Problem Solution: Classic Airlines
Problem Solution: Classic Airlines
Over the past year Classic Airlines has seen a shrinking customer base and a decrease in share prices. In addition, investors are getting nervous and the industry is being closely monitored. A side effect of this is the morale has been impacted. Classic Airlines is ability to compete for repeat customers is lacking as consumer confidence is declining and costs increase.
Describe the Situation
Currently Classic Airlines has a fleet of 375 jets flying to 240 cities with 2,300 flights daily. This makes Classic Airlines the fifth largest airline in the world. For Classic Airlines to operate they have 32,000 employees though out the world. Last year, Classic Airlines had $8.7 billion in sales, and profited $10 million of the $8.7 billion. However, things are not all positive for Classic Airlines. In the last year there has been a decline in employee morale and a 10% drop is share price. In addition, Classic Airlines’ Rewards Program has experienced a 19% drop in members. Of those members remaining there has been a 21% drop in flights per member. The rising costs are preventing Classic Airlines from competing for frequent flier miles. And things are only looking to get worse. Classic is facing a 15% cost reduction foe the next year and a half (University of Phoenix, 2008).
Issue and Opportunity Identification
Classic Airlines is working to handle a loss of customers. The customer base has shrunk by 20% and Classic Airlines is facing a major loss of customers as the customers go to the competition. Recent price reduction placed Classic Airlines profit barely above acceptable. For investors this is not a good sign as a price war currently exists in the industry and Classic Airlines can not lower prices any further. The investor, Wall Street has lost confidence and Classic Airlines stock value is declining. To make the situation worse, rumors exist of Classic Airlines filing bankruptcy....
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