Problem Solution: Classic Airlines
Problem Solution: Classic Airlines
Andrew J. Cohen
University of Phoenix
Problem Solution: Classic Airlines
The paper will discuss the issues surrounding Classic Airlines as the company plans its transition from a self-performing company to a corporation that uses outsourcing and strategic allegiances business model. The paper will create a solution based on the Issues, Opportunities, Risks, Stakeholder Perspectives and the Ethical Dilemmas that surround the decision to transition from one type of business model to another type of business model.
Describe the Situation
Issue and Opportunity Identification
What is the situation?
Classic Airlines is the fifth largest carrier in the US airline industry, they have a modern fleet of 375 aircraft, and they serve 240 cities worldwide and average 2300 flights daily. The company had gross revenue of 8.7 billion dollars that earned 10 million in net revenue. The company has a workforce of 32,000 employees.
Over the past year, the price per share has dropped 10%, revenue is steadily declining and the level of customer satisfaction is declining due to poor service and customer unfriendly rewards program. In addition to that, operating costs, (fuel) has risen 25% over the past 18 months and the legacy union labor force costs continue to increase at a pace greater than CPI (Consumer Price Index).
The Board of Directors recently placed an edict to the company of a 15% cost reduction over the next 18 months or the company could fall into deeper financial trouble. Rumors of possible bankruptcy and the level of negativity from Wall Street being leaked to the media has affected employee morale and investors confidence levels in the company
What challenges exist?
Increased operating costs have curtailed Classics ability to aggressively compete with the larger fleets for valued customers using discounted fares. ...
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