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This report provides information about the financial and operational performance of ACE Airlines Inc. In particular, much attention will be paid to such indicators as net income, operational expenses, and growth trends which are needed to assess the profitability of this organization. Furthermore, this document will outline the key challenges that the company currently faces. Moreover, solutions to these problems will also be described.
Finally, by reading this report, the stockholders will learn about the future policies of this company such as dividend and expansion plans. Finally, it is vital to explain the rationale for the decisions taken by the management because this information is critical for current shareholders and potential investors. Overall, at the present stage, the company struggles to strengthen its competitive position in the market; moreover, the management should improve several internal operations. Nevertheless, ACE Airlines Inc. has been able to show marked improvements during the last year. These are the main questions that should be discussed more closely because they are important for evaluating operational and financial performance of this organization.
Brief synopsis of sales and earnings
The company has displayed varying results in terms of net revenues. For example, during the first three rounds, the revenues equaled $22,234, $32,337 and -$58,762. The loss which was recorded during the last round was caused by the need to spend more capital on various business functions of the company. In this case, it is critical to consider the expenditures on marketing and training. Furthermore, the earnings of a company could be attributed to the sails of the company’s stocks. In total, these revenues equaled $ 419. 000. The sale of stocks is critical for reducing the need to make loans which can be regarded as liabilities. More specific details about the financial performance of this company will be provided in the following sections of this report.
Star-up problems and the way in which they are addressed
The company encounters several difficulties at its start-up stage. At first, one should speak about strong competition staged by other airline companies. In this case, much attention should be paid to such businesses as APEX, Quantum Airways, and Cloudair because their market share is rather large. The company intends to address these challenges in several ways. In particular, the management intends to increase the number of routes that the company serves. In this way, Quantum Airways Inc. can erode the market share of the competitors. Moreover, the management will lease additional aircrafts.
Furthermore, the company will launch an intensive marketing campaign in order to attract potential clients. This is why the marketing budget has been increased; currently, it equals $ 75. 000. Additionally, the management will focus on the quality of services that it provides to clients. This is why the company allocates more capital to such business functions as training and quality control. Apart from that, the management has to chosen to open its own website in order to promote the sales of tickets. Such a strategy has been adopted by other business representing this sector of the service industry; moreover, it has proved to be rather effective (Belobaba, Odoni, & Barnhart, 2009, p. 458). This is why this approach should be adopted by this organization on a regular basis.
Apart from that, this airline company has a rather low Passenger Load Factor. To a great extent, this indicator is important for determining how effectively the company uses its resources (Wensveen, 2012, p. 207; Shaw, 2012). At this point, one of the key tasks is to make sure that this indicator reaches at least 50.2 percent. This goal will be attained by focusing on advertisement, training, and quality control which are critical for the sustainability of the company. Similarly, online retailing of tickets can also increase Passenger Load Factor. Overall, these strategies are critical for increasing return on investment and improving the profitability of the organization.
It should be noted that at present, the quality rankings of ACE Airlines Inc is comparable to those companies which operate within the industry for a long time. Nevertheless, the company should excel in terms of this particular criterion in order to strengthen its completive position and generate additional revenues. Overall, the challenges of the company can also be explained by budgetary restraints which should not be overlooked. Nevertheless, these difficulties can be overcome through effective financial management, optimization of internal operations, and improving customer relations. These areas represent various aspects of internal operations and they are essential for the work of airline companies (Wensveen, 2012). These are the main issues that should be considered by investors and managers.
Dividend plans and policy
The company intends to increase the dividends of its stocks. Within the last year, the dividends have increased from $ 2.000 to 2.0000. This policy is critical retaining stockholders and attracting potential investors. Apart from that, this strategy is important for minimizing the need to make loans that can profoundly undermine the financial stability of the company. In the long-term, this policy can increase the sustainability of the company. This is the main rationale that should be taken into account.
Expansion plans and future prospects
The company intends to implement several expansion plans. Currently, the organization intends to increase its share in the passenger transportation market. As it has been said before, this goal will be achieved through combination of several marketing strategies such as using an online website. Apart from that, the management intends to enter the cargo market because this policy can increase the revenues of ACE Airlines Inc. Overall, the expansion of this organization will be based on the use of various marketing strategies and quality training since these strategies enable businesses to improve their competitiveness in a cost-effective way. Moreover, in this way, the company can adjust to existing budgetary constraints.
Overall, the management intends to become a regional leader in the airline transportation of passengers and cargo in the future. To a great extent, it is the long-term vision that the company should attain. Moreover, this overarching goal will shape the work of managers and employees.
General financial statement
The following data will throw light on the financial performance of the company during the last year. At first, one should focus on the income statement. In particular, it is important to speak about the gross revenues because this information is important for showing if the company can attain growth.
|The First Round||$1,400,000|
|The Second Round||$2,867,000|
|The Third Round||$4,070,000|
This change indicates that the company has passed through the period of considerable growth during the last year.
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|The First Round||$1,236,000|
|The Second Round||$2,445,000|
|The Third Round||$3,506,000|
Total Operating Expenses and Operating Profits
|Round||Total Operating Expenses||Operating Profits|
|The First Round||$1,200,000||$37,000|
|The Second Round||$ 2,390,000||$54,000|
|The Third Round||$3,557,000||– $51,000|
|The First Round||$22,234|
|The Second Round||$32,337|
|The Third Round||-$58,762|
These are the main financial indicators that should be considered by stockholders and potential investors. As it has been noted before, the losses were recorded during the last round because the company had to spend more capital on training and marketing activities. These steps were critical for improving the internal operations of the company. Additionally, this allocation of resources was important for facilitating the expansion policies of the company. Furthermore, the management did not want to close some of the less profitable routes because at the early stages, it is difficult to identify the routes which are critical for the profitability of the company. During the next reporting period, the management will focus on the net revenues of ACE Airlines Inc.
On the whole, ACE Airlines Inc. has been able to remain competitive, even despite the difficulties that this company currently encounters. Although, it is a start-up company, the organization has been able to improve its financial performance by increasing gross revenues. Moreover, the enterprise has increased the number of routes that it serves. In the future, the company will attach importance to marketing activities and quality training because they can contribute to improved financial performance of ACE Airlines Inc. Finally, it is vital to improve the internal operations of the company in order to avoid losses. These are the main details that can be singled out because they will significantly affect internal operations as well as profitability.
Belobaba, P., Odoni, A., & Barnhart, C. (2009). The Global Airline Industry. New York, NY: John Wiley & Sons. Web.
Shaw, S. (2012). Airline Marketing and Management. New York, NY: Ashgate Publishing. Web.
Wensveen, J. (2012). Air Transportation: A Management Perspective. New York, NY: Ashgate Publishing. Web.