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Flirting With Risk
 
 
|KOÇ UNIVERSITY                                                                                                                           |
|FINANCIAL MANAGEMENT 501                                                                                                                 |
|Case 17: Flirting with Risk                                                    &nbs ...
 
 
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Classic Airlines

This paper will cover an in-depth look and analysis of Classic Airlines, a twenty five-year-old passenger airline. Classic Airlines commands a fleet of more 375 jets that serve 240 cities with more than 2300 daily flights making it the fifth largest airline in the world (University of Phoenix, 2007). Classic has grown to an organization of 32,000 employees, and last year, it earned $10 million on $8.7 billion in sales (University of Phoenix, 2007).
The paper will give the reader background information concerning the current situation the company faces, determine the key issues in the situation, opportunities the company has to address, who this will affect, and the desired end-state goals of the company.
Situation Background : "Increased uncertainty about flying has affected industry stock prices across the board, and Classic has seen a 10% decrease in share prices in the past year. With a concerned investment community on the watch, the airline industry operates under a microscope, subject to scrutiny from all sectors. Not surprisingly, the negativity from Wall Street to the media to the public has affected employee morale, which is the lowest its ever been. Consumer confidence also appears to be waning. By January 2005, Classic's declining Classic Rewards program measured a 19 percent decrease in the number of Classic Rewards members, and 21 percent decrease in flights per remaining member. Clearly, loyal customers were jumping ship and the ones still aboard seemed to be flying less frequently -- or at least less frequently with Classic Airlines....

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