a m s - wsiz m s . airline management ... heinz poloschek . ... wacc = weighted average cost of...

Airline Management Simulation AMS

A M S

Airline Management Simulation

Dear course participants, The "rules of the game" serve the fundamental orientation in the air traffic world in which we will move with our management exercise. Please work through these before the beginning of the seminar. The exercises in the rules serve the deepening the contents. Pocket calculators and writing materials suffice to the equipment of your own during the seminar. You can use a laptop computer of your own; but there is the danger that one neglects too much the actual task by continuously improving your sheet on the laptop. The seminar times are determined by the points delivering your decisions and can last until approximately 17.00 hours. If you should still have questions before the beginning of the seminar, you can write to me by e-mail: Heinz. Poloschek@ t-unlined I wish you a lot of joy already when getting familiarized with the rules. Heinz Poloschek All rights reserved Published by Heinz Poloschek 2012 [email protected]


Contents Page

1. General Overview 4

1.1 The simulation model 4

1.2 The starting situation 4

1.3 The course of simulation 6

2. Production 7

2.1 Route network and timetable data 7

2.2 Aircraft 8

2.3 Crews 10

2.4 Handling 11

2.5 Technical services 12

2.5.1 Maintenance 12

2.5.2 Overhaul 12

2.6 Personel in the technical department and the field sales organisation 13

2.7 Supply of materials 13

2.7.1 Spare parts 13

2.7.2 AoG transport 13

2.7.3 Emergency delivery 14

2.7.4 Breakdown frequency 14

3. Marketing 15

3.1 Market relationships 15

3.2 Marketing instruments 15

3.2.1 Advertising 15


3.2.2 Sales promotion 15

3.2.3 Acquisition by sales representatives 15

3.2.4 Service frequency 16

3.2.5 Service 16

3.2.6 Fares 16

3.2.7 Punctuality 18

3.3 Maximum load factor 18

3.4 Market research 20

4. Financing 21

4.1 Own financing 21

4.2 Outside financing 23

4.3 Bridging loans 23

4.4 Insolvency 23

4.5 Money investment 23

5. Administration 24

5.1 Personel 24

5.2 Building 24

6. Accounting 24

7. Decision making 26

8. Decision input programme 27


1. General Overview 1.1 The simulation model

This business simulation represents the economic actions of an airline.

The participants make decisions on the basis of existing information with the aim of maximising profits and/or obtaining adequate interest on the capital invested.

The interest of the capital invested is measured by the financial indicators “entrepreneurial return and corporate return”:

The entrepreneurial return is also called the return on ownership capital; it is especially interesting for the owners of a company.

The corporate return is also called the return on total capital. The interest paid on borrowed capital must therefore be added to the profit in the numerator (above the line) because it is not important who receives the interest only that the interest was earned. This economic statistic assesses the company as a whole and is, for example, interesting for the investor. In addition to the figures Entrepreneurial und Corporate return a new financial indicator is used in order to emphasize the aim of increasing the company value. This financial performance indicator is the cash value added (CVA) and answers the question how much the company value increased beyond the interest which is expected by the investors. To calculate the indicator to figures must be compared: the actual cash flow and the cost of capital employed. The company value increases when the difference is higher than zero. The management regarding the CVA is called “value-based management”.

Profit * 100 Entrepreneurial return =

Equity capital

(Profit + interest paid) * 100 Corporate return = Equity capital + borrowed capital


Your company aim must be defined by the CVA indicator. Please make your decision between the figures of 5, 10, 15 or 20 million EUR per year.

1.2 The starting situation

The companies are founded as joint-stock companies with a share capital of 80 million EUR each. The purpose of these companies is the transportation of passengers and cargo. The state encourages competition within the framework of the free-enterprise system; it endeavours to prevent the creation of monopolies and to retain jobs.

CVA = Cash flow –minimum cash flow Cash flow = Operating result + interests earned + depreciation + changes in pension provisions (not in AMS) + result from tangible asset disposal (not in AMS) Minimum cash flow (also called Hurdle Cash Flow) = Cost of capital employed + capital recovery rate + taxes paid Calculating the capital costs = captal emploed * WACC Capital employed = sum of all assets at their historical costs

WACC = weighted average cost of capital, calculated seperately for equtiy and debt.

Calculating the capital recovery rate = In addition to the return on capital, the capital recovery has to be considered in the calculation of the minimum cash flow, which is expressed by the economic depreciation of an asset. It is measured by the capital recovery rate. If this is applied to the capital base, the result is the percentage of the historical cost of assets which needs to be earned annually over its useful life in order to recover the historical cost, after accounting for interest.

Finally, the expected tax payment is added - in simplified form, by applying a surcharge of currently 1.2 per cent of the capital base.


Exercise: Prepare the opening balance sheet of the company after the equity capital has been formed by the sale of the shares at a quotation of 100%. Balance sheet Assets Liabilities

Administration building Hangar building Sales and Stations Advance payments Aircrafts Spare parts Securitites Cash Loss

Issued Equity capital Capital Reserves Liabilities Provisions Profit

Total Total

1.3 The course of the simulation

The simulation consists of a series of periods. At the beginning of a period the decisions are made and given to the simulation management on a disk. The companies are informed of the results at the end of the period. A simulation corresponds to half a year (26 weeks, 182 days). A fiscal year consists of 2 periods. The number of periods to be played is not certain at the beginning of the simulation.

Exercise: Let us suppose that you have invested 80 million EUR as capital. How high must be the profit per period if you want to achieve 15% interest per annum? Result: thousand EUR

How

did

we

spen

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oney

?

From

who

m d

id w

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oney

?


Flight operations can only be started in Period 3, as at the beginning of the simulation there are no operable aircraft available. The company is set up in Periods 1 and 2.

Period 1

Period 2

Period 3

Period 4 DECI-

SION

EVAL-

UATION

RESULT

DECI-

SION

EVAL-

UATION

RESULT

DECI-

SION

EVAL-

UATION

RESULT

DECI-

SION

EVAL-

UATION

RESULT

2. Production 2.1 Route network and timetable data

The production of the airlines consists of the transportation of passengers and cargo between the three locations Airport A, Base B and Airport C. The traffic aera 3 cannot be served before period 6.

The flight time from the base to the airports or Airport A to Airport C is 3 hours, the turnaround or transit time is 1 hour. Passenger flights can begin at 06.00 and must be ended by 22.00. Each day (24 hours) maintenance tasks are carried out which last 2 hours (Flight operations check). These cannot take place during the transit/turnaround time. The timetable must show the same data each week. The timetable must be adhered to even during the partial overhaul (D-check) of the aircraft (use of own reserve aircraft and/or charter of other aircraft).

1.5 hours

approx.

1.5 hours

approx.

1.5 hours

approx.

Decision time

Base

A C

Traffic area 3

Traffic area 2 Traffic area 1


Exercise: Produce a turnaround plan for one aircraft. Please remember that Traffic Area 3 cannot be served at the beginning because there are no traffic rights.

Place Time

2.2 Aircrafts

The manufacturers offer passenger and cargo aircraft. Cargo cannot be transported in passenger aircraft. The delivery time of the aircraft is 2 periods. If an aircraft is ordered at the beginning of the first period, it will be delivered at the end of the second period. It can be put into operation in the third period. 20% of the purchase price must be paid on order; full payment takes place on delivery of the aircraft, in our example, therefore, in the second period.

Period 1 2 3 Order

Advance payment 20%

Delivery Payment 80%

Operation

The useful life of the aircraft is 10 periods. Depreciation takes place to a residual value of 0 EUR. Aircraft sales are not possible. It is possible to lay up aircraft but this does not influence the depreciation or the other fixed costs. The D-check can be carried out during the lay-up.


At the beginning of the simulation the following aircraft types are available (P = passenger version, F = cargo version). The costs given in the table of aircraft types can change in the course of the simulation:

Aircraft type A-100 P A-100 F

B-100 P B-100 F

Purchase price (in thousand EUR) 15,000 26,000 Number of seats (Passenger version)

65 120

Cargo capacity (Cargo version)

6 t 10 t

Insurance costs per period (in thousand EUR)

100 150

Max. flight hours before D-check

4,500 4,500

D-check duration 4 weeks 4 weeks D-check material costs (in thousand EUR)

2,000 3,500

Salaries in thousand EUR per crew (cockpit and cabin) and per period at the beginning of the simulation

200 300

Training costs per crew in thousand EUR 300 300 Landing fees in thousand EUR per landing 0.5 1.1 Range in flight hours 5 5 Fuel consumption in litres per flight hour 3,500 5,500 Fuel price: EUR/litre 0.30 0.30 Charter price for 4 weeks in thousand EUR

800 1,000

In order to carry out the scheduled flight operations during the D-checks aircraft must be chartered if you do not own reserve aircraft. Insurance costs are included in the charter price. All other costs must be covered by the airlines. Crews cannot be chartered with the aircraft.


Produce a cost comparison for the two aircraft types by calculating the costs per seat or tonne. Please note that this cost comparison cannot replace a capital expenditure calculation.

2.3 Crews

Crews are only allowed to fly one type of aircraft. The type training or retraining lasts 1 period. Crews can be made redundant with a period of notice of 1 period. Notice of redundancy is given at the beginning of the period; the crew leaves at the end of the period. Crews do not leave voluntarily. Crews are employed for a maximum of 80 flight hours in 4 weeks.

Preconditions A-100 P B-100 P Days 182 Flights 728 Seats offered (100%) 47,320 Flight hours 2,184 Number of crews

Costs (in thousand EUR)

Insurance D-check material (proportional)

Fuel costs D-check personnel Crews Landing fees Depreciation Total Costs per offered seat

You may obtain different figures for some types of costs depending on how you account for incidental costs or on the distribution of costs. The salaries for the crews are average salaries for passenger and cargo services.

Cost comparison


Overtime is not allowed. Each crew is only available for 22 weeks in a period, as in a year 4 weeks vacation are granted and 4 weeks of absence through illness have to be reckoned with. Thus, 440 flight hours are possible per period and crew. The crews are stationed at the base. If overnight stays are necessary at the locations A and C, then additional costs arise of two thousand EUR per crew and night. The trade union of the flight personnel is endeavouring to improve working conditions through collective bargaining. The number of crews necessary is calculated separately according to aircraft types and passenger/cargo services. They are however exchangeable between passenger and cargo services from period to period. Crews can be leased in urgent cases at five times the normal salary; they are available immediately.

2.4 Station Handling

The sales and airport equipments must be installed at each airport one period before the first flight to the airport. Expenses of 2,000,000 EUR are needed for each airport. These are written off at 400,000 EUR per period, the useful life is 5 periods. The following personnel is necessary at the airports, calculated separately according to passengers and cargo. If the total of necessary employees is not available, then temporary personnel (available immediately) must be employed at five times the normal salary. Continued next page

Flights per airport and period

Airport employees - passenger services

Airport employees - cargo services

0 to 364 100 50 365 to 546 150 75 547 to 910 195 90

911 to 1274 235 110 1275 to 1638 270 130 1639 to 2002 300 150 2003 to 2366 325 160 2367 to 2730 345 170 2731 to 3094 360 180 3095 to 3458 365 190 3459 to 3822 370 200


Flights per airport

and period Airport employees - passenger services

Airport employees - cargo services

3823 to 4186 375 210 4187 to 4550 380 220 4551 to 4914 385 230 4915 to 5278 390 240 5279 to 5642 395 250 5643 to 6006 400 260 each further 364 flights

5 more each 10 more each

2.5 Aircraft maintenance and overhaul 2.5.1 Maintenance

20 employees can carry out one aircraft check at the same time and a maximum of four a day in an eight hour shift. Employment only on night shift is not allowed. The night shift begins at 22.00 hours and ends at 6.00. Night and day shifts have to alternate.

2.5.2 Overhaul (D-Check)

For the overhaul of the aircraft, the construction of a hangar, in which only one overhaul is possible at a time, is necessary. Per period a maximum of 6 D-checks are possible in one hangar. Construction costs 10,000,000 EUR and takes 1 period. The building is written off at 5% of the residual value (degressive depreciation). Technical personnel must be employed for the D-check. 300 employees are able to carry out a D-check every 4 weeks. That means that 6 D-checks are possible, one after the other, within a period. The remaining two weeks are for renovation of the hangar and technical equipments. Each D-check has to be completed within a period and is carried out in 4 complete weeks (weekly planning). If more capacity is needed for D-checks, then a further 300 employees must be hired (and an additional hangar must be available).


2.6 Personnel in the technical department and the station handling

The minimum salary of the employees is 10,000 EUR per period at the beginning of the simulation. All employees receive the same salary. Higher salaries can be paid in thousand EUR steps and this reduces employee fluctuation (employee resignations). The employees of both sectors in then technical department are exchangeable from period to period (maintenance/overhaul). Dismissal by the company is possible with a period of notice of one period. Training lasts one period; training costs are 10,000 EUR per employee (in addition to salary). A labour agreement on working conditions is signed annually with the trade union. Temporary employees in the technical depart-ment and in the field station handling (available immediately) cost five times the normal salary.

2.7. Supply of material 2.7.1 Spare parts

In order to safeguard flight operations it is advisable to store spare parts at the base and the airports. The spare parts can be used for all aircraft types. The spare parts package for a repair (for a breakdown) requires purchase expenses of 100,000 EUR free on base, payable in the delivery period. The delivery time for spare parts is one period. If, for example, the order is in period 6, then delivery takes place at the beginning of period 7 and payment is made then. The installation of the spare parts can take place either at the base or at the airports. The defective parts can be removed and scrapped, the costs of scrapping the parts are equivalent to the amount received for the scrap. The storage costs for a spare part package are 5,000 EUR per commenced period.

2.7.2. AoG transport

If a spare parts package is urgently needed at an airport, then it will be transported to the corresponding location at AoG transport costs. (AoG = Aircraft on Ground). The AoG transport costs are 20,000 EUR per consignment.


2.7.3 Emergency delivery

If a spare parts package is urgently needed at an airport or at the base and no replacement of spare parts package can be obtained from another airport or the base, then a new package must be obtained from the manufacturer by emergency delivery. The delivery takes place directly to the station or base which ordered it. No storage costs are incurred for spare parts packages ordered by emergency delivery. These spare parts packages are not shown in the balance sheet but in the revenue-expenditure account.. They cost 200,000 EUR each.

2.7.4 Breakdown frequency

The breakdown frequency is on a long-term average approximately 3% of the number of flights.


3. Marketing

To characterise marketing: May we remind you of the four P’s? 3.1 Market relationships

In total there are three local market segments: the base market and the markets at the airports A and C. On each of these market segments there is a separate demand for business and private journeys as well as for cargo transport.

3.2 Marketing instruments

Advertising, sales promotion and acquisition by sales representatives are all used separately for business travel, private travel and cargo.

3.2.1 Advertising

Advertising takes place at the locations base, A and C, divided according to whether it is for business travel, private travel or cargo. The advertising is route-oriented product advertising (no image advertising). It has an effect only in period where the money is spent. You do not need to take decisions about the type of advertising (media) because you have appointed an agency to handle your advertising. You only decide about the amount of advertising expenditure in the individual market segments.

3.2.2 Sales promotion

Sales promotion takes place at the locations base, A and C, divided according to whether it is for business travel, private travel or cargo. Sales promotion supports your own sales outlets and the travel agencies with material, information, etc. Here too, you only decide about the amount you spend.

3.2.3 Acquisition by sales representatives

Sales representatives are used selectively in business travel markets, private travel markets and cargo markets.

Product Price Place Promotion

How many market segments are present in this simulation?


The normal salary of the sales representatives is 10,000 EUR per period (during the training period as well). Increases in salary are possible but only in amounts of full thousands. All sales representatives receive a uniform salary. Training for a sales representative lasts one period. Hiring and training costs for a sales representative are 10,000 EUR (in addition to the respective current salary). Resignations by the sales representatives take place at the end of a period, and at this point they leave the company. Hiring and dismissal by the company take place at the beginning of a period. The dismissed sales representatives leave the company at the end of this period. At the beginning of the simulation the sales representatives are not organised in a trade union.

3.2.4 Service frequency

The frequency of a service to a location influences the sales success. The quality of the product is increased by a more frequent service. Customers react to the frequency of the service to a location, e.g. per day or per week. It is not possible to allow them to differentiate between departure times (e.g. peak time flights).

3.2.5 Service

The quality of the service is measured by the expenditure. The amount in EUR is to be given per passenger and tonne. The exact amount of the total expenditure for service can only be ascertained after the simulation of a period, as you can only estimate the number of passengers or tonnes carried at the time of your decision. You should enter planned values in the budget.

3.2.6 Fares

One fare per traffic area is fixed for business travellers and one for private travellers. In the cargo sector, on the other hand, you fix cargo rates for each of the 6 routes. The fares and rates are always valid for one period. A cartel-type pool of the three companies is not possible. Too high a price level leads to the emergence of new competitors.


Please think about the price/quantity function of your company. It could look like this:

price Maximum e>1 turnover e = price elasticity e=1 e<1 sales

price-sales-function

„In pricing policy, you can only make two mistakes: you either fix the price too high or too low.“ Wolfgang Schmidt, MOW GP Basic principles of pricing policy: 1. The prices to be set by the companies conform to

market conditions (market type, demand) 2. Over the long term prices must cover costs; in the

short term you do not have to cover fixed costs (but not for long!)

3. In the short term (i.e. in the decision phase in a period)

all costs can be regarded as fixed (you will certainly not alter the marketing concept three minutes before the decision is due). That is why you have to fix the price so that it will probably bring the highest turnover.


If you want to find out the maximum turnover, then it would be helpful to know the price elasticity of demand. This is calculated as follows: Example: Calculate the value for the price elasticity using the following figures: Former Business Class fare 1,500 EUR Number of tickets sold 10,000 New Business Class fare 1,425 EUR Number of tickets sold 10,425 Was the price change sensible under the aspect of sales revenue maximisation?

3.2.7 Punctuality

The punctuality ratio is composed of the following factors: 100 % minus • average breakdown rate • 0.5% for every AoG transport • 1% for every emergency delivery • 1% for every delay of 5 minutes or part thereof in handing in the decision

3.3 Maximum load factor

The capacity offered can only be used to a maximum of 80% in the period average. If the passengers and cargo volume attracted by the marketing instruments cannot be carried due to lack of capacity (overbooking), then these passengers and cargo are carried in part by the competition (business and private travellers in equal parts). If, however, this happens frequently or if all the companies together are not able to satisfy demand, then additional competition can emerge. We know that you do not like the 80% maximum but it is very difficult for a scheduled airline to reach the last per

Price-Quantity Function

e =

Percentage change in demand Price elasticity of demand = Percentage change in price


percentage points of the seat or cargo load factor. Even charter airlines do not achieve 100% load factor over a whole year!

Definitions Measuring instruments for the output of an airline are SKO and PKT. Loadfactors measure the sold part of the total offer. SKO = seat kilometres offered; also called ASK = available seat kilometres. Calculation: offered seats multiplied by the distance in kilometres PKT = passenger kilometres transported, also called RPK = revenue passenger kilometres Calculation: transports pax multiplied by distance in kilometres SLF = seat load factor, also called PLF = passenger load factor PKT SLF in % = ------------------ x 100 SKO TKO = tonne kilometers offered, also called ATK = available tonne kilometers Calculation: offered tonnes multiplied by the distance in kilometers TKT = tonne kilometers transported, also called RTK = revenue tonne kilometers CLF = cargo load factor TKT x 100 CLF in % = -------------------- TKO Overall load factor = is the relation between total transported output (passenger, cargo and mail) and the corresponding offer.


3.4 Market research

1. Demand estimate for the following period: 300,000 EUR 2. Demand forecast for the following 4 period in advance: 300,000 EUR 3. Global competition survey: 500,000 EUR 4. Detailed competition survey 1,200,000 EUR 5. Price elasticities 500,000 EUR The results of the market research on potential demand are to be handled with care; normally the results are accurate in 80% of the forecasts. Remark: In period 3 230,000 people want to travel between the base (B) and the two stations vv.

Potential demand: These figures correspond to Market Research 2 and are to be used as an example. You will receive the figures valid for your simulation at the introduction at the beginning of your simulation. Period Passengers Cargo O & D passengers Tonnes 1 220,000 23,400 2 270,000 27,000 3 230,000 30,000 4 360,000 34,000


4. Financing

Overview of the various types of company financing:

Internal financing External financing Own financing Self-financing

(Retention of profits) Investment financing (Issue of shares)

Outside financing Formation of reserves

Creditor financing (borrowing)

4.1 Own financing

Own financing can take place thorugh retained profits (self financing) and the issue of shares (investment financing). The placement of new shares on the capital market is only possible when the share price of the company is above 150% (quotation in percentage). The issue price of the new shares must be one third lower than the price of the shares dealt with on the stock exchange in order to offer investors an incentive to buy. Issuing expenses do not arise. The willingness of investors to buy new shares raises with the stock exchange prices of the old shares: Share quotation Possible capital increase in

percentage to 175% 176% - 225% 226% and more

5% 10% 15%

The equity capital is to be increased by 10%. The result is as follows: (In the following balance sheet only those items which have changed are shown. The values also only show the changes).

Example for a (normal) capital increase: Equity capital 80,000,000 EUR Reserves 10,000,000 EUR Share quotation 210%

(that corresponds to a quotation of 105 for a 50 EUR share)


Amended balance sheet

A high share price often leads to a capital increase. Please note that in this way the future price is lowered (because more shares are in circulation) and the entrepreneurial return can sink, and in addition a higher equity capital wants to receive an appropriate dividend! Capital increase from company means: In this simulation we have agreed that reserves are to be transferred to the equity capital when they are more than 50% of the equity capital. This procedure is called capital increase from company means. To make it clearer here is another example: Original balance sheet

Assets 140,000 Equity capital Reserves

80,000 60,000

Total 140,000 Total 140,000 New balance sheet

Assets 140,000 Equity capital Reserves

110,000 30,000

Total 140,000 Total 140,000 At this opportunity here is some information on calculating the owned capital of a joint stock company. It consists of the sum of: Equity capital + Reserves + Profit - Loss = Own capital This is a calculation based on one point in time (e.g. 31 December). If you want to be more exact, then you can calculate this value monthly, for instance.

Cash in hand 11,200 Equity capital 8,000 Reserves 3,200

Total 11,200 Total 11,200


4.2 Outside financing

Each company can borrow money within the framework of the borrowing limit. The application takes place at the beginning of a period, the amount is available to the company in the same period and interest has therefore also to be paid in this period. Credit can be repaid at any time. At the beginning of the simulation the interest rate for credit is 4% per period.

4.3 Bridging loans

If at the beginning of a period there is a negative cash balance due to inadequate financial planning, the referees grant a bridging loan to the amount that brings the cash balance to zero. The interest rate for this loan is 5% above the current rate for loans. Interest payment and expenditure for the bridging loan are taken into consideration in the following period for reasons of simplicity. If in the following period no decisions are made about the repayment of the bridging loan, it will be treated like a normal loan.

4.4 Insolvency

If total debts exceed the borrowing limit, the company is insolvent and has to declare bankruptcy. The borrowing limit is the sum of the assets (the asset side of the balance sheet without the loss).

4.5 Money investment

The companies can buy securities on the stock exchange and resell them at any time. The rate of return is 1% below that for loans.


5. Administration 5.1 Personnel

The personnel of your airline consists of the handling staff at the airports (see 2.4), the technical staff (see 2.6), the sales representatives (see 3.2.3), the flying personnel (see 2.3) and the staff in the administrative sectors. These include the employees in Planning, Marketing, Accounting, Personnel and in the Field Sales Organisation. The total number of the administrative personnel is 500 employees. Their salary is 10,000 EUR per period at the beginning of the simulation. These employees are organised in a trade union and have to be hired in Period 1. They do not give notice on their own accord.

5.2 Building

The purchase of a head office building requires 10,000,000 EUR (necessary from Period 1). Depreciation is 500,000 EUR per period.

6. Accounting

To facilitate your planning your company PC provides at all times a liquidity account, a profit and loss account and a marginal costing account for the decisions you make.

6.1 The following accounts must be kept per period:

Profit and loss account (comparison of revenue and expenses, period oriented) Liquidity account (comparison of earnings and expenses, period oriented) Balance sheet (comparison of balance sheet and finance sources, at a specified time)

6.2 The valuation of spare parts and securities take place at their purchase price. The valuation of the total fixed assets takes place at the respective residual values.

6.3 In the calculation of profits the losses of the three previous years can be

deducted. 6.4 A decision on the use of profits has to be made in the period following the

conclusion of a fiscal year (periods 3,5,7 etc.). 6.5 Dividends can only be paid when the equity exceeds the nominal capital and

a legal reserve of 10% of the nominal capital is present.


6.6 If a dividend is paid, then a corporation tax of 36% must be paid on this amount. A corporation tax of 56% is levied on retained profits.

6.7 A provision to the amount of the tax liability is formed retroactively. The

profit after tax is distributed as disposable profit and remainder goes to increase reserves.

6.8 The annual financial statements of the companies and the stock

exchange prices are published at the end of the following periods.


7. Organisational suggestion AMS

Chief Executive Officer Goals

Coordination Working organisation

Dividends

Product Management Passenger Services

Product Management Cargo Services

Product Management Technical Services and Flight Operations

Marketing Sales Planning Aircraft Long-term Planning Flight Planning

Marketing Sales Planning Aircraft Longterm Planning Flight Planning

Maintenance Overhaul Material Crews Handling Flight Planning

8. Decision making Each group makes the decisions with the help of a computer programme. At the decision time die decisions are saved on a disk which is transferred to the central evaluation programme. On the following pages you will see the input masks.

Accounting and Controlling

a m s - wsiz m s . airline management ... heinz poloschek . ... wacc = weighted average cost of...

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