, (2010) places the average load factor at 50% over the first half of the 1970s decade. However, by the beginning of 2008, the "average number of passengers on board a flight had greatly improved due to deregulation and the effects of competition in the industry," and the load factor had risen to 75% (Gildner, et al
Threat of New Entrants The airline industry has a number of barriers to entry and exit which may constrain the potential for new competition. The high capital requirements may be partly overcome by the easy aviablety of lease aircraft, but the limited availability of take off and landing slots at peak times at the popular airports and the bureaucratic requirements for licenses reduce the potential threat of new entrants (Belobaba, Odoni, & Bamhart, 2009)
The founders; Rollin King and Herb Kelleher, developed the idea of a low cost carrier and the airline airlines gained the first mover advantage when the inaugural flight took place in 1971. The airline has been very successful and following the acquisition of AirTran in 2011, the company is now the largest domestic carrier and the world's largest low cost carrier (Southwest Airlines, 2014)
The high capital requirements may be partly overcome by the easy aviablety of lease aircraft, but the limited availability of take off and landing slots at peak times at the popular airports and the bureaucratic requirements for licenses reduce the potential threat of new entrants (Belobaba, Odoni, & Bamhart, 2009). With the industry having a reputation for high overheads and low profits, it may also be argued to be an unattractive industry (The Economist, 2014)
airline industry had an average load factor of 84.1%, carrying a total of 649 million passengers (Transtats, 2014)
Boeing have developed a smaller much lighter Dreamliner aircraft for point to point journeys where the overall cost of fueling the aircraft is much less, at approximately $24.53 per nautical mile, but with the typical aircraft carrying only 210 passengers the cost per passenger is slightly higher (Anonymous, 2014)
One can see how a choice between these aircraft may have a significant impact on fleet management, emphasizing the need for long-term planning. However, even where there is not the acquisition of new aircraft fleet management is still active, not only with the allocation of aircraft but the way the fleet is managed; Southwest has undertaken a strategy to manage their fleet more actively, which has included reconfiguring some aircraft to increase seating by making the seats narrower, and improving air efficiency with adjustments to wings (Forbes, 2014)
Southwest Airlines, known as the first low cost carrier, adopted a strategy which saw the airline using only Boeing 737's; a strategy which continued until the acquisition of AirTran (Southwest Airlines, 2014). This approach provided some benefits in terms of efficiency, the aircraft could all be easily interchanged, which reduced potential difficulties associated with repairs and maintenance, as well as eliminating the problems of staffing replacement aircraft with appropriately trained staff (Freiberg, 1998)
It was estimated that in any environment with high aviation fuel costs the most efficient operating strategies increased value was active management. It was estimated that airlines could save up to 14% of their fuel costs with the optimal allocation of aircraft to different routes to maximize occupancy, as well as minimize fuel costs (Naumann et al
Different strategies may be adopted by airlines. Southwest Airlines, known as the first low cost carrier, adopted a strategy which saw the airline using only Boeing 737's; a strategy which continued until the acquisition of AirTran (Southwest Airlines, 2014)
S. authorities and Congress might yet sweep the restriction into the sea making a merger possible" (Brummer, 2011, p
In their report of the global airlines' premium traffic performance in November 2011, the International Air Transportation Authority (IATA) noted that demand for premium travel had increased slightly; however, it remained slower than the benchmarked year-to-date growth rate. By contrast, demand for economy class travel was on the rise, indicating a weaker passenger yield mix (Emsellem, 2011)
Figure __. Premium and economic class trends: December 2003 through August 2011 As noted in the introductory chapter, although the situation is highly dynamic, at present, British Airways is owned by International Airlines Group, a holding company called that also owns Iberia in Spain (Evans, 2011)
Statement of the Problem In an action that has been described by some analysts as "two drunks holding each other up," the merger between Iberia and British Airways will inevitably have some significant effects on the group's overall financial performance in ways that are difficult to predict, but which can be evaluated to some extent through an analysis of existing performance data, an enterprise that represents the purpose of this study and which is discussed further below. Purpose of Study The purpose of this study was two-fold as follows: (a) to review the relevant peer-reviewed, scholarly and industry literature and (b) to calculate and benchmark relevant financial analyses of IAG compared to three of its competitors, Turkish Airlines, Finnair and Jet Airways provide a summary of issues faced by IAG followed by potential steps to improve its position including M&a opportunities, equity and debt capital raising options Rationale of Study Analysts typically use two components of a company in evaluating its capital funding: cost of debt and cost of equity (McClure, 2010)
Other events have also affected the company's standing compared to its competitors in recent months, weeks, and in some cases, days. For instance, according to Smith (2010), recent reports indicate that the International Airlines Group consisting of the new merger between British Airways and the Spanish carriers Iberia may lead to the acquisition of another carrier, Bahrain-based Gulf Air (Smith, 2010)
html?fourWayKey=ES0177542018GBGBXSET1 Both carriers have struggled to compete with budget airlines and the decline in demand for premium business travel during the recession. Like its competitors, British Airways also attempted to reduce costs; however, this action resulted in cabin crews striking and in early 2010, the airline conceded that the costs of the labor issues could cost it as much as [pounds sterling]45 million (Tobin, 2010)
1 billion Pretax profit (2009/10) BA expected to post average full-year pre-tax loss of [pounds sterling]578m; Iberia posted [euro]435m pre-tax loss in 2009 Source: Adapted from Tobin, 2010 4. IAG's financial projections and valuation analysis Deutsche Bank reports operating profits for IAG were up 114% during 2011; however, even this healthy increase was more sluggish compared to current year project (a decline of 17% in 2012) and an expected operating profit increase of 122% in 2013 (van Klaveren, 2012)
This reaction is congruent with the overall trend in the industry towards consolidation and may represent a valuable opportunity for carriers that identify strategic partners with the requisite resources and expertise that is needed in an increasingly competitive marketplace (Smith, 2010). Moreover, IAG's executive leadership team emphasized the importance of such initiatives to the company in the future and indicated they would be relentless in their efforts (Webb & Rothwell, 2012)
I was one of the Portland International FAA Air Traffic Controllers on duty that fateful evening." (KingRey, 1999) According to one of the controllers on the scene, at some point the UA173 crew announced they had gear problems and the controller offered the flight's captain the option of holding or landing
Moreover, the delayed rescue action could have saved lives if Japanese officials allowed American forces to immediately go to the crash site. A study on this disaster and another revealed the significant cultural differences between Japan and the United States in communication practices (Haruta & Hallahan, 2000)