The Southern Airlines performance index is descriptive of the well being of the company.
The company since fiscal year 2003-204 has undergone tremendous growth. The growth and operating profitability rate up to fiscal year 2006-2007 is at 10.28% which is indicative of increased productivity and growth of assets. The company’s asset capacity gain on the fiscal year 2006-2007 is 3.7% up from the 2.
7% in the fiscal 2003-2004. This means a growth rate of 1% on assets value returns.Southern Air Lines 2006-2007Income statement1st quarter of fiscal year 2006-2007Net sales $790,000,000Cost of sales $9086mTaxable income $9086Tax $291,000,000Net income $499,000,000Economic implications and market overviewDue to radical market changes and regulatory aspects the company had to undergo radical surgery in terms of restructuring operations and services provision policies. Due to pressure in the airline sector which was convectional and greatly weighing on the market Southern Airlines initially had some setbacks and lost its asset value marginally between 2005 and 2006. However there were gains in sales and the market share seemed to grow rapidly in favor of the company. According to the company reports 2001 was a disappointment. There were numerous losses and loss of asset value.
There was a decline on customer influx and the profits dwindled drastically. 911 was another major setback and the issue of regulation and market share made considerable effects on the company’s performance. However, over the years, the company has increased pace in development of services, fiscal capability and its market share policies.
This has resulted to gains which have projected the versatility of the company as a lucrative investment and a very competent airline. US stocks market performance, the Iraqi issue and the oil prices have considerably affected the company both positively and negatively. The company has seen its value decline over these factors but through the same up its strategic corporate development policies and strategies to foster financial and investment growth. The same has applied double standards on gain on asset value and produced a very lucrative façade that has helped the recapture of investor and customer confidence on the airline. Profitability and management has become elemental in creation of competent services and there has been increase in assets as well. The well being of the company looks very promising and this is enough evidence of the value of the company and its diversified investment outlook. This is a company which both the community and the investors can bank on.Working Capital StrategiesImplementation of capital saving measures is essential to avert financial storms.
The commonplace technocrat’s action of putting too much effort on a loss making strategy or venture, the overall out come is putting of extra funds to manage and try to force performance in this non-performing venture. Rather than making any gains then the venture eats into the capital resulting to losses, instead of such an expensive corporate mistake, the venture’s expenses should be cut and the funds being channeled on the venture should be cut off.Capital should be induced into performing projects. It should be incorporated minimally so as to have savings.
This sounds hackneyed but it’s more strategic in poising the company to counter fiscal lackluster in future. The capital should only purchase viable assets and finance viable business moves. There should be no money pets in the capital division. Choices of expenditure on important measures and plans, there should be investment projections which will bring dividends rather than expense which will decrease gain potential in set fiscal periods.
Capital management should be expeditiously structured. Each segment of proposed strategy has its implication on the economy of the company. This means it is not possible to ignore projects which are deemed productive but to allocate fiscal capital strategically.This means having a set time frame of ejecting more fiscal on the project and when to pull out from financing the same. Company policy on banking on projects already making money for the company should be implemented to cut cost on use of company capital so as to have reserves. Generally, there will be increase in savings and less budget allocations on financing company ventures. Capital ejection should be streamlined to minimal percentages’ on performing projects and the gains from the latter should be evaluated to level with the expense so as to reduce capital ejection. Looking at the debt based structure; the company is fit to perform on cash basis rather than borrowing to project its focused programs’Capital Structure StrategiesA budget on company expense and venture financing is the basis of streamlined expense and capital flow regulation.
The company budget should project even the least expected eventualities, impeding fiscal storms. Regulation of eventualities becomes elemental in keeping the structured capital projections at the exact level.Gauging capital performance and gain deferred will also regulate expense against gain. The percentage capital use should have convectional effect on gain on the same considerable rates. The budget should adhere to market demographics, assessment, research and marketability issues and assist only in pulling the company Achilles feet up the ladder. This attributes to a larger part of the company liabilities which form the Achilles feet. Besides proper expenditure, a capital expense time frame will have implications on the percentage profit at the end of the fiscal year, besides regulating losses accrued due to un-propagated expense. As such a very efficient structure to use the company capital is more or so the regulatory aspect of the company loss risk.
Capital Investment StrategiesMost businesses tend to favor financing only the functional area of the company and subsequently using the capital to improve the asset capacity. The investment stratagem offers comprehensive accreditation of valuable investments rather than business incentives. This means that the company uses investing the capital as the economic driver and a risk reduction measure instead of spending. Buying company stake, bonds and other investments is one essential strategy. But that is not seen as an aggressive investment strategy to some companies.
As such, adoption of other strategies that facilitate buy outs increase potential profit gain and ups investment level. New products within the airlines scope can become very lucrative investments. This is achievable through market research and survey to understand customer needs and the market situation analysis that would put in place provisional techniques and project needs that can be converted in to profits or long term investments. The company can strategize on capitalizing on advanced transport and luxury jets. These will make its competitiveness in the market to be higher and become insulation against losses and market share loss as well.
Capital can also be invested on customer service. Service provision will mean spending more on new staff, equipment and hospitality related projections.Dividend PolicyThe golden rule often ignored is that ‘its not only selling is business, but giving back is business too’ Good dividend rates offer incentives to possible investor. The ideology of making a formidable gain from the company through a stock is a valuable incentive as per the investor.
But this depends on the amount and regularity of the dividend.The policy at the company on the dividend should remain based on the rule. There is more public trust on companies that respect the community and give back to the community than aggressive corporations which barely concentrate on such issues but are abrasive and only after profits and expansion.There have been a lot of investor interests on companies whose public image is more of a household issue than the cut-throat fiscal objetived corporations.
Investors view this type of a company as already insured by the confidence reposed on it by the community rather than the profit making entity that is depicted by the latter. Insurance will express the vital element of securities held by investors in the company in terms of shares, with pockets of big investors and thousands of home based, mommy and daddy investors the insurance is in place since the majority of these are the same customers at the air line.Risk Mitigation StrategiesCustomer response to the company strategy and service provision is the onset of risk evaluation. Obviously no one can play down the possibility of a hard fiscal storm in case of an impeding one becoming real. The implications tend to derail, destroy capital structure and collapse the company. To demystify this, it is the responsibility of the company to assess the market through forecasting, market survey, and research on insulation against bad financial weather. However this is less expounded as required for comprehensive expression of risk mitigation.
It entails the departmental analysis of its functions and the possible loopholes that cause distress.Demographic factors, market conditions, shift of industry policy, regulation, product diversity and the political weather stands in the way of a consistent economic health of the company. Measures to insulate the company against all these impeding storms is through investing, adapting the systems in the company to the insulators condition, standards and requirement specifications.
Also there should more out put in terms of projection of company policy, structure and corporate value to the public so as to induce the shift of value and service policy towards the company. With such a broad based insight on reducing risk, there should be a profound expose within the company that draws out these risks and the consistent strategy to out, curb or cope with them, either of the measures will be able to poise the company against problems deemed impeding.