Author : Betty M. C. Tsai
Publisher :
Page : 268 pages
File Size : 49,87 MB
Release : 2008
Category :
ISBN :
Financial Risk Exposures in the Airline Industry
Betty M. C. Tsai
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Risk Management Practices in the Airline Industry
Sharon Fernando
Author : Sharon Fernando
Publisher :
Page : 88 pages
File Size : 24,56 MB
Release : 2006
Category : Derivative securities
ISBN :
This paper reviews the use of financial derivative instruments by non-financial entities to manage risk exposure. It provides the main objectives of a non-financial corporation to enter into derivative contracts with a counterparty and the scope of usage of these instruments. It is evident that most companies use derivative instruments to preserve cash flows and firm value as opposed to taking positions in contracts for speculative purposes. The paper focuses on the risk management practices of a specific industry: Airline transportation. The airline industry employs derivative instruments primarily to manage volatility in jet fuel prices, interest rates and foreign exchange rates. In spite of the la ck of consistent information provided in the annual reports, there is strong evidence to support the effective use of derivative instruments to manage operating costs and thereby maximize firm value.
British Airways: Foreign Exchange Exposure
kents Ashely
Author : kents Ashely
Publisher : GRIN Verlag
Page : 16 pages
File Size : 34,46 MB
Release : 2014-03-27
Category : Business & Economics
ISBN : 3656624712
Seminar paper from the year 2012 in the subject Business economics - Investment and Finance, grade: A, The University of Liverpool, language: English, abstract: British Airways is the largest airline in United Kingdom dealing with both international destinations and flights. It is the second largest airline behind easyjet measured by passengers carried. It was founded in 1972 and privatized in 1987. The company has been involved in various alliances with companies like Oneworld Airline, American Airlines Qantas and Canadian Airlines. In 2011 it merged with Iberia creating International Airlines Group (IAG) and listing it on the stock exchange. Since then it has purchased British Midland International (BMI). The company has maintained a stream of subsidiaries in various countries including BA CityFlyer, OpenSkies and hence developed its fleet size to 262 with 169 destinations excluding code-shares and subsidiaries. Its hubs are in London Heathrow Airport and Gatwick Airport. The company has also maintained several codeshare agreements and partnership with other companies like WestJet, Loganair, Finnair and several others. The company has employees represented by a number of trade unions with each employee segment having a different trade union representing it. The company as per 2011 fiscal year indicated an increasing revenue registering 10.827 billion pounds). Exposure of foreign exchange is that sensitivity regarding a real value of domestic currency of the assets, operating incomes and liabilities to changes unanticipated that may occur in rates of exchange. The risk of foreign exchange can be determined by of value of variance of domestic currency of all liabilities, assets and operating income which is attributed rates of exchange that are unanticipated.
Fuel Hedging, Operational Hedging and Risk Exposure - Evidence from the Global Airline Industry
Britta Berghöfer
Author : Britta Berghöfer
Publisher :
Page : 30 pages
File Size : 37,63 MB
Release : 2013
Category :
ISBN :
The aviation industry is characterized by low profit margins and a constant struggle with skyrocketing fuel costs. Financial and operational hedging strategies serve aviation managers as a tool to counteract high and volatile fuel prices. While most research on fuel hedging has concentrated on the U.S. airline market, this paper is the first study to include airlines from Asia and Europe. We analyze 64 airlines over 10 years and find that Asian carriers are more negatively exposed than European airlines but less exposed than North American airlines. In contrast to Treanor, Simkins, Rogers and Carter (2012), this study finds less significant negative exposure coefficients among U.S. carriers. Using a fixed effects model we reject the hypothesis that financial hedging decreases risk exposure. One possibility is that the decreased volatility in jet fuel prices over the past few years has perhaps made airlines less exposed to fuel prices and hence, financial hedging less effective. However, operational hedging, defined by two proxies for fleet diversity, reduces exposure significantly. A one percent increase in fleet diversity, calculated with a dispersion index using different aircraft types, reduces the risk exposure coefficient by 2.99 percent. On the other hand, fleet diversity, calculated with different aircraft families, reduces exposure by 1.45 percent. Thus, aviation managers have to balance the fleet diversity between operational flexibility and entailed costs.
Fuel Hedging and Risk Management
Simo M. Dafir
Author : Simo M. Dafir
Publisher : John Wiley & Sons
Page : 312 pages
File Size : 30,4 MB
Release : 2016-03-11
Category : Business & Economics
ISBN : 1119026733
A hands-on guide to navigating the new fuel markets Fuel Hedging and Risk Management: Strategies for Airlines, Shippers and Other Consumers provides a clear and practical understanding of commodity price dynamics, key fuel hedging techniques, and risk management strategies for the corporate fuel consumer. It covers the commodity markets and derivative instruments in a manner accessible to corporate treasurers, financial officers, risk managers, commodity traders, structurers, as well as quantitative professionals dealing in the energy markets. The book includes a wide variety of key topics related to commodities and derivatives markets, financial risk analysis of commodity consumers, hedge program design and implementation, vanilla derivatives and exotic hedging products. The book is unique in providing intuitive guidance on understanding the dynamics of forward curves and volatility term structure for commodities, fuel derivatives valuation and counterparty risk concepts such as CVA, DVA and FVA. Fully up-to-date and relevant, this book includes comprehensive case studies that illustrate the hedging process from conception to execution and monitoring of hedges in diverse situations. This practical guide will help the reader: Gain expert insight into all aspects of fuel hedging, price and volatility drivers and dynamics. Develop a framework for financial risk analysis and hedge programs. Navigate volatile energy markets by employing effective risk management techniques. Manage unwanted risks associated with commodity derivatives by understanding liquidity and credit risk calculations, exposure optimization techniques, credit charges such as CVA, DVA, FVA, etc.
Airline Management Finance
Victor Hughes
Author : Victor Hughes
Publisher : Routledge
Page : 110 pages
File Size : 17,27 MB
Release : 2019-12-05
Category : Business & Economics
ISBN : 042987927X
Airline Management Finance: The Essentials is of significant benefit to airline industry practitioners seeking a focused, neatly contained and accessible resource that provides explicit financial information pertinent to their current or future role. The book explains and demystifies an airline’s financing and the financial reporting of its operations to airline staff and others. It seeks to explain the role of finance and the Finance Department in a non-technical way, so staff can appreciate the value of the department and its information resources, and see finance as an active contributor to the airline’s operation. It concentrates on practical matters, explaining frequently used financial and accounting terms, how financial strategy works, the uses of various types of financial reporting, as well as what financial risk is and how it can be managed through the co-operation of finance and operating staff. Staff who understand the airline’s finances and financial system are more likely to make decisions which align with the airline’s strategy and objectives. They will also know how to use the financial information which is available. The book establishes a good foundation of financial knowledge for all staff. This book is recommended reading for new employees in airline finance and related areas, as well as those starting to move up the supervisory ladder in an airline.
Foundations of Airline Finance
Bijan Vasigh
Author : Bijan Vasigh
Publisher : Routledge
Page : 641 pages
File Size : 28,67 MB
Release : 2014-11-13
Category : Business & Economics
ISBN : 1317802497
In recent years the airline industry has experienced severe volatility in earnings, with airlines recording periods of substantial profits that are closely followed by periods of financial distress. This trend has continued into the new millennium, with numerous examples of airlines across the globe entering bankruptcy protection or liquidating. The text provides an introduction to both the basics of finance and the particular intricacies of airline finance where there can be significant fluctuations in both revenues and costs. This new edition also includes: capital budgeting management of current assets financial risk analysis fuel hedging aircraft leasing This textbook contains chapters that cover unique aspects of the aviation financial decision-making process. These include a rigorous and structured presentation of the buy versus lease decision that is prevalent in the industry, a valuation process for aviation assets, the recent trend toward privatization and the difficulty inherent in the valuation of a publicly-owned or semi-publicly owned asset. The Foundations of Airline Finance, now in its second edition, is an introductory text that can be used either as a general financial text or in a specialized class that deals with aviation finance in particular.
Risks and Decision Making
Thomas Punzel
Author : Thomas Punzel
Publisher : GRIN Verlag
Page : 27 pages
File Size : 19,10 MB
Release : 2009-02-13
Category : Business & Economics
ISBN : 3640266870
Seminar paper from the year 2008 in the subject Business economics - Business Management, Corporate Governance, grade: B, University of Birmingham, language: English, abstract: Nowadays strategic planning comes more than ever to the fore. In the course of an onward globalisation and with an increasing stress of competition, it becomes more and more difficult for entrepreneurs to keep or to improve their market position. For this account, strategic planning comes into the main focus to choose the best strategy for a business. However, every business man knows that there are always chances and risks in economic life. For this reason, risks cannot be eliminated, but they can be managed. Especially in the airline industry, the competition is on a very high level. Since 2001 more and more low cost carriers have been competing with the big well known national airline companies like Lufthansa or British Airways. That’s why a well thought out strategic management, strategic planning and of course risk management are essential to overcome the stress of competition. This report will analyse why risk management is so important in strategic planning. By evaluating different models and techniques, the best method to analyse the internal and external environment will be elaborated. By using a current business paper, in that case the annual report of British Airways Plc 2007, different kinds of risks will be analysed and strategies will be given, to overcome and mitigate those risks.
Foundations of Airline Finance
Bijan Vasigh
Author : Bijan Vasigh
Publisher : Routledge
Page : 642 pages
File Size : 26,53 MB
Release : 2019-07-02
Category : Transportation
ISBN : 0429769555
There are few industries that have had a more profound impact on business and society over the last century than aviation. This book is an accessible, up-to-date introduction to the current state of the aviation industry which provides readers with the tools necessary to understand the volatile and often complicated nature of airline finance. Understanding finance is critical in any industry; however, the financial track record of the airline industry places even more importance on effective financial management. Foundations of Airline Finance provides an introduction to the basics of finance – including time value of money, the valuation of assets, and revenue management – and the particular intricacies of airline finance where there can be wild fluctuations in both revenues and costs. The third edition of this text has been extensively updated to reflect the many changes in the air transport industry that have taken place since the publication of the second edition, and features an expanded chapter on aircraft leasing and many new international case examples. This thorough introduction to aviation finance is valuable reading as a general, introductory financial text, or as reading in specialized airline finance classes.
Airline Finance
Peter S Morrell
Author : Peter S Morrell
Publisher : Routledge
Page : 232 pages
File Size : 47,41 MB
Release : 2018-04-27
Category : Social Science
ISBN : 1351732382
This title was first published in 2002: The purpose of this book is to provide, as far as possible, a broad understanding of all areas of airline finance. It is intended to be suitable for both those in the industry without any financial background and newcomers to the industry who may have some knowledge of finance.