Report: Performance Improvement Strategies OverviewYou are the controller of a public Fortune 500 airline, TransGlobal Airlines. The airline utilizes a fleet of corporate jets for private charter by F

Report: Performance Improvement Strategies OverviewYou are the controller of a public Fortune 500 airline, TransGlobal Airlines. The airline utilizes a fleet of corporate jets for private charter by F
MBA 620 TransGlobal Airlines Information Loca tion, Size, and Age of the Firm • Name: TransGlobal Airlines • Home Country: USA • HQ Location: Miami, FL • Size: 40,000 employees • Age: began operations in 1951 Customer Segment and Ta rget Market • Class: global airliner with dominant U.S. presence • Market: global • Destinations: 242 destinations serving 52 countries across six continents • Market segment: first class, luxury, business class, and economy • Global market share: 18% (ranked 2nd, American is number one at 18.6%) • U.S. market share: 18.3% (ranked 2nd, Southwest first at 19.1%) • Retention: 80% return customers • New customer growth: 27% annually (prior to COVID) • Passenger kilometers: 278 billion (American is number one at 287 billion) Major Competitors All international and domestic U.S. airlines Company Leadership Publicly held with a board, president, VP admin, CEO, CFO, COO, VP sales, division VPs, subsidiaries Current Financials • Annual gross revenues: $ 20.683 billion • Annual net income: $ 2.099 billion • Adjusted earnings per share of $ 3.22 , a 28 % increase year -over -year • Delivery of 88 new aircraft during the year • Number of aircraft in fleet, end of period: 1,062 • Average age of aircraft: 13 years • Domestic revenue grew 7.7% in the last quarter on 1.6% higher passenger unit revenue (PRASM) and 6% higher capacity . Domestic premium product revenue grew 11% and corporate revenue grew 6%, driven by strength in business and leisure demand through the holiday period. Revenue and margin improved in all domestic hubs, with revenue up 10% in coastal hubs and 6% in core hu bs. • Atlantic revenue grew 0.8% in the last quarter on 2.4% higher capacity and a 1.6% decline in PRASM, driven almost entirely by foreign exchange rates . • Latin revenue grew 6.7% on a 6.3% increase in unit revenue and 0.4% higher capacity. This revenue im provement was driven by continued double -digit unit revenue growth in Brazil and Mexico. • Pacific revenue was down 0.5% vs. the prior year on a 4.4% decline in unit revenue primarily due to continued softness in China. This was a 3.2 point improvement vs. the September quarter on improved trends in Japan. Strategic Plans and Goals The board of directors has recently approved a comprehensive plan identified as TransGlobal 2030. The plan is the result of eight months of data collection, customer focus gro ups, leadership retreats, and employee input. The TransGlobal 2030 vision is to lead the industry in three critically important areas: safety, excitement, and stewardship (SES). This SES vision has been translated into a collection of guiding principles and goal statements: • SES Principles o We will always treat our customers with respect. o We will value our employees and business partners. o We will innovate to provide our c ustomers with the most forward -thinking and exciting travel experience. o We will build lifelong relationships with our customers. o We will protect our planet. • SES Goals o Safely re -introduce and promote the MAX 737 aircraft 1. o Expand the fleet of regional aircraft with capacities below 7 0. o Upgrade the reservation and ticketing experience, including smartphone apps and integration with apps associated with lodging, ground transportation, and attractions. o Achieve top -10 status in the 2030 World’s Best Workplaces rankings (currently not ra nked in top 100). o Reach net -zero carbon footprint by 2075. o Accelerate adoption of fuel -efficient aircraft and alternative fuels. o Expand use of carbon offset measures. o Improve our Airlines.com safety rating from 5 stars to 7 stars. o Build brand awarenes s and customer loyalty. o Address workplace inequities and build an inclusive culture. o Train every employee in the basics of FAA’s SAS (Safety Assurance System) via 2 -hour web – based training. 1 The popular 737 aircraft has been the subject of considerabl e controversy and safety concerns worldwide. ASSETS (in millions) Current Assets Cash and cash equivalents: $1,268 • Accounts receivable: $1,256 • Fuel inventory: $321 • Expendable parts and supplies inventories, net: $229 • Prepaid and other expenses: $559 • Total current assets: $3,629 Other Assets: • Property and equipment: $13,776 • Operating lease right -of-use assets: $2,476 • Goodwill: $4,304 • Identifiable intangibles: $ 2,272 • Cash restricted for airport construction: $280 • Other noncurrent assets: $1,657 • Total other assets: $24,765 Total assets: $28,394 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities • Current maturities of long -term debt: $806 • Finance leas es: $200 • Current maturities of operating leases: $352 • Air traffic liability: $2,251 • Accounts payable: $1,437 • Accrued salaries and related benefits: $1,628 • Loyalty program deferred revenue: $1.416 • Fuel card obligation: $ 324 • Other accrued liabilities: $474 • Total current liabilities: $8,888 Noncurrent Liabilities • Long -term debt: $3,000 • Finance leases: $904 • Pension, postretirement Related benefits: $3,719 • Loyalty program deferred revenue: $1,544 • Noncurrent operating leases: $2,329 • Deferred income taxes: $641 • Other noncurrent liabilities: $610 • Total noncurrent liabilities: $12,747 • Total liabilities: $21, 635 Stockholders’ equity: $6,759 Total liabilities and stockholders’ equity: $28,394 Margins • Operating margin: 14.08% • Net profit margin: 10.14% • Operating cash flow margin: 41.7% • Debt to equity: 3.20 • ROE: 31.04% • ROA: 7.39% • Receivables turnover: 16.47% • Aircraft capacity: 98% • Current ratio: 0.408 • Quick ratio: 0.2839