Operating Income: West Coast Air Case Study

Nevertheless, Ryanair needs to evaluate its operating expenses and check whether such a drastic drop in market prices can be sustained by it.

Income and cost changes because of different levels of activity they carry out in the business. If the sales of the business increase so will the cost. This is because; more production will take place for more sales. Income and cost can be changed by fashion as well. The business will need to be up to date with the fashion. This change will increase the cost as well. But if the business can be up to date, it will bring a higher income as their products going to be popular.

The purpose of this memorandum is to address the profitability issues at Continental Airlines and to estimate the costs for 2009 to forecast the future outlook of the company. To address these issues, I used regression analysis to observe what effect the 11% reduction in flying capacity would have on the firm’s future operating costs. I also used the results from the regression analysis to verify the costs that, if reduced, would further comply with the implementation of cost-cutting initiatives and operational efficiencies that the company is striving for. Lastly, I consolidated the data to forecast Continental’s financial outlook for 2009, then provided insight

RAD should pursue option 2 because it increases their overall profitability. Despite the plan increasing costs by $200, option 2 increased daily profits by reducing the amount of depreciation. By cutting the flow time by 2 days, depreciation decreased by $2,400, which greatly outweighed the $200 increase in costs. At $3,940 in daily profits with option 2, RAD would see a $2,200 increase from their original amount.

Recently, the WSJ had displayed data regarding United Airlines signifying that the company was not covering their flight costs from San Francisco to Washington D.C. Due to this, they had assumed United Airlines is unable to cover their costs, so in this case it was suggested for them to discontinue their services. To begin, it is critical that United Airlines should preform a marginal analysis in order to make a final decision. A marginal analysis focusses on incremental costs and benefits that will help aid companies in making a final decision. After completing this analysis, the company can then make an executive decision on whether or not they should discontinue their flights.

Indicate whether each of the following changes in price cause total revenue to increase, decrease or remain unchanged? Explain why. (2 marks each)

have not been continuously covered. The costs of flights in reference from San Francisco to

Managerial economics is about theory meeting practice in the real world. There are many factors to consider when making managerial decisions. Some of those variables include the relationships between total cost, total output, and the price of labor and capital. Investor Words (2016) defines total cost as “the sum of fixed costs, variable costs, and semi-variable costs.” In this paper I will explain how total cost, total output, and the price of labor and capital affect the airline industry.

If a manager wants to increase their company’s operating income, there are endless options available. He could come up with a new advertising campaign to increase sales, decrease employee wages, or negotiate lower prices for raw materials with vendors. However, if a manager wishes to increase the company’s net income without doing something similar to the above, a little bit of accounting “magic” might do the trick.

Both the flight scheduling and operating departments were given the goal of improving the airline’s reliability rating through the flight schedule planning. The departments were made to be held accountable and if successful they would be rewarded for their achievements with an incentive of $65 per month.

The lecturer pointed out that the airline industry is very poor at earning its cost of capital and various factors making aviation industry inherently difficult to make money, such as high capital intensity and high financial leverage of airline business. In addition, some current conditions have exacerbated

In airline industry, the cost can break to two parts: fixed cost and variable cost. And there is very hard to cutting off of the fixed cost which is including the cost of fuel, landing fees, insurance, etc. because these costs are necessary.

In the airline business industry it is requirement to have outstanding leadership and culture to achieve a strong business operation and management.

Formulations of new strategies to ensure optimum ticket pricing in order to support airliners avoid losses and gain sustained profits in their operations

The main source of profit for the airline industry are passenger and cargo revenue primarily, in addition, the fuel surcharges and exchange gains constitute the major part of its profits. According to these factors, airline companies will make a expection development whether they can benefit or loss, and they will expect how much they will benefit or loss. However, the question that over the past 10 years, airline has lost $50bn, but