...brief overview of the growth and trends in the industry. Importance to economy The revenue of international airlines industry has increased from 476 billion USD in 2009 to 567 billion USD in 2011, a 9.3% year-on-year increase. This industry employs 56.5 million workers and accounts for US $2.2 trillion of the global GDP. Indian Aviation industry contributes to 0.5% of the India’s GDP and generates 1.7 million jobs. Technological Trends Major cost items for airlines are fuel, labour and maintenance. Airlines are able to reduce the cost/increase profit by adopting innovations such as more fuel efficient planes, reducing turnaround time, extra charges for less cramped seats, excess luggage etc. and providing ticketing facilities online. Analyst View The industry is facing major challenges in form of increasing fuel prices, depreciation in rupee value and high sales tax. But the passengers are going to increase in FY’14. However, the forecast for Indian aviation sector for FY 14 remains bleak. The Jet Etihad deal has reached next step. Foreign airlines entry will depend on the results of this deal. Government has planned to construct 50 low cost Airports. Delhi will be first among them. Mergers & Acquisitions Due to high competition and slim profits there has always been an urge in the Aviation industry for mergers and acquisitions. Since it helps the airline to...
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...___________________________________________________________________________________________ English - Or. English DIRECTORATE FOR FINANCIAL AND ENTERPRISE AFFAIRS COMPETITION COMMITTEE DAF/COMP(2014)14 Unclassified AIRLINE COMPETITION -- Background Paper by the Secretariat -18-19 June 2014 This document was prepared by the OECD Secretariat to serve as a background note for Item IX at the 121st meeting of OECD Competition Committee on 18-19 June 2014. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the Organisation or of the governments of its member countries. More documents related to this discussion can be found at http://www.oecd.org/daf/competition/airlinecompetition.htm. English - Or. English JT03358883 Complete document available on OLIS in its original format This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. DAF/COMP(2014)14 TABLE OF CONTENTS Introduction ................................................................................................................................................. 3 1. Features of the airline industry ............................................................................................................. 4 1.1. Liberalisation of the air transportation industry .......................................
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...IAG INTERNATIONAL AIRLINES GROUP Corporate finance 2013 ------------------------------------------------- Index 1. Company profile 1. Core activities 2. Competitors 3. External finance 1. Corporate governance 4. Corporate governance 5. Compensation of member of the Board of Directors 6. Investor relation section 2. Stock price data and analysis 7. Daily stock prices 8. Comparison with market and sector indexes 9. Dividends policy 10. Investment magazines reports 11. Five selected new facts 3. Financial information 12. Capital structure 13. Liquidity and solvency analysis 14. Beta coefficient and cost of equity 15. Discounted cash flow analysis and implication of fundings 4. Recommendation ------------------------------------------------- 1. COMPANY PROFILE 1.1 Core activities MISSION: "To be the leading international airlines group in future industry consolidation on a regional and a global scale" International Airlines Group (IAG) is one of the world's largest airline groups: with 377 aircraft and an average of 69 million passengers each year flying to 230 different destinations, IAG is the third- largest based in Europe and the sixth in the world. Formed in January 2011 as a result of the merger between British Airways and Iberia, it is a Spanish registered company whose shares are traded on the London and Spanish Stock...
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...To what extent has Ryanair met the critical success factors for the sector in the last five years? 1. Loyalty: The most important factor for being successful in service industry is loyalty. Quality of service, communication with the current and potential clients as well as promos and discounts can help airline companies to attract more travelers. As Ryanair is a low-cost airline, they do not invest in any particular loyalty program, like majority of full-cost airlines do. The attitude for the low-cost airlines could be described as ‘you get what you paid for’. Looking for other big companies, it is essential, that a properly working loyalty program needs big investments and proper, continuous management that would essentially increase costs of operation for Ryanair. Despite this fact, during the research it was investigated, as Ryanair is one of the leading European low-cost airlines, it already has a base of loyal customers, mostly because of simplicity (a lot of destinations offered, cheap prices, and relatively new aircrafts). 2. Access: Airports are usually out of the cities. Passengers are spending a lot of time in traffic jams on the way to and from the airport. In addition, passengers are spending a lot of time in the airport, as usually they must check-in in advance. Reducing advance time and developing transportation can reduce the overall time of the trip. Access factor for Ryanair a is topic for discussion, as majority of airports they operate in are very far from...
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...integrated (or focused) sector against those in more diversified businesses which are vertically integrated or conglomerates. In this report, I will be analysing and comparing how these integrations are being effectively deployed by various organisations in order to have the edge above their competitors in the sector. The second part of this report will focus on the clear definition of the types of business integration discussed as well as giving examples of each type. With the aim of using numerous examples and case studies, to show how these organisations are using the integration to gain more control and less competition in their sector. Horizontal Integration Horizontal Integration, according to Investopedia, this is defined as “When a company expands its business into different products that are similar to current lines”. However there are so many definitions to define horizontal integration but one thing all the definitions have in common is the coming together of two or more companies with the aim of becoming the dominant force in the sector and also generating more profit with less input compared to when these companies operate separately, but this is be done under single ownership and control. Another definition of horizontal integration is “the merger of companies at the same stage of production in the same or different sectors”. (Business Dictionary). If the end products of the merging companies are similar in a way, this can be referred to as merger of competitors...
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...ASSIGNMENT 2 EXECUTIVE SUMMARY Aviation industry is a highly competitive market, airlines needs to develop or possess good resources and capabilities to set a threshold among the industry. The airline that sets a new wave will gain the limitless opportunity as the game setter and industry’s leader. AirAsia is a Low Cost Carrier that has won many awards and global reputation. They had learned the importance to innovate good employee relations as employees are the heart and soul of the company. This assignment elaborates how AirAsia was analysed under Ansoff Matrix and many of their marketing alliances through vertical or horizontal links. AirAsia has coordinated well in IT systems that enable them to conduct many marketing strategy through partnerships with travel agencies, hotels, telecommunications and other airlines. AirAsia has looked into the traditional interline to code sharing and now into cross-border mergers. AirAsia is a very successful airline that has stayed true to its initial slogan of “Now Everyone Can Fly”. With just less than 15 years, AirAsia has gone from a heavily indebted company to becoming a World’s Best Low Cost Airline. 1 ERICA DIANA JEREMIAH (01130102), STRATEGY MANAGEMENT MGT 6303, ASSIGNMENT 2 TABLE OF CONTENTS Page Executive Summary 1 Table of Contents 2 Ansoff Matrix Analysis 3-5 Internal Development 6-7 Merger & Acquisitions 8 Joint Development/ strategic alliances 9 List of References 10...
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...Accounting standards for business consolidations XXXX ACC 407 Your name Date Accounting standards for business consolidations In competing market it is very common for one business to merge with another one. In order to survive in this rivalry marketplace, Companies need to expand business to the most profitable capacity. No matter what kind of reasons for company seeking extension under the ownership, the main one is to track potential profit. Today’s business environment Financial Accounting Standards Board (FASB), one of regulators represented concepts related with business combinations. Below is my briefly understanding of accounting standards of business combination. What is the history of account for business combinations? How many businesses are consolidated with each other? Companies often learn that entry into new product areas or geographic regions is more easily accomplished by acquiring or combining with other companies than through internal expansion. For example, SBC Communications, a major telecommunications company and one of the “Baby Bells,” significantly increased its service area by combining with pacific Telesis and Ameritech, later acquiring AT&T ( and adopting its name), and subsequently combining with BellSouth. Moreover, Cingular Wireless, the largest provider of mobile wireless communications in the United States and now part of AT&T, was operated as a joint venture of AT&T (Baker, R. E., Christensen, T., & Cottrell, D. (2011))...
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... Acknowledgement.........................................................................................4 Objective........................................................................................................5 Research Methodology.................................................................................5 Chapter I Introduction...................................................................................................6 V. Chapter II Aviation Industry in India............................................................................7 History of Aviation Industry in India..........................................................7 Drivers to Growth in Indian Aviation Sector.............................................10 Players in the Aviation Sector......................................................................10 VI. Chapter III Importance of Competition in the Market..................................................14 VII....
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...Ethical Issues in Mergers and Acquisitions MERGERS AND ACQUISITIONS-AN OVERVIEW: The phrase mergers and acquisitions (M&A) refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling and combining of different companies that can aid, finance, or help a growing company (in a given industry) grow rapidly without having to create another business entity. In legal terminology, mergers and acquisitions can be defined as follows: • Merger: A full joining together of two previously separate corporations. A true merger in the legal sense occurs when both businesses dissolve and fold their assets and liabilities into a newly created third entity. This entails the creation of a new corporation. • Acquisition: Taking possession of another business, also called a takeover or buyout. It may be share purchase (the buyer buys the shares of the target company from the shareholders of the target company. The buyer will take on the company with all its assets and liabilities. ) or asset purchase (buyer buys the assets of the target company from the target company). Although they are often uttered in the same breath and used as though they were synonymous, the terms merger and acquisition mean slightly different things. A purchase deal will also be called a merger when both CEOs agree that joining together is in the best interest of both of their companies. But when the deal is unfriendly - that is, when the target company does not want...
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...Qantas airlines is one of the world’s oldest airlines, number three to be exact. They have been operating commercial flights for nearly a century. In the last ninety-five years there have been several mergers, acquisitions, a World War, advances in technology, name changes and other moves to diversify and expand the company. What started from such humble beginnings has grown into a large multinational corporation with holdings in various travel related industries across the board. Qantas Airlines was founded in 1920 during the dawn of the golden age of aviation. Two veteran officers, W Hudson Fysh and Paul McGinness, of the Australian Flying Corps joined forces after World War I to help advance aviation in Australia. They were hired by the...
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...throw lights on some major reasons which were somehow responsible for the current crisis going inside the kingfisher Airlines which can be realized by the press statement from KFA, on 12 March 2012, highlights the challenges: “The flight loads have reduced because of our limited distribution ability caused by IATA suspension. We are therefore combining some of our flights. Also, some of the flights are being cancelled as a result of employee agitation on account of delayed salaries. This situation has arisen as a consequence of our bank accounts having been frozen by the tax authorities. We are making all possible efforts to remedy this temporary situation.” RESEARCH OBJECTIVE: The key objective of this research study is to investigate the reasons behind the failure of the Kingfisher airline in the year 2012. To investigate the government policies and the various steps taken to fix the current crisis. To investigate the reasons due to which the whole Aviation Industry is suffering from higher operating losses. What went so terribly wrong with Kingfisher when rival Jet Airways has comparatively much higher debt? INTRODUCTION: Global aviation industry is passing through challenging times due to unprecedented fuel price hike during the last 4 years, turbulent financial markets and economic recession. Vijay Malaya’s dream bird, Kingfisher Airlines - popularly known as The King of Good Times - is witnessing its worst phase. Indian domestic aviation is suffering...
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...Great Team University of Phoenix InterClean Benchmarking Today's organizations thrive on benchmarking to find best practices or solutions to a company's problems through outside industries or companies. This paper highlights some of those issues focusing on how other companies have implemented plans to handle those issues. The issues facing InterClean highlighted in this analysis are human resource philosophy, employee retention, mergers and acquisitions, human resources product handling and servicing. Benchmarking was conducted to evaluate how other companies had handled situations similar to those of Interclean. Outside companies evaluated for comparison come from the mortgage industry, pharmaceutical industry, oil industry, specialty eatery industry, technology industry, airlines industry, chemical industry, insurance industry, and home improvement retail industry. The companies evaluated in this paper were Guardian First Funding Group, Trinity-Chiesi Pharmaceuticals, BP Amoco, Starbucks, Google, Northwest Airlines and Delta Airlines, Rohm and Haas Company, Liberty Mutual Holding Company, Pepsico, and LOWE’s. Evaluation of these companies showed several concepts used in handling the issues and how the companies used these concepts. Situational Analysis Retaining Employees Guardian First Funding Group - Guardian First Funding Group (GFFG) is a mortgage company exclusively involved in the reverse mortgage business. They have been selling reverse mortgages for a little...
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...try to throw lights on some major reasons which were somehow responsible for the current crisis going inside the kingfisher Airlines which can be realized by the press statement from KFA, on 12 March 2012, highlights the challenges: “The flight loads have reduced because of our limited distribution ability caused by IATA suspension. We are therefore combining some of our flights. Also, some of the flights are being cancelled as a result of employee agitation on account of delayed salaries. This situation has arisen as a consequence of our bank accounts having been frozen by the tax authorities. We are making all possible efforts to remedy this temporary situation.” RESEARCH OBJECTIVE: The key objective of this research study is to investigate the reasons behind the failure of the Kingfisher airline in the year 2012. To investigate the government policies and the various steps taken to fix the current crisis. To investigate the reasons due to which the whole Aviation Industry is suffering from higher operating losses. What went so terribly wrong with Kingfisher when rival Jet Airways has comparatively much higher debt? INTRODUCTION: Global aviation industry is passing through challenging times due to unprecedented fuel price hike during the last 4 years, turbulent financial markets and economic recession. Vijay Malaya’s dream bird, Kingfisher Airlines - popularly known as The King of Good Times - is witnessing its worst phase. Indian domestic aviation is suffering from a serious...
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...We have a positive fundamental outlook for the airline industry. In 2009, the S&P Airlines Index increased 27.43%, versus a 29.03% rise for the S&P 500 The airline industry is highly cyclical, and the level of demand for air travel is correlated to the strength of the U.S. and global economies. According to the S&P, it is expected that an improving U.S. economy continues to drive improving air travel demand over the next few months beginning at the end of 2009. At the end of 2009, the reported traffic statistics at many major carriers showed improving demand and revenues . Therefore, it is reasonable that the U.S. airline industry could be undergoing the start of fundamental industry demand improvement. In addition, since the industry has already reduced capacity levels, it should be able to raise fares as passenger travel demand improves. Even though oil and jet fuel prices is up sharply from 52-week lows, 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...
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...Hawaiian Airlines’ Business 1. Factors to use to think about buying HA’s stock: Customers – 2014 marked the first year that Hawaiian carried more than 10 million guests in a single year which is 80% higher than 10 years ago. The most emerging tourism market for the airline is China which is the reason that the airline added a triweekly service from Beijing to the islands. Although this market seemed to be booming at the end of 2014, the decrease of economic growth in the country recently could hurt the tourism market from China. The customers of Hawaiian are not all identical which makes it critical that the airline’s business is not dependent upon a single or few customers and the loss of any one customer would not have a huge effect on Hawaiian’s business. Cost Structure – The greatest and most important cost for Hawaiian is the cost of airline fuel. Operations are significantly affected by the availability and price of jet fuel. The lower the fuel, the better for the airline as it is more cost effective, however, because of the binding hedging contracts that the company has to protect itself against low fuel prices, costs will not be cut as much as assumed. Recently, the appreciation of the US dollar, and extremely low oil prices (fuel prices) have cut costs for Hawaiian and other airlines nationwide, and in 2014 Hawaiian consumed more gallons of fuel than in 2013 or 2012 and still maintained lower fuel costs in both years. These low fuel costs help the airline create new...
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