and tourism therefore it is a central industry in Canada. Airlines are companies that provide air transport services for passengers and freights. Airlines lease or own their aircrafts with which to supply these services and may form partnerships or alliances with other airlines for mutual benefit. Airline services can be categorized as being intercontinental, domestic, regional, or international. Airline industry in Canada has two major carrier families---Air Canada and Canadian Airlines International Ltd. Both major carriers are affiliated through ownership with regional or specialized local carriers. While Air Canada and Canadian carry passengers and cargo on scheduled and charter flights domestically and internationally, their affiliates generally serve the different regions of the country. The airline industry makes a significant contribution to the Canadian economy. In 2014, for example, the industry generated $7.6 billion in operating revenues and employed 53,000 people. Moreover, the airlines carried 32 million passengers on domestic and international flights. 2.PESTE analysis 2.1 Political The airline industry is very susceptible to changes in the political environment. Canadian political environment is stable and airline industry operates in a highly regulated political environment where passengers’...
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...Introduction: Porter Airlines has managed to find success where many small carrier airlines have not. The company has survived predator competition from Air Canada to become a recognized brand in South Eastern Canada for the time-sensitive business traveller segment. The company has developed a loyal customer base and continues to capitalize on its strengths which include it location, ownership of the Billy Bishop Airport. Despite its success the company is currently focused on expanding its operational efforts both nationally and cross-border to the US and must consider a variety of options which can achieve this. Situational Analysis: External Environment: PESTEL: Political: Porter operates largely within Canada. Its home terminal is located in Toronto so it largely affected by the political environment in Canada, at large, but more specifically by the political environment in Ontario. The local and national political environment in Canada is relatively stable as there are no significant unrests in the country to impact the operations of the Porter Airlines. Economic: The economic environment in Canada has also been stable in recent years. Inflation rates are currently decreasing and lower than the GDP growth rate of 2.63% . The stabilization of oil prices will lead to savings for companies since fuel costs are a major expense for most airlines. Tax policies are favourable for Canadian corporations. However, the Canadian dollar has been experiencing recent instability...
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...Sage Consultants January 19, 2012 Mr Olive Yue, CEO Air Canada 135- 5980 Miller Rd Richmond, BC V7B 1K2 Dear Mr. Yue, Report on Changes and Trends in the Airline Industry I am writing this report in response to your recent request to Sage Consulting to advise Air Canada on the emerging changes and trends in the airline industry. This report will address major issues rather than trivial ones. Currently, the fierce rivalry between the different airlines means that Air Canada must continue to innovate in the ever-changing market place in order to stay relevant. Given that the airline industry is highly sensitive to changes in the wider economy, our company has performed in-depth research and analysis on the challenges and opportunities that these social changes may bring as well as the potential impact that they may have on Air Canada. Furthermore, we have also investigated the innovative practices that are currently being developed by your competitors which Air Canada should be aware of. Based on the strengths and weakness of Air Canada, we have come up with recommendation on ways that your company can best adapt to these changes. We hope that you and your senior management staff will find this detailed report to be useful and insighful. Thank you once again for choosing Sage Consulting Inc. Sincerely. Henry Fung Senior Consultant Sage Consultants Inc. 1055 Georgia Street – Suite 301 Vancouver, BC V6E 3H3 Telephone (604)-301-3001 Emerging...
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...Case Study Analysis Air Canada takes off with Maintenix 1. What problems does Air Canada hope that Maintenix will solve? Air Canada is keen on replacing old software packages (that has served the company over 15 years) with new and more efficient packages able to boost productivity. This decision is aligned with the company’s strategic goal which is to improve operational efficiencies and decision-making process. The old systems were not able to interact with one another, resulting in more time spent by the engineer to coordinate between the different systems rather than focus solely on maintaining planes which is the core activity. 2. How does Maintenix improve operational efficiency and decision-making? Air Canada is striving to be more competitive in the airline industry. The company believes that by investing in information system, it will be able to capture more value resulting in higher dollar figures at the bottom line. Value is created by improving operational efficiency and by rendering decision making process more effective. Therefore, Air Canada has decided to put in action a new software package called Maintenix which is provided by Mxi. Briefly stating, Maintenix consists of a software package delivering integrated, intelligent aviation MRO software. MRO stands for maintenance, repair and operations, and all of these elements must work collectively to accentuate the company’s productivity. Sharing of information is made easy on Maintenix allowing...
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...2009. Leaders of the company believe that the core to their success is care.” Handle with care” is the company credo and not only that. It is everyday reality and the way how the company does the business. Other two key elements contributing to the success are low–cost structure and company’s culture, which is unique in the airline business. WestJet was awarded four times as one of Canada’s Most Admired Corporate Culture and in 2010 survey as one of the best employer in Canada. Company History History of the company started with successful businessmen Clive Beddoe from Calgary. In 1994 he bought Western Concord Manufacturing Ltd., which brought him to the flying business. He bought small cabin plane and flew it himself, in order to save money on company’s executives’ high air travel expenses. Later he leased the plane to other businesses via local charter operation Morgan Air Service Co Ltd.Beddoe saw an opportunity in offering cheap flights which could afford everyone. Tim Morgan, the president of Morgan Air Service Co and two others investors liked Beddoe’s idea about starting their own discount airline. Together they approached other investors and in 1995 the accumulated more than $8, 5 million dollars for starting new airline. The company was officially founded in May 1995 under name West Jet Airlines Ltd. In February 1996, they started flight operation with three aircrafts and 220 employees, offering flights to Vancouver, Calgary, Edmonton, Kelowna, and Winnipeg. Since...
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...Table of Contents Executive Summary 2 Problem Statement 2 Situation Analysis Company Objectives 2 Company Background 3 S.W.O.T. Analysis 4 Market Analysis 5 STEEPL 6 Consumer Analysis 7 Case Keys 8 Alternatives 9 Recommendation 10 Action Plan 10 Contingency Plan 11 Appendix A Exhibit 1 Segmentation Chart 12 Bibliography 12 Executive Summary MMI Product Placement Inc., established in 1985, is the pioneer in the business of product placement in Canada. MMI leveraged its relationship with the Canadian entertainment industry to incorporate its clients’ brands into films and TV shows. Greyhound, the country’s largest provider of intercity bus transportation, recruited MMI services to provide cost-effective ways to communicate its marketing message to consumers. Philip Hart, president of MMI, was preparing to make a final pitch to sign up Greyhound as client. For Greyhound, the major competitors include VIA Rail, owned automobile, and airline transportation companies. The consumer segmentation can be divided into three groups including college and university students, newer professionals and established professionals. The target market will be age 18 to 24 college and university young professionals. Philip Hart needs to decide which promotional vehicle would be best for Greyhound’s product placement. The alternative choices include to stick with traditional advertising, or product placement on TV series shows like “Corner Gas” or...
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...provide a comparative analysis of leadership and the external environment for the following four airlines: AirTran, Delta, WestJet and Air Canada. Introduction The drive for lower operational costs and increased efficiency has forced many companies of the world to turn towards mergers and acquisitions. However, even then when companies realize that cost cuts cannot be born out of “corporate marriages”. Instead a new trend in strategic management emerged to achieve similar objectives - forming alliances. Among the industries, alliances and networking are dominant in the airlines industries with North America securing the leadership position followed by European carriers. Both the Canadian and the US airlines industries account for a market approximately $4.5 billion and $5.5 billion respectively (Factsheet from WestJet Website 2005), offering widespread opportunities for airlines to exploit and explore. Yet one observes many airlines have been filing for bankruptcy protection; others constrained for profit margins; and there are some that are enjoying greatly the benefits of these vast markets. There are a host of reasons macro and micro factors responsible for the diversified operational outcomes of airlines. In the following discussion the researcher offers an overview of the North American airline industries through a macro and micro environmental analysis of the four of the leading airlines in the US and Canada - namely AirTran, Delta, WestJet and Air Canada with the hope to...
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...Market Analysis Product placement is the form of advertisement where a product is placed in a context of ads in movies or TV shows. Since the first instance of formal product placement occurred in 1951, there have been countless placements in thousands of movies and TV shows. Product placement has experienced a surge in the mid-1980s and strong growth ever since. In 2005, estimated total global spending on paid product placements is about US$2.21 billion. Forecasted that by 2010, 75% of scripted shows will include product placement and the revenues will reach US$50 billion. Competitive Analysis MMI The product placement segment of the industry is dominated by small business typically run by their owners who have experience in the entertainment industry. A few larger ad agencies offer the same service with the intention of offering one-stop-shopping for their clients. These are typically the result of acquisitions of smaller specialty firms. The smaller firms tend to have the advantage because they typically have experience and a background with film and TV producers whereas the large firms often do not. In addition, the small firms like MMI offer more personalized service and build ongoing relationships with their clients. Greyhound Greyhound is currently Canada’s largest provider of intercity bus transportation and serves 6.5 million passengers each year, which constitutes about 40% of the market. Its brand logo, the running dog, is highly recognized. In addition...
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