Using an AIRLINE for T8

@coco78 – the fact that your company or its comparator has been making a loss is an important part of your analysis -what factors caused the loss? How has it turned this around? Answering these questions and including good graphs to show the trends is ESSENTIAL. The key here is producing good graphs and researching well to explain exactly what has gone on over the 3years

@MahinAdnan. You really need to read previous posts on here and apply things in context.

I have mentioned many times on our forums how you should tailor ratio analysis to the relevant industry and why it is totally pointless calculating any inventory ratios or trying to differentiate between the current ratio and quick ratio for any service industry (which by definition includes airlines).

I have now explained above the inherent problem of matching Westjet with Air Canada (two North American low cost carriers would be better) or for Air Canada another GLOBAL N. American airline.

Kellann achieved an A and chose Ryanair and Easyjet and thanked me for my advice in helping her achieve this. I am not saying an A for Westjet and Air Canada is not possible but it would be harder to do a good objective evaluation and valid comparison which is very necessary for a higher grade and a student is more likely to produce a RAP which markers describe as ‘death by numbers’ if their comparators are not well matched. This is because they can’t find any valid reasons to account for performance differences beyond looking at the financial statements.

If you have already done a lot of work then don’t abandon it – just ensure you have really used appropriate ratios (some of the usuals + the KPIs as mentioned) and ensure the focus is on strategies. Look at pronouncements made by the CEO and the directors’ reports and see how they have guided decisions and how those decisions link back to the SWOT & PESTLE

You are more likely to pass if your business and financial analyses are good and well researched even if the comparitor companies are not an ideal match than if you have perfectly matched companies but you don’t really explain what has influenced the strategic direction and the factors that have impacted on performance. So don’t panic – instead refocus on what is really important.

As for matching Air Canada another N. American airline with transatlantic routes but not in the same partner alliance would be appropriate ( but faling that one of the major European carriers would be fine). However as I said at the start don’t ditch Westjet if your work is nearing completion – rework the analysis and refocus iinstead

You spend time on doing a really thorough PESTLE and SWOT. Read ALL the CEO and directors’ reports starting with the one for the year preceding the first year you are starting with as reports often set out future plans. Try to outline these plans (in your draft notes) and see how they have built up. You hopefully should see in part how the companies are building on strengths, overcoming weaknesses (essentially you are determining the SWOT factors) and identify what environmental factors have been particularly relevant. For example if you have read through this forum you will see I have mentioned the falling cost of oil in 2014 and 2015 (gradually rising now though) – which will have decreased costs considerably. When it comes to this cost (again as I have pointed out elsewhere) newer planes tend to be more fuel efficient but longer flights proportionally use less fuel per mile / kilometre flown (like long car drives are cheaper per mile than short trips).

Although the requirements and word count probably only allow for SWOT & PESTLE in depth analysis of the main company in your main report if you do a draft one for the comparator (much of the PESTLE should be the same) in your notes or as an appendix you will get a much better ‘feel’ overall for both companies operations. Then, when you do your written financial and ratio analysis you try to link the results to these models to really show how they have affected and influenced the performance and results. You will have to use references to support your statements so look at articles about your companies in the business press (Forbes, Huffington Post, New York Times etc.)

If you do this sort of research analysis and evaluation and refer to some relevant KPIs you will build up a ‘quality’ analysis (and you won’t feel the need to cite a bucketful of numbers either!) as you will really be starting to understand what your companies have been up to in the last 3 years, the opportunities they have seized and challenges encountered -one of which for Air Canada will be Westjet’s growth. Also for this pair consider how they have chosen to finance their fleets – lease or buy? How has this affected operating costs? – depreciation and lease payments and the amount of capital actually employed in the business, balance sheet strength, gearing etc.

As I said several posts back a text-book approach is not appropriate for this industry as it requires a more sensible foundation!

@ricko – please read the posts on here from the beginning as I don’t have the time (or energy) to repeat everything (and also because a degree is about working somethings out for yourself)

Regular readers will know that I am not a great fan of Porter’s 5 Forces as a T8 model. If you read my posts on this page you will see how I have suggested that SWOT and PESTLE are very useful and usually lend themselves better when exploring and explaining the changes in the trends (not so obvious and easy to do with the P5Fs model).

@jbao – please see this link helpfully supplied by the Learning Luminarium which was originally posted on our forum about choosing a topic for T8 &T 15 from P32 onwards

https://learningluminarium.com/wp-content/uploads/2015/12/Topic-8-Three-New-Industries.pdf