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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Changes in the Price of Fuel for Aircraft

The cost of fuel is reported to be about 2/. of the total operating cost for a major airline.

Events in the Middle East caused jet fuel costs to nearly double from 2008 to 2011.

Required:

2. How would you expect the financial statements of major airlines to be affected by the fuel price increase and the actions that the airlines would take in response?

To determine

(a)

For the airline industry fuel is very important element because airplane cannot fly without fuel. And cost of fuel is very important for the company. A plane like a Boeing 747 uses roughly 1 gallon of fuel (around 4 liters) consistently.

As far as genuine working costs the greatest variable is the fuel cost. This is straightforwardly identified with the cost of unrefined petroleum. To endeavor to smooth out vacillations in the cost of fuel most expansive aircrafts fuel support.

To discuss:

How would you deal when you expect the financial statements of major airlines to be affected by the fuel price increase and the actions that the airlines would take in response?

Explanation

Fuel is the important part for the flight the fight because cannot fly without fuel. If the fuel price increase than the company increase the sale price of ticket per passenger...

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