Description
It describes about Industry Trends in airline industry, PEST Analysis of airline Industry, Competitor Analysis, SWOT analysis, Company Description, General Information about jet airways, it's Finance performance, SWOT analysis of Jet airways and Various Strategies employed by jet airways.
SIMSREE 2012-14 Pre induction Program Company analysis document of
Industry trends: Indian and Global perspectives, recent happenings The flying colors of aviation industry in India is coupled with the economy in India in many ways and the better economy in India creates greater opportunity to the people of India to be affordable to air travel and the success of the industry shows greater GDP and help the economy of the country But now Indian Aviation Industry has been going through a turbulent phase over the past several years facing multiple headwinds – high oil prices and limited pricing power contributed by industry wide over capacity and periods of subdued demand growth. Over the near term the challenges facing the airline operators are related to high debt burden and liquidity constraints - most operators need significant equity infusion to effect a meaningful improvement in balance sheet. Improved financial profile would also allow these players to focus on steps to improve long term viability and brand building through differentiated customer service. Over the long term the operators need to focus on improving cost structure, through rationalization at all levels including mix of fleet and routes, aimed at cost efficiency. At the industry level, long term viability also requires return of pricing power through better alignment of capacity to the underlying demand growth. While the domestic airlines have not been able to attract foreign investors (up to 49% FDI is allowed, though foreign airlines are currently not allowed any stake), foreign airlines may be interested in taking strategic stakes due to their deeper business understanding, longer investment horizons and overall longer term commitment towards the global aviation industry. Healthy passenger traffic growth on account of favorable demographics, rising disposable incomes and low air travel penetration could attract long-term strategic investments in the sector. Recently major players in the industry like Kingfisher are on the verge of bankruptcy and others have large debts. Entry of foreign investment may solve this problem.
SIMSREE 2012-14 Pre induction Program PEST analysis of Airlines industry Political - Taxes that they get charged in different countries for landing, fuel taxation etc. Allowance of FDI in airlines industry will be useful for industry for infrastructure development. Economic - How does interest rate movement affect their long-term debt? How as their economic performance compared to the market sector? P/E ratios etc. Oil prices increasing, is this affecting their profits from increased fuel costs? Social - Safety measures they employ on board and on the ground. Population growth - does an ageing population affect them i.e. baby boomers, lots of people in that life stage have more disposable income to spend on air travel. Technological - As things improve technology becomes cheaper. How does this affect them? Does this mean the entries to barrier are lower for competitors to join? Do easy jet have a big R&D dept? India lacks in R&D so more investment is needed to survive in competition by foreign carriers.
SWOT analysis of Airlines industry. Strengths A major strength of any airline is the product itself--air travel. Despite downturns, over time air travel continues to grow, not only due to population growth, but also due to an increased propensity to fly. Strength is the safety record, and the associated public acceptance of air travel as both a fast and safe way to travel. Both traditional, brand recognized airlines and new low cost carriers share this strength. Airline staff is highly trained and experienced, from pilots and flight attendants to mechanics and ground staff. Businesswise, airlines have the ability to segment the market, even on the same routes. This allows airlines to establish different levels of service and make associated pricing decisions. Weaknesses Airlines have a high "spoilage" rate compared to most other industries. Once a flight leaves the gate, an empty seat is lost and non-revenue producing. Aircraft is expensive and requires huge capital outlays. The return on investment can be different than planned. Large workforces spread over large geographic areas, including international points, require continual communication and monitoring. This can be exacerbated during operational irregularities, such as bad weather. While the business climate can change quickly, airlines have difficulty making quick schedule and aircraft changes due to leases, staffing commitments and other factors.
SIMSREE 2012-14 Pre induction Program Opportunities Airline market growth offers continual expansion opportunities for both leisure and business destinations. This is particularly true for international destinations.Technology advances can result in cost savings, from more fuel efficient aircraft to more automated processes on the ground. Technology can also result in increased revenue due to customer-friendly service enhancements like inflight Internet access and other value added products for which a customer will pay extra.Link-ups with other carriers can greatly increase passenger volumes. By coordinating schedules, airlines can offer service to destinations via a code share agreement with a partner carrier. Threats A global economic downturn negatively affects leisure, optional travel, as well as business travel.The price of fuel is now the greatest cost for many airlines. An upward spike can destabilize the business model.A plague or terrorist attack anywhere in the world can negatively affect air travel.Government intervention can result in new costly rules or unexpected new international competition.
SIMSREE 2012-14 Pre induction Program Jet Airways
Company description and general information. Jet Airways is the largest Indian airline based out of Mumbai. It operates over 400 flights daily to 76 destinations worldwide. Its main hub is Mumbai, with secondary hubs at Delhi, Kolkata, Chennai, Cochin, Ahmedabad, and Bengaluru. It has an international hub at Brussels Airport, Belgium. Jet Airways is owned by Naresh Goyal. With its first flight in 1993, Jet Airways has come a long way to becoming the fastest growing airlines in the world- now all set to change the way you fly- for the better! Connecting 22 international destinations and operating flights to and from 52 destinations in India, Jet Airways offers the best air deals. Key people of Jet airways are Naresh Goyal, Founder & Chairman , Nikos Kardassis, CEO. Ali Ghandour, Director.Revenue of Jet Airways are INR145,225.80 million (US$2,628.59 million) Profit increase INR-858.40 million (US$-15.54 million) as per 2011.
SIMSREE 2012-14 Pre induction Program Financial performance of Jet Airways…
Balance Sheet of Jet Airways
in Rs. Cr. Mar '12 Mar '11 12 mths 12 mths
Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities
86.33 86.33 86.33 86.33 0 0 0 0 -625.78 750.37 1,720.31 1,767.64 1,180.86 2,604.34 3,528.89 4,510.45 7,338.86 8,969.94 10,867.7 5 13,480.39 12,048.6 1 16,084.73 Mar '12 12 mths Mar '11 12 mths
Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit 18,875.7 2 17,940.46 5,093.27 4,324.65 13,782.4 5 13,615.81 242.05 348.91 1,645.96 1,725.09 778.35 711.18 1,266.44 965.77 47.85 141.2 2,092.64 1,818.15 2,666.03 3,688.64 450.03 446.51 5,208.70 5,953.30 0 0
SIMSREE 2012-14 Pre induction Program Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs) 8,651.90 5,371.49 178.65 186.89 8,830.55 5,558.38 -3,621.85 394.92 0 0 12,048.6 1 16,084.73 16,453.5 1 13,928.42 -62.48 96.91
SWOT analysis of Jet Airways….. Strengths · · · · Passengers will continue to need connecting/network services Ensure a leisure travel, especially to the business traveller, like airport lounges Enhanced in-flight service and more comfortable seating In long-haul markets, where premium service is essential, through higher capacity and long range Boeing 747s and Airbus 340s. Weakness · · · · Excess capacity Complicated flight operations. Hub-and-spoke networks of legacy carriers were profitable as long as LCCs had low service along heavily travelled routes. Mounting debt – Enormous debt to investment ratio (above 90% for most US legacy carriers like US, DL, AA, UL, CO) compared to LCCs (25% for Southwest) Cost-to-revenues ratio per seat mile is very high (>13) compared to Southwest’s 7.67 Opportunities · Maintain short-haul flights only to extent needed to feed the network Threats · Labour problems as “legacies” try to streamline in order to compete with LCCs
SIMSREE 2012-14 Pre induction Program · Flood of new capacity into the region from LCCs may trigger a competitive bloodbath among the legacies.
Various strategies employed by Jet Airways in the course of conducting business • • • • • • • • • • • Keep operations and growth in line with expected Indian economy growth which is around 7%-8% per annum Manage risk & short term crisis on account of any global financial risks Manage short term spike in crude oil prices. Minimize passing the fuel price fluctuation to customers. Network expansion will be around the key focus specially Gulf and Middle east Focus on improving service, reliability and on time performance Focus to be the best in sector. Measures to negate effect of unprecedented increase in prices of fuel Maintain its leadership position in the Indian aviation industry Improve On-time performance it was 88.4% for Jet Airways for the financial year 201112 Explore the potential for sustained growth in Indian passenger traffic because of low penetration in the medium to long term.
doc_856972739.doc
It describes about Industry Trends in airline industry, PEST Analysis of airline Industry, Competitor Analysis, SWOT analysis, Company Description, General Information about jet airways, it's Finance performance, SWOT analysis of Jet airways and Various Strategies employed by jet airways.
SIMSREE 2012-14 Pre induction Program Company analysis document of
Industry trends: Indian and Global perspectives, recent happenings The flying colors of aviation industry in India is coupled with the economy in India in many ways and the better economy in India creates greater opportunity to the people of India to be affordable to air travel and the success of the industry shows greater GDP and help the economy of the country But now Indian Aviation Industry has been going through a turbulent phase over the past several years facing multiple headwinds – high oil prices and limited pricing power contributed by industry wide over capacity and periods of subdued demand growth. Over the near term the challenges facing the airline operators are related to high debt burden and liquidity constraints - most operators need significant equity infusion to effect a meaningful improvement in balance sheet. Improved financial profile would also allow these players to focus on steps to improve long term viability and brand building through differentiated customer service. Over the long term the operators need to focus on improving cost structure, through rationalization at all levels including mix of fleet and routes, aimed at cost efficiency. At the industry level, long term viability also requires return of pricing power through better alignment of capacity to the underlying demand growth. While the domestic airlines have not been able to attract foreign investors (up to 49% FDI is allowed, though foreign airlines are currently not allowed any stake), foreign airlines may be interested in taking strategic stakes due to their deeper business understanding, longer investment horizons and overall longer term commitment towards the global aviation industry. Healthy passenger traffic growth on account of favorable demographics, rising disposable incomes and low air travel penetration could attract long-term strategic investments in the sector. Recently major players in the industry like Kingfisher are on the verge of bankruptcy and others have large debts. Entry of foreign investment may solve this problem.
SIMSREE 2012-14 Pre induction Program PEST analysis of Airlines industry Political - Taxes that they get charged in different countries for landing, fuel taxation etc. Allowance of FDI in airlines industry will be useful for industry for infrastructure development. Economic - How does interest rate movement affect their long-term debt? How as their economic performance compared to the market sector? P/E ratios etc. Oil prices increasing, is this affecting their profits from increased fuel costs? Social - Safety measures they employ on board and on the ground. Population growth - does an ageing population affect them i.e. baby boomers, lots of people in that life stage have more disposable income to spend on air travel. Technological - As things improve technology becomes cheaper. How does this affect them? Does this mean the entries to barrier are lower for competitors to join? Do easy jet have a big R&D dept? India lacks in R&D so more investment is needed to survive in competition by foreign carriers.
SWOT analysis of Airlines industry. Strengths A major strength of any airline is the product itself--air travel. Despite downturns, over time air travel continues to grow, not only due to population growth, but also due to an increased propensity to fly. Strength is the safety record, and the associated public acceptance of air travel as both a fast and safe way to travel. Both traditional, brand recognized airlines and new low cost carriers share this strength. Airline staff is highly trained and experienced, from pilots and flight attendants to mechanics and ground staff. Businesswise, airlines have the ability to segment the market, even on the same routes. This allows airlines to establish different levels of service and make associated pricing decisions. Weaknesses Airlines have a high "spoilage" rate compared to most other industries. Once a flight leaves the gate, an empty seat is lost and non-revenue producing. Aircraft is expensive and requires huge capital outlays. The return on investment can be different than planned. Large workforces spread over large geographic areas, including international points, require continual communication and monitoring. This can be exacerbated during operational irregularities, such as bad weather. While the business climate can change quickly, airlines have difficulty making quick schedule and aircraft changes due to leases, staffing commitments and other factors.
SIMSREE 2012-14 Pre induction Program Opportunities Airline market growth offers continual expansion opportunities for both leisure and business destinations. This is particularly true for international destinations.Technology advances can result in cost savings, from more fuel efficient aircraft to more automated processes on the ground. Technology can also result in increased revenue due to customer-friendly service enhancements like inflight Internet access and other value added products for which a customer will pay extra.Link-ups with other carriers can greatly increase passenger volumes. By coordinating schedules, airlines can offer service to destinations via a code share agreement with a partner carrier. Threats A global economic downturn negatively affects leisure, optional travel, as well as business travel.The price of fuel is now the greatest cost for many airlines. An upward spike can destabilize the business model.A plague or terrorist attack anywhere in the world can negatively affect air travel.Government intervention can result in new costly rules or unexpected new international competition.
SIMSREE 2012-14 Pre induction Program Jet Airways
Company description and general information. Jet Airways is the largest Indian airline based out of Mumbai. It operates over 400 flights daily to 76 destinations worldwide. Its main hub is Mumbai, with secondary hubs at Delhi, Kolkata, Chennai, Cochin, Ahmedabad, and Bengaluru. It has an international hub at Brussels Airport, Belgium. Jet Airways is owned by Naresh Goyal. With its first flight in 1993, Jet Airways has come a long way to becoming the fastest growing airlines in the world- now all set to change the way you fly- for the better! Connecting 22 international destinations and operating flights to and from 52 destinations in India, Jet Airways offers the best air deals. Key people of Jet airways are Naresh Goyal, Founder & Chairman , Nikos Kardassis, CEO. Ali Ghandour, Director.Revenue of Jet Airways are INR145,225.80 million (US$2,628.59 million) Profit increase INR-858.40 million (US$-15.54 million) as per 2011.
SIMSREE 2012-14 Pre induction Program Financial performance of Jet Airways…
Balance Sheet of Jet Airways
in Rs. Cr. Mar '12 Mar '11 12 mths 12 mths
Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities
86.33 86.33 86.33 86.33 0 0 0 0 -625.78 750.37 1,720.31 1,767.64 1,180.86 2,604.34 3,528.89 4,510.45 7,338.86 8,969.94 10,867.7 5 13,480.39 12,048.6 1 16,084.73 Mar '12 12 mths Mar '11 12 mths
Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit 18,875.7 2 17,940.46 5,093.27 4,324.65 13,782.4 5 13,615.81 242.05 348.91 1,645.96 1,725.09 778.35 711.18 1,266.44 965.77 47.85 141.2 2,092.64 1,818.15 2,666.03 3,688.64 450.03 446.51 5,208.70 5,953.30 0 0
SIMSREE 2012-14 Pre induction Program Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs) 8,651.90 5,371.49 178.65 186.89 8,830.55 5,558.38 -3,621.85 394.92 0 0 12,048.6 1 16,084.73 16,453.5 1 13,928.42 -62.48 96.91
SWOT analysis of Jet Airways….. Strengths · · · · Passengers will continue to need connecting/network services Ensure a leisure travel, especially to the business traveller, like airport lounges Enhanced in-flight service and more comfortable seating In long-haul markets, where premium service is essential, through higher capacity and long range Boeing 747s and Airbus 340s. Weakness · · · · Excess capacity Complicated flight operations. Hub-and-spoke networks of legacy carriers were profitable as long as LCCs had low service along heavily travelled routes. Mounting debt – Enormous debt to investment ratio (above 90% for most US legacy carriers like US, DL, AA, UL, CO) compared to LCCs (25% for Southwest) Cost-to-revenues ratio per seat mile is very high (>13) compared to Southwest’s 7.67 Opportunities · Maintain short-haul flights only to extent needed to feed the network Threats · Labour problems as “legacies” try to streamline in order to compete with LCCs
SIMSREE 2012-14 Pre induction Program · Flood of new capacity into the region from LCCs may trigger a competitive bloodbath among the legacies.
Various strategies employed by Jet Airways in the course of conducting business • • • • • • • • • • • Keep operations and growth in line with expected Indian economy growth which is around 7%-8% per annum Manage risk & short term crisis on account of any global financial risks Manage short term spike in crude oil prices. Minimize passing the fuel price fluctuation to customers. Network expansion will be around the key focus specially Gulf and Middle east Focus on improving service, reliability and on time performance Focus to be the best in sector. Measures to negate effect of unprecedented increase in prices of fuel Maintain its leadership position in the Indian aviation industry Improve On-time performance it was 88.4% for Jet Airways for the financial year 201112 Explore the potential for sustained growth in Indian passenger traffic because of low penetration in the medium to long term.
doc_856972739.doc