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CANADIAN AIRLINES CASE

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SABRE American Airlines. APOLLO / COVIA United Airlines. Gemini-Canadian CRS -3.7% share ... Accept American Airlines Proposal. Reduce Operating Expenses ... – PowerPoint PPT presentation

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Title: CANADIAN AIRLINES CASE


1
CANADIAN AIRLINES CASE
  • Presented By
  • Bin Chen
  • Tyler Ferguson
  • Mike Gravino
  • Yuka Wakayama

2
Canadian Passenger Aviation Industry Conditions
  • Small Market Share
  • Worldwide Recession
  • Over Capacity
  • High Government Regulation
  • Geographic Limitations
  • US Cabotage Rights
  • 2 Major Carriers in the Market

3
Canadian Airlines International LTD
  • History
  • Calgary Headquarters
  • Result of Industry Consolidations
  • Costly Acquisition
  • Bad Terminal
  • Routes- South America, Pacific, Western Canada

4
  • Case Situation
  • High Debt C3.2B
  • Low Current Ratio of .65
  • ROA -.029
  • NPM -.098
  • Negative Cash Flow Last 5 Years
  • Litigious Market
  • CRS is Gemini

5
Competition Air Canada
  • Debt Ratio of .88
  • Current Ratio of 1.36
  • Negative Cash Flows Last 2 Years
  • Routes Caribbean, US, Eastern Canada

6
Impact of IT In the Present
  • CRS Computerized Reservation Systems
  • SABRE American Airlines
  • APOLLO / COVIA United Airlines
  • Gemini-Canadian CRS -3.7 share
  • CRS Monopoly Between SABRE/COVIA

7
Alternative Solutions
  • Develop Proprietary CRS
  • Accept American Airlines Proposal
  • Reduce Operating Expenses
  • Pay Down Debt
  • Increase Operating Revenue / Per Employee
  • Merger
  • Cease Operation

8
Potential Use Of IT With The Alternative Options
  • Preventive Maintence Software Programs
  • CRS Based Routing
  • CRS Based Assets Schedule
  • Route Evaluation

9
  • Web Site Reservation System
  • E-Tickets/Reservations/Seating
  • Internet Advertising
  • Human Resources Employee Management
  • 401k
  • Employee Training
  • Time Card
  • Career Management
  • Insurance/Health Care

10
Quiz Time
  • What alternative solutions do you have?

11
Our Recommendation
  • Merger

12
Pros / Cons of a Merger
  • Pros
  • Financial Stability / Access to Capital
  • Continue to Operate
  • Complete and Effective Use of CRS
  • Economies of Scale
  • Operational Synergies
  • Higher RPM (Revenue Passenger Miles)
  • Greater Capacity, Utilization and Leverage

13
  • Cons
  • Loss of Control
  • Potential of Non-Canadian Ownership
  • Regulatory Approval
  • Loss of Jobs

14
Current situation of Canadian Airlines
  • Government Rejection of AMR Hostile Offer
  • Air Canada Wholly Owned Subsidiary
  • 10 Month IS Integration
  • Consolidated Gemini with New Star Alliance
  • 2001 Bankruptcy
  • Used IT to Develop Award Winning Systems
  • First Interairline E-Tickets
  • Joint Venture with IBM

15
  • Any Questions
  • or
  • Comments?

16
THE END
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