...Continental Carriers, Inc case Continental Carriers, Inc. 1. Consider the EPS-EBIT chart. a. Why do the lines for the stock plan and the bond plan have different slopes? What’s the significance of this difference? Because the calculation of EPS is net income divided by outstanding shares, two lines for the stock plan and bond plan have different slope. The significant difference is that two variables are different on bond and stock plan. If we assume two plans have same EBIT, a net income shows different value on two plans due to the interest expense of bond, which is 5.0 million dollar in every year till maturity. Another compounding that used to calculate EPS is outstanding shares that also differ on two plans. On bond plan, outstanding shares would be 4.5 million whereas for stock plan is 7.5 million. b. Why are EPS equal under the two plans at an EBIT of $12.5 million? Which plan would produce the higher EPS at $10 million? At $15 million? Although the stock and bond plans have a same EPS at an EBIT of $12.5 million, equation is different. The equation is shown below: Bond plan: EPS=(Net income-Dividends on preffered stock)/(Average outstanding shares)=$4'500'000/4'500'00=$1.0 Stock plan:EPS= $7'500'000/7'500'000=$1.0 According to the graph and equation, If EBIT increases above $12.5 million, bond plan will produce higher EPS because increasing debt affects to increase leverage. If EBIT decrease below $12.5 million, stock plan will produce higher EPS. Exact...
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...THE EXECUTIVE POWER 1- THE PRESIDENT OF THE REPUBLIC: Article 49 (As amended by the Constitutional Law of October 17, 1927, And by the constitutional law of may 8, 1929, And by the constitutional law of January 21, 1947 And by the constitutional law of September 21, 1990) The President of the Republic is the head of the state and the symbol of the nation's unity. He shall safeguard the constitution and Lebanon's independence, unity, and territorial integrity. The President shall preside over the Supreme Defense Council and be the Commander-in-Chief of the Armed Forces which fall under the authority of the Council of Ministers. The President of the Republic shall be elected by secret ballot and by a two thirds majority of the Chamber of Deputies. After a first ballot, an absolute majority shall be sufficient. The President's term is six years. He may not be re-elected until six years after the expiration of his last mandate. No one may be elected to the Presidency of the Republic unless he fulfills the conditions of eligibility for the Chamber of Deputies. It is also not possible to elect judges, Grade One civil servants, or their equivalents in all public institutions to the Presidency during their term or office or within two years following the date of their resignation and their effective cessation of service, or following retirement. Article 50 Upon assuming office, the President of the Republic shall take an oath of fidelity before the Parliament, to the Nation...
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...Continental Carriers, Inc Continental Carriers, Inc is a regulated general commodities motor carrier who had shipping routes up and down the Pacific Coast and to parts of the Midwest. They sought to acquire Midland Freight, Inc to expand its operations and were deliberating about which method to finance the acquisition. The purchase of Midland Freight, Inc would cost $50 million in cash. CCI would gain $8.4 million to its earnings before interest and tax. There were three options that the board of directors debated over: issuing new common stock, issuing preferred stock or selling bonds. As Ms. Thorp, evaluate the impact of the bond issue and of the stock issue on the EPS. What are the risks in each alternative? The bond alternative arranges to sell $50 million in bonds to a California insurance company with an interest rate of 10 percent at maturity of 15 years. There is $2.5 million sinking fund required which leaves $12.5 million outstanding at maturity. The issues with this method are as follows: Long-term-debt can be burdensome and can stunt or slow growth of the company. The company has to payback what was borrowed plus the interest on the debt. It also puts stockholders and management who are primary holders of stock at risk, because if the company earnings are substantially lower than what was forecasted then the bondholders can virtually gain control of company. The second alternative would be the possibility of issuing new common stock of 3 million...
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...Blue Sky University Student Research FedEx Corporation Tanan Jargalsaikhan Table of Contents Key Information 3 Business Description 4 Industry Overview and Competitive Positioning 5 Porter’s Five Forces model 5 SWOT analysis 7 Financial Analysis 8 Cash Flows 8 Common size statements 9 Evaluating Internal Liquidity 11 Evaluating Operating Performance 12 Valuation 14 Dividend Discount Model 14 Present Value of Free Cash Flow to Equity 15 Present Value of Operating Free Cash Flow 17 Relative Valuation 19 Investment Risks 20 Investment Summary 21 Conclusion 22 * Key Information Company name: FEDEX CORPORATION Exchange: New York Stock Exchange (NYSE) Ticker symbol: FDX Sector: Services Industry: Air Delivery and Freight Services Price: $166.11 (as of 30 January, 2015) Price Target: $189.13 Recommendation: HOLD / BUY * * Business Description FedEx Corporations (“FedEx”) is one of the largest operating delivery service companies within the United States as well as globally. The company was first founded in 1971 and today operates in over 220 countries with its headquarters based in Memphis, Tennessee. The company has over 300,000 employees worldwide. The revenue for 2014 was $45,6 billion and the net income was $2,1 billion. The firm is the prevailing leader within the delivery and freight service industry. This is substantiated through sales, profit, and growth. FedEx’s revenue is one...
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...analysis Texas Air, Inc. I. Main Problem * Pricing Strategy Sub problem: * Late departures * Poor service and safety II. Objectives * To defend its price leadership over its competitors in the airline industry. * To amend its pricing strategy to avoid massive losses. * To shun being the lowest rank out of fourteen major airline in its evaluation on time arrival. * To improve service and safety of the Texas Air Inc. III. SWOT analysis Strengths * Price leadership * Largest airline system * High number of established, high frequency discount rates Weaknesses * Poor service and safety * Ultra low-fares Opportunities * Growth and expansion * partnership Threats * Competition * Passengers complaints IV. Alternative Course s of Actions (ACAs) ACA1. Texas Air Inc. will now be increasing its price by 30%. Expect high quality service would be given to its consumers. ACA2. Set aside pricing philosophy Peanut and MaxSaver fares. V. Recommendation We decided to adapt ACA1 because this can be better strategic move for the Texas Air Inc. In this strategy, they can avoid passenger’s complaints such as late departures, canceled flights and dirty planes. We believe that they can give their passengers a high quality services. VI. Marketing Strategy Executive Summary: Early in 1987, Texas Air bought Eastern Airlines and the financially troubled People Express. Texas merged Continental, New York Air, and...
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...HIST101 American History to 1877 A Man of Honor George Washington was the first president of the United States and is known as “the Father of Our Country. He was a man with much conviction, humility, and integrity. George Washington trusted in God, was willing to sacrifice much, and he was selfless. All of these qualities were important to his success as a military leader and as the leader of the nation. It is apparent by how revered Washington is today that he was a man of honor. George Washington begin life in Virginia in 1732. He was the son of Augustine and Mary Ball Washington. The tale of him cutting down the cherry tree, is just a tale created by author Mason Locke Weems. Weems wanted Washington's life to appear more interesting in the biography he wrote. The biography, A History of the Life and Death, Virtues and Exploits, of General George Washington, “supplied the American people with flattering (and often rhyming) renditions of the events that shaped their hero”. Lawrence Washington was George's older brother. Lawrence was a great influence on George's life. After the death of their father, George spent a lot of time with Lawrence at his home, Mount Vernon. Washington learned the gentlemanly ways and manners of the time from Lawrence. One of the things George enjoyed most was fox-hunting. When Lawrence died, Mount Vernon was left to George. Washington received little formal education. This was due to his father dying when he was a boy...
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...George Washington was a great man of example. The legacy he left behind has yet to be matched. From his fear of God and self-control to his experiences as leader of an unlikely army and first president of the United States, He has emerged a great example to quote, admire and to learn from. No wonder why some have named him “The Father of His Country.” He was not always considered worthy of such a title. Biographies of his life show us that he was just a man like us. He still made mistakes and had errors. Despite this, he had the ability to learn, adapt and succeed. Leading the Continental Army, Washington was not the most experience general the Continental Congress had to choose from. Washington even admitted that in his opinion, he was not qualified to be the Commander and Chief of the Army. Nevertheless, he learned how to be a general by choosing more experienced generals to advise him. He retired thinking that he was done with public service for his lifetime. He retired an American hero. He retired defeating the World Power in their best game. His hair had even grown grey in the process and he was not in the same intimidating physical shape as he was when the war started, but he was not done. He was elected president unanimously. He was the first ever president this nation has had. He, just as in his unanimous Commander and Chief election, admitted that he was not qualified to be America’s first president. But he learned, adapted and succeeded. He knew that precedents...
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...Karasti 1 Aviation and the Law Kevin Karasti The Demise of Eastern Airlines By 1985 Eastern Airlines had become one of the United States’ largest airlines. They operated in twenty-six countries on three different continents, and were considered one of the four prominent airlines in the U.S. Although for a time they were successful, it wasn’t long after that Eastern Airlines began to run into problems. Eventually Eastern made a decision that would prove to be disastrous for the airlines-- they sold the company to Frank Lorenzo. Why did Eastern sell to Texas Air? For starters, the 1970's and 80's proved to be a very difficult time for many airline companies. In the late 70’s the Airline Deregulation Act of 1978 was passed. The enactment did provide many new freedoms (freedom to expand their route systems for example), and positive outcomes for airline carriers. One of which was flexibility to develop innovative pricing structures. This flexibility allowed carriers to expand into new markets. Yet with the positive changes of deregulation, came negative consequences for the airlines-- “airfare wars.” Companies now had to compete to remain in the market. They waged airfare wars against their rivals, slashing their own prices to knock off smaller companies. Many airlines struggled tremendously, and had difficulty keeping their doors open. This made many air carriers susceptible to unwanted, hostile takeovers and mergers. In 1985 Eastern was a large airline (three...
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...Continental Airlines and United Airlines Merger Tony McDougal December 2, 2012 Professor Bates Abstract This paper explains the challenges faced by two major U.S. airlines, United and Continental airlines in an attempt to merge, and form the world's largest airline based in the United States. This consideration is based in relation to the movement of passengers via air traffic. The airline merge occurred in order for each airline to survive and be competitive within the airline industry. The paper explains briefly the reason for this merger, the strategy it used and went through to accomplish the merger. It also explains some pros and cons the merger and management faced. It explains the vision of the newly created company in reference to where they want to be in the future and the profit of revenue they foresee to earn with this merger. This paper outlines the structural change the new United Airlines came up with after the merger took place and how both United and Continental Airlines management, employees, and customers adapted to the merge. Continental Airlines and United Airlines Merger The merger of United and Continental airlines that was under way in 2008 formed the third’s world largest airline. This merge occurred during the decrease of air travel from heightened security measures against terrorism and high fuel costs. During this time, the United States government also tried to help by giving the airline industry monetary...
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...UVA-OB-0705 MAKING THE TOUGH TEAM CALL (A) Gudrun Dammermann-Priess was stunned after this latest round of project presentations. In the nine years since the international management program (IMP) began, she never had a project so bad that she considered not allowing it to go forward. With only six weeks until the final project deliverable in mid-May 2000—a 15-minute presentation in front of 100 top executives at Continental A.G., including the chief executive officer (CEO) and at least four other members of the Vorstand—the software team project was a potential embarrassment in a very high-stakes environment. The CEO’s concluding remarks from the previous year’s IMP–1999 echoed in her ears. “I would like all my top managers to take notice. If only your presentations were as good as those we have seen this afternoon.” The IMP program had risen substantially in stature and useful strategic output over the last several years, and the risks of presenting a poor project were, for Dammermann, acutely felt. Literally from the very first module of IMP–2000 in November 1999, when teams were put together and matched to mentors and projects, the three members of this project were in complete disagreement about almost every aspect of the project and its development. They disagreed on what the mentor wanted them to accomplish and how they might begin to approach answering the key questions. Furthermore, even though there were some personal interest overlaps, the styles of two team members...
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...Managing IT for Business Continental Airlines: Outsourcing IT to Support Business Transformation Questions: 1. Why is it necessary to have top management support for the implementation of technology innovations? Innovation implementation require adequate resources including money, but more importantly, people and time. These resources will not be formed without top management support. Top management support is essential for the project since it is they who allocate the funds which turn the wheels of changes in the organization. At all stage of implementation, management must monitor and change the process if necessary (Mohini and Dianne, 2004). In the case of Continental Airlines, Janet Wejman who were the Chief Information Officer noted in the case which the management team treated the new technology as a progress continuity that Continental had made. In this case, the investment of $2.5 million on an email system, $2.8 billion outsourcing agreement and other investment will not been realized without the approval and support from the top management. 2. What do top managers need to know about IT in order to run their business? The dependency on information technology (IT) has increased progressively for organizations as a strategically important competitive advantage. If planned, developed, and managed properly, IT can bring about greater efficiency in organizational operations, better working environments, and effective decision-making processes. A...
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...Overview of Airline Industry Depreciation Policies, 12/22/99 CFRA believes that certain airline companies have recently obtained an earnings boost by extending the depreciable lives and increasing the residual values relating to operating aircraft. In addition, some airlines have recently recorded one-time write-downs and losses on the sale of aircraft, leading to questions about the proper depreciable life of aircraft. Typically, an airline’s aircraft depreciation expense is derived by initially estimating both the useful life and the residual value -- or the perceived fair market value of the aircraft at the end of its estimated useful life. To determine the periodic depreciation expense -- which reduces the value of the aircraft on the company’s balance sheet while increasing operating expenses -- the total cost of the aircraft is reduced by the estimated residual value and that sum is divided by the estimated useful life. By increasing the estimated residual value and extending the estimated useful life of its aircraft, an airline company would prospectively record a lower depreciation expense on its income statement and a higher value for each aircraft on its balance sheet. Consequently, the airline would receive a boost to earnings in all future periods and a boost to earnings growth during the four quarters following the change, as prior financial statements are not restated. While near term earnings would be boosted by the reduced depreciation expense, future earnings...
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...Quality Management at United Airlines Brandon L. Smith Keller Graduate School of Management GM 588 6/20/2012 Dr. Kim Hunley INTRODUCTION United Airlines is a major airline based in the United States and one of the world’s largest airlines. It was formed in 1934. It is a subsidiary of United Continental Holdings Inc. Its headquarters are located in Chicago, IL. United is a founding member of the Star Alliance, the largest alliance in the world. On October 1, 2010 United and Continental airlines merged together forming the world’s largest airline in revenue passenger miles and second largest in fleet size and destinations. “The new United will offer customers an enhanced travel experience, combining the best products and services each carrier has to offer,” (The World's Leading Airline, 2012). The airline is supposed to be the airline that customers want to fly, the airline employees want to work for and the airline shareholders want to invest in. The key highlights of the merger are the following: * World’s most comprehensive global network, including world class international gateways to Asia, Europe, Latin America, Africa and Middle East with non-stop or one stop service from virtually anywhere in the United States * Most modern and fuel-efficient fleet and the best new aircraft order book, among U.S. network carriers * Industry-leading frequent flyer program that will provide more opportunities to earn and redeem miles worldwide *...
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...they are still notably lower than in 2008 , which should ease cash usage throughout the group and allow good entry points into new fuel hedge positions, thereby offering protection if oil spikes again. According to S&P, the top 10 U.S. carriers lost about $5 billion in 2009, after a $4 billion loss in 2008, as the benefit of lower jet fuel costs was eroded by lower airfares and falling passenger levels. Results in 2008 were impacted by record high oil prices. Airlines have cut fares in response to weakening demand, but we think recent cuts to domestic and international supply could help restore some pricing power. For 2010, S&P estimates a net profit of about $2.0 billion for the top 10 U.S. major airlines Continental Airlines, Inc. –SWOT Analysis Continental Airlines is a major U.S. air carrier engaged in the business of transporting passengers, cargo and mail. The company has a strong market presence and a robust hub system. The company would be...
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...[Type the company name] | GM588 Course Project | [Type the document subtitle] | | 6/15/2011 | INTRODUCTION United Airlines is a major airline based in the United States and one of the world’s largest airlines. It was formed in 1934. It is a subsidiary of United Continental Holdings Inc. Its headquarters are located in Chicago, IL. United is a founding member of the Star Alliance, the largest alliance in the world. On October 1, 2010 United and Continental airlines merged together forming the world’s largest airline in revenue passenger miles and second largest in fleet size and destinations. “The new United will offer customers an enhanced travel experience, combining the best products and services each carrier has to offer,” (The World's Leading Airline, 2011). The airline is suppose to be the airline that customers want to fly, the airline employees want to work for and the airline shareholders want to invest in. The key highlights of the merger are the following: * World’s most comprehensive global network, including world class international gateways to Asia, Europe, Latin America, Africa and Middle East with non-stop or one stop service from virtually anywhere in the United States * Most modern and fuel-efficient fleet and the best new aircraft order book, among U.S. network carriers * Industry-leading frequent flyer program that will provide more opportunities to earn and redeem miles worldwide * Optimal hub locations in 10 cities...
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