Using an AIRLINE for T8

this might seem a bit odd.... i am comparing emirates with cathay pacific. Can i use short forms for these companies like EA and CP or Emirates and Cathay. i have crossed the word limit and this modification will save me about 100 words.

Hi, my company is Delta Airlines (main company) and American Airlines (competitor) Can anyone tell me how will I be able to compare them two in terms of business analysis? I have used 2 models: PESTEL and Five Forces. PESTEL would be same for both since macro-environmental factors would be same for them since they operate in the country (i.e- United States) Five forces would also be the same Only thing which would be different would be value chain analysis, M model, etc which I haven't used. Financial analysis would be simple as I have to explain significant differences in ratios between both companies but what to do in Business analysis comparison? Thank you

@ahmadnip You would be correct as the statements were released less than 90 days from the start of the submission period. I would note this in my limitations or in my SLS just so the marker understands why you chose the years you did. @amal3008 Emirates is commonly referred to as EK and Cathay as CX. As long as you have indicated clearly at the start of the report that Emirates Airlines will be referred to as EK and Cathay Pacific will be referred to as CX, there shouldn't be much of a problem here. @syfar42 A benchmark is really necessary for financial ratios because it helps you put the ratios in context. A benchmark is not usually needed for business analysis. It might sometimes be relevant because a competitor is a threat, or when you are looking at competitive rivalry in Porter's 5 Forces. Other than that, you're looking at Delta's business analysis and not AA's. Hope this helps!

@LearningLuminarium Please advise whether we are required to use comparator in business analysis as well? Thanks.

Dear @trephena, In my choice of Ryanair and Easyjet, I am having problems getting the RRPK/ yeild as well as cost per RPK. So i have chosen to calculate the Passenger yield, using Total Passenger revenue/ RPK Is Easyjet's Seat revenue equal to the Scheduled revenue of Ryanair ? What is closest to Passenger revenue in both companies?

I need an urgent help !! While doing the financial analysis, should one consider the Consolidated Financial Statement or the Standalone Financial Statements are fine ? please let me know as i am due for submission this period and will fail if this goes wrong as its my last attempt thanks !

@chandan - SWOT & PESTEL should not overlap too often. This is because PESTEL describes the industry/macro situation. While SWOT focuses more on the company itself and thus is more micro. This 2 models go well together as one takes the macro while the other takes the micro perspective. Another example of such a pairing is (a) Porter's 5 Forces and (b) SWOT. @jahnvi - they leave it to your choice. Any annual report published beyond the 90 days rule HAS to be used. Its mandatory. Anything within the 90 days is up to your choice and you wouldnt be penalized if you did not use it. @mango - standalone financial statements are fine. It is important that you compare apples with apples. So if you use standalone statements, please ensure that you can find the same for your competitor as well. It would be painful to compare consolidated FS with a competitor's standalone.

@learningluminarium - thank you so much for your advice. yes my competitor also has their standalone financials and i have used that for comparison. my company is a mobile telecom, and they have subsidiaries that are not all related to mobile telecom, so i decided to go with standalone. hope that is okay.

@ch305 said: @Learning Lumarium, My mentor has advised me to do only SWOT and elaborate it more rather than doing SWOT and PESTLE both.. do you think its risky to just include SWOT

People who have passed mostly have apparently used at least 2 models for each analysis. Using just one is risky coz u dont know if ur one model is perfect. If for eg they dont like it much u cud at a disadvantage. Having 2 models is like have very good prospects for passing provided both are reasonably good When u have the chance take it. Will certainly take more effort but it is way a lot better than not passing and regretting not doing it later. Try to think every possible wrong thing the examiners cud pick up from ur RAP thinking from their viewpoint and u will see the improvement

As I have said probably 1000+ times: evaluation is key to passing the RAP. This means providing proper explanations linking the models to performance. If you are omitting PEST you are already limiting your chances of producing a decent evaluation and analysis. I suggest you use the search facility to pull up our forum on 'OBU marker speak' and read the marker feedback if you want to check out how important the models are to passing. If word count is the issue again I have said hundreds of times to cut out all the superfluous comments in Parts 1 & 2

@trephena quick question for you, part three of my RAP is 4660 wrds but my overall word count is below 7500 words. Would this be an issue as they said 4500 words for part three?

@trephena if one company is using GAAP and the competitor IFRS, is comparison still possible ?

As you have obviously done so much work already on Air Canada and WestJet I think it would be a big mistake to 'switch horses' at this late stage. In fact you might be able to use the fact that they tend to operate in different markets to account for some of the differences in their performances. Regarding the results expressed in thousands and millions you will mainly be comparing ratios so it is irrelevant in most respects. Being a cynic I am not a great fan of mission statements - I often wonder if anyone (apart from those who cobble them together) take them seriously. For example 'We strive to be one of the top five airlines in the world' -most airlines might similarly state this but it comes down to logistics - how could a Canadian airline reach this from its actual geographical position? European airlines are literally better placed to achieve this as Europe is a 'hub' bridging the Americas with the East. The airlines in the Arabian Gulf with rich backers are also reasonably well placed in terms of having the money to buy newer larger aircraft and Dubai is one of the largest airports now in the world. So I would say dream on WestJet!! However I will be kinder about their core values and big oak trees from little acorns grow - so maybe in the top 5 in about 2050.... (it was 5 wasn't it and not in the top 5th? As the latter would be a more reasonable ambition). However enough about dreams and ambitions... ...and yours is to pass. So go full speed ahead with what you have but be mindful of hyperbole coming out of the boardroom and don't forget that when it comes to the KPIs that good RASK and CASK, load factors and aircraft utilisation will show who is likely to be the overall 'winner' between your two companies.

Hey trephana, I have 2 doubts: My companies are Delta airlines(main) and American Airlines(competitor) I am using 31 December 2014,2015 and 2016 financial statements 1. Should I explain the differences from 31 December 2013 to 31 December 2014 in my analysis or will 31 December 2014 be taken as the starting point and I only have to analyze and explain 31 December 2014-31 December 2015 and 31 December 2015-31 December 2016 (for ratio analysis)? 2. I have used PESTEL and Porter's Five Forces. Are these models fine to use?

@Learning Lumarium If two companies are using different accounting policies (GAAP and IFRS) is comparison possible ?

Hi, please recommend the ratios I should do for my financial analysis.I'm doing SWOT and PESTEL for business analysis so I'm ot to worried about that now.My mentor has told me to do Op margin,Net profit margin,ROCE and gearing.I fell these 4 are'nt enough so please tell me what ratios I should do other then these.I'm doing american airlines(main) and Delta btw.Also,is it a good idea to write about the advanages and disadvantages of ratio analysis,SWOT,PESTEL?PLease let me know ASAP.I would like trephanas reply.Others are welcome to offer advice.The more opinions I have the better.Thanks.

@ Sarmin Yes those ratios are fine but you need additional ones like EPS. Although payables and receivables are too complex for you to calculate (because the way airlines operate) and stock is irrelevant you should mention the current ratio and talk about cashflows. If you have read this forum you will know that I bang on about KPIs (as that is how airlines themselves assess their performance). Asset utilisation is important - see if you can find the aircraft utilization figure in the reports and load factors and you should also mention asset turnover as airlines are capital intensive businesses.

@syfar42 as it is a 3 year analysis you should really be looking at the full 3 years @mango1991 - The tutors at the Learning Luminarium do not advise this and suggest that both companies should be using the same reporting standards as the perceived differences may just be because of the different treatments so are not always valid for analysis purposes . So either both GAAP or both IFRS

Yes it is fine to use statements that have been available less than 90 days - this is voluntary. As you have realised if the latest statements were published 90 days ago or longer than that, then they MUST be used - otherwise you can be failed for out of date information. You then work backwards in terms of time in selecting the 3 years (but when doing your analysis you work forward in time e.g. start discussing the oldest year and track the trends through to the current period)

Hi, If my word count of q1 of sls is around 750 words, is that acceptable?

what about witing about the advantages and disadvantages of ratio analysis, swot, pestel?Is that fine or is it a waste of words?

Hi Trephena, Are RASM(revenue per Available seat miles and CASM(cost per..) KPIs?My mentor told me to do them and I am doing them.Also,I am a bit time pressured atm with 19 days left :').I'll try to include the ratios you recommended if I can manage my time well.

Reduce your part B to 1400 - 1600 words. Remove payable days receivable days altogether. Remove DPS, because EPS will be enough. And try to write in concise manner for all other ratios. Only put relevant and material reasons in you analysis.

For ratio analysis, i used operating profit margin, return on assets, fixed asset turnover, revenue per employee, current ratio, net debt/equity ratio and interest cover. i am worried about ROA and fixed asset turnover. Both looks similar. should i go ahead with these or should i use some other ratio. What are possible reasons for if revenue per employee fluctuates. For cathay pacific, there have protests from its employee over low pay and i used the dissatisfaction of employees as a reason, the protest also caused delays and flight cancellations. what other reasons can i include

@ehsanshah said: Reduce your part B to 1400 - 1600 words. Remove payable days receivable days altogether. Remove DPS, because EPS will be enough. And try to write in concise manner for all other ratios. Only put relevant and material reasons in you analysis.

Are you sure?The rap document said Part B is supposed to be 2000?

Part 1 - keep as brief as possible. Part 2 - as long as you you state limitations of you data then trim out most of the other things Part 3 - payables and receivables are pretty pointless for airlines as they have complex cash models (use search and read why I suggest NOT to use an airline for Topoc 15 to understand why)

@amal3008- that sounds good about the employee information and as a potential weakness for the SWOT. It is these sorts of explanations that markers look for in the evaluation. You could use aircraft utilisation and asset Turnover instead of ROA.

thanx a lot @trephena But aircraft utilisation and asset turnover are efficiency ratios. Is there any alternative profitability ratio. I am using emirates airlines as main company and cathay as comparator.

Hi, Do I have to reference every conclusions and recommendations I make ? Since conclusions are just a summary of every parts above that I already referenced, I think I do not have to reference again. For recommendations, I think they are personal so they don't need reference.

What is maximum word limit per question in sls? If q1 is around 720 words(including the question as heading) is that okay? @trephena