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International airline is exposed general entrepreneurial risks and industry-specific risks. Key areas of exposure are capacity and utilization risks, strategy-related risks, political risks, operational risks, procurement risks, labor agreement risks, financial and treasury management risks.
risks (1991-2001): The primary risk facing the industry four categories hazard, strategic, financial and operational.
Failure to manage the risks resulted in the evaporation of $46 billion in shareholder value
Challenges from a new form of competition shifts in customer preference and industry consolidation These challenges may be mitigated through traditional responses creating a culture focused on the customer, developing a rigorous strategic planning process or
business design For example, Southwest has designed a business that attracts customers in good times and in bad because it is simple operationally and, therefore, cost effective use of secondary airports insulates from competitive pressure low debt levels make the company less vulnerable to interest rate fluctuations. profit sharing and fun culture reduce the chance of labor difficulties.
the management of capital and cash, including exogenous factors affect the predictability of revenue and cash
transactions structured finance, derivatives, insurance, contingent financing and debt equity offerings.
solutions, process redesign, organization structural changes, improved communication, contingency planning, performance measurement and reward systems, capital allocation and pricing.
Not all of the divisions have been successful. Swissair pursued a similar strategy but they couldn't succeed
cash management.
During the 2001 crisis, low-cost airline Ryanair an order for 100 Boeing 737s with 50 options, during a time when most airlines are deferring orders They were able to negotiate a low unit price. During the Asian financial crisis, Singapore Airlines upgrades to their onboard product, for entrenching their leadership position during the later economic upturn.
There is a large third-party market dedicated to the effort, including banks, credit specialists, derivative markets and others. Hedging is a common way to manage the financial risk no airline input is more volatile than fuel hedging is not a core competency, and as long as competitors are not hedged, it will be a level playing field. When fuel prices rise dramatically, airlines cannot pass all of the cost on to their customers.
While many airlines were able to maintain profits in the face of price increases, more aggressive strategies could have been used to further improve results. If such tools are not further leveraged, earnings will continue to be vulnerable.
In the new arrangement, a guarantor insures the refunds to the bank, which then releases the cash in the escrow account.
Two-thirds could have been avoided using the types of approaches discussed above. Ten could have been mitigated through traditional means such as insurance or financial derivatives. Fourteen events could have been mitigated by more consistent and in-depth customer analysis, combined with scenario planning and game theory exercises. Finally, eight events could have been mitigated through improved merger integration planning and improved execution.
economy. According to IATA report, Turkey will be one of the fastest growing markets between 2005-2009. An approximate of 8.9% growth in passenger numbers is estimated for Turkey for the next 5 years.
THY, remains the national flag carrier. However with competition in the market, THY has improved its standards The private sector has steadily increased its share in the international market.
THY carried 19,6 million passengers, flies to 69 countries, 138 cities and 140points, fleet of 102 aircraft and seat capacity of 17,594. In Jan-Mar 2008, On domestic routes On international routes; capacity increased by 9,4%, capacity increased by 10%, traffic increased by 9,7%, traffic increased by 16,5%, load factor decreased by 71,4%. load factor increased by 70,2%.
As of 2008 average age of the fleet will be around 6 yrs. Total of 2.7 billion dollars financing were completed for the aircraft delivered Annual lease expenses will be approximately around $545 million; 77% Financial leases and 23% Operational leases
The sensitivity of the THY against 10 % change in USD and EUR exchange rates. Negative amount demonstrates the decrease effect of the 10 % increase in the value of USD and EUR against YTL in the net profit for the year. If USD and EUR is devaluated against YTL by 10 %, the amounts are the same as the figures in the table below
CONCLUSION
THY start a expansion plan turn into global airlines:
THY bought 61 new airplanes 41 airplanes financing has completed and delivered to THY 18 airplanes financing has been decided Approximately 2,7 billion dollars financing has provided Treasure guaranty isnt taken and The lowest interest rate credit accepted on libor(-).
CONCLUSION
THY makes decisions by researching all alternatives as
ECA, Guaranteed Financial leasing, Operational leasing, Japanese Operating Lease (JOL) Tax Shielded Financial Leasing and Securitization.
international market This method was used financing Airbus aircraft in 2006 will be use US Eximbank guarantied Boeing aircrafts which will be delivered in 2008
CONCLUSION
The risk of interest of companies has two sources:
the sensitiveness of assets and the sensitiveness of debts to the interests. If the companies want to protect themselves on natural ways from the risk of interests, positive correlation with the changes of interest should prefer the floating interest debt and negative correlation with the changes of interests should prefer the fixed interest debt. Distribution of foreign money on the revenues and the expenses are care about. If the cost is low, a part of financing can be done on Euro beside dominant money US Dollar in aircraft market. THY provide positive contribution with the matching distribution of revenues and expenses in their future cash flows,
CONCLUSION
THY management manages the risks through its decisions
and applications. A formally specified risk management model is not available in THY Corporate risk management model has been aimed
strategic risks which will give many advantage to THY With formation of ERM its planning to identify risk appetite, risk strategy and create risk transparency to create a strong risk organization, to inculcate sharing risk culture and effective risk processes.
CONCLUSION
event.
If economy is a chain and every sector is its ring, every sector
crisis management.