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Classic Airlines Marketing Solution Paper - Essay Example

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The company has often been accused of neglecting customer’s needs and wants. Classic airlines offers a poor quality of customer support. The company also does not have a proper…
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Classic Airlines Marketing Solution Paper
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Download file to see previous pages The company generates its revenue from passenger as well as cargo services. The total revenue earned by the company has moved up from $8592 million to $8700 million from the year 2003. Despite the rise in the revenue, it faced a decline in its net income. The main reason for this can be attributed to the rise in its operating expenditure which has moved up by approximately 20% in 2004. This is getting reflected in the annual net profit, as it has dropped significantly from $71 million to $10 million in the year 2004 which is a fall of nearly 86%. The net profit margin ratio of the company has declined from 0.0083 to 0.0011. This means that the net profit margin of the company has declined substantially by 86 % compared to the last year (California State University, n.d.).
In view of this, Classic Airlines has planned for a reduction in its costs relating to Operations, Marketing, Sales, Administration and IT. The company has planned for the highest cost-cut in the marketing division.
The price of the companys stock at the end of 2003 was $33.20 compared to $28.93 in 2004. The dismal financial performance of the company is getting reflected in the stock price which has fallen by nearly 12.86%. The highest price recorded by the company in 2004 is $36.75, in the month of July. This could be due to highest monthly net income posted by the company in the last month at $160 million. Even though it remained above $100 million mark in July, the following months witnessed a sharp fall in the net income. As evident by the financial statements, the companys revenue peaked in the months of June and July in both the years.
The terrorist strike on September 9/11 had a deep impact on the airline industry with most of the airlines reporting dip in profits. This led to an increase in the amount of debt as the company ran into severe losses which had to be financed through external ...Download file to see next pagesRead More
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