Weaknesses The airline industry is extremely competitive and there are constant struggles to maintain a low-cost fare that can compete with other companies such as JetBlue and Southwest. This has proven to detract from Delta’s success throughout the years due to continuous attempts at market strategy and low-fare subsidiaries. Delta had a bankruptcy scare in 2005 and made a filing with the U.S. bankruptcy court for Chapter 11 bankruptcy. The plan for Delta was to continue with its normal operations while simultaneously undergoing corporate restructuring. At the time, Delta had approximately $20.5 billion in debt, mainly as a result of record-breaking fuel prices and high labor costs (“Delta Air Lines - Plan of Reorganization").
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There are many different factors that come into play regarding the airline industry. Airlines such as Delta operate in an extremely political environment that requires an abundance of government regulation, especially after incidents like 9/11. As shown in Appendix A, the state of the economy, such as changes in GDP, per capital income, disposable income, and industrial production can also drastically impact the Airline Industry (Teresa Cederholm). In order to remain competitive in the airline industry, companies such as Delta must adopt the latest technology. For a full PESTEL analysis, refer to Appendix …show more content…
Delta became the only airline to own and control its reservations system, which is key to operations. In 2014, Bastian stated “We have also moved toward vertical integration (and better management of fuel costs) by acquiring an oil refinery—a decision that shocked both aviation and oil industry observers” (Anderson, Richard H). Rather than be controlled by producers, Delta took matters into its own hands and gained full control over its supply chain. Over the past few years, Delta managed to expand its oil team to include several crude traders and the former president of Total Gas & Power North America (Anderson, Richard H). These innovative changes have allowed Delta’s average cost of fuel per gallon to remain five to 10 cents less than the industry’s for over two years now. Appendix B illustrates Delta’s road to redemption in greater
Delta Airlines in a major American airline company headquartered in Atlanta, Georgia, United States. The company was founded on May 30, 1924. They operate as an extensive domestic and international network. Delta currently operates a fleet of more than 700 aircraft and they employ approximately 80,000 people. In 2011 they were the world’s largest airline in terms of fleet size. Delta Airlines is a very successful company. Part of what makes them so successful is expansion, making good decisions in route selection and hubs location, being service oriented, having a strong operation management, being reactive in terms of prices, and offering low fares.
Although Delta is a strong and competitive incorporation, they have had their history of mistakes. When they hit bankruptcy in 2005, they realized they had to improve their ways of business and operation. With this new plan, Delta will see their profits increase. 4 – Delta Airlines Technological
in revenue passenger-kilometers flown with 277.6 billion. In 2015 their revenue was up $40.704 billion, operating income was up $9.520 billion, and net income of $926 million. Delta’s total assets were down in 2015 with $53.134 billion. Total equity was up with $10.85 billion. The results that we will be discussing will include the RPM, ASM, and Load Factor from May 2015 and May 2016. The results will show the year to date traffic results and the monthly traffic results change.
American airline industry is steadily growing at an extremely strong rate. This growth comes with a number economic and social advantage. This contributes a great deal to the international inventory. The US airline industry is a major economic aspect in both the outcome on other related industries like tourism and manufacturing of aircraft and its own terms of operation. The airline industry is receiving massive media attention unlike other industries through participating and making of government policies. As Hoffman and Bateson (2011) show the major competitors include Southwest Airlines, Delta Airline, and United Airline.
7) Retirement plans worth $1,5 billion (Delta Airlines, 2014, p. 7) Providing a safe working environment (Delta Airlines, 2014, p. 7) For instance, the initiative of Delta’s staff to procure a jet in 1982, as a gift to the company, is a strong indicator of how successful this method is (Kaufman, 2012). Consequently, even though the company went through many acquisitions, merges and was even at the brink of bankruptcy, throughout the years (Tully, 2014), it managed to survive and prosper. 2. Environmental Approach Moreover, Delta Airlines is an organization that not only cares about the affluence of its internal environment but also for its external.
Technological advancements, mergers and acquisitions, volatility in crude oil prices, currency depreciation, ground staff management and baggage handling are the major external factors for Delta Air Lines. The Monroe oil refinery purchased by Delta Air Lines provides an opportunity for the company to deal with the volatility in crude oil prices. Presently Delta Airline is over dependent on the North American markets, which had experienced a major hit during the recession in 2008.
For this company analysis paper, Delta Airlines has been chosen out of 100 best companies. In this paper, firstly we will talk about the background of the company. Secondly, vision and mission will be evaluated. Thirdly, competitor analysis will be carried out. Lastly, business characteristics and accomplishments will be discussed.
Delta “focuses on shifting their cost structure from fixed to variable costs as much as possible.” (https://rctom.hbs.org/submission/delta-airlines-flying-high-in-a-competitive-industry/) Delta also understands the importance the importance of delivering top notch customer service to appeal to their principal demographic, business travelers. They have incorporated a training work-shop so employees have a better understanding of how to solve travel disruptions that customers deal with. Employees also learn how to help insure that baggage performance is up to par with a low amount of mishandled bags reports from customers. Delta has done this by incorporating a way for customers to track their bags using a mobile app. In the Business Travel News Delta has been ranked #1 by corporate flyers for four years in a row. I believe the business level strategies that Delta has incorporated have been a good choice for their business. Their strategies have helped them to gain a competitive advantage from customer service and great operating cost flexibility.
The report finds that Delta Airlines has successfully emerged from its bankruptcy in 2005 to report successful returns in both 2007 and 2008. With its 2008 acquisition of Northwest Airlines Delta became the world's largest airline, further improving its position in the airline industry. Despite this current positive position report also finds potential adversities
The key issue for compensation and benefit for Delta’s airline was labor expense through salary and wages for their employees. These issues raise for the increase in taxes and security fees, rising prices of fuel, labor management mistakes, and large executive perks. As a result Delta announced that they might have to file for bankruptcy protection if they did not cut salaries by 32.5%. As a result of this increase in labor cost, Delta was forced to lay off 11,000 employees, the change of many employees from full time to part time and outsourcing a great deal of their work. The organization's relationship with employees has been tense because of substantial layoffs, bankruptcy-proof pension trusts and executive bonuses which were not tied to performance.
This paper will review the case study of Delta Airlines which was suffering like all its competitors with rising fuel costs which averaged anywhere between 30 to 50 percent of its total operating costs. This paper will answer six questions which will help identify what the company did to handle the high cost of fuel. The questions that I will answer will include the following.
2. Why have all of the low-cost subsidiaries of full-service airlines, including Delta Express, failed?
The Delta Beverage Group is a bottling and canning company from the United States. Delta had some very strong brand names, like Pepsi and Mountain Dew, included in their franchises. Around 1988, a price war occurred and Delta suffered from compressed margins. About a year later situation became critical and a new management team from was hired. The new management stopped the fall in prices, the decline in market share and increased margins by changing the cost structure. Delta also acquired some other bottling companies at the same time increasing their sales and operating cash flow. After a couple of years operating profits increased by almost 100% and net income made a solid upward progress.
Airlines Industry is large and growing, it is also the most fiercely competitive sector. It facilitates international trade, world economy growth, tourism and international investment. The airline industry has over time with the use of modern technology been able to take advantage of the short haul, high frequency and gained a competitive advantage over other forms of travel, such as buses and railroad travel. Additionally, the airline industry still holds the market for global travel at a low cost and convenient way to travel. The aviation industry gives a good contribution to the GDP which includes the following: airline services, general aviation, civil airport operations, aircraft manufacturing, and
The Airline industry is a large and constantly growing industry. It facilitates economic growth, international investment and world trade and is therefore central to other industries as well for globalisation. There are various forces which lead to globalisation in airline industry. Key drivers of change are forces likely to affect the structure of an industry; sector or market. (1).