This website uses cookies to ensure you have the best experience. Learn more

The Current Financial State And Appraisal Of Barra Airways

2146 words - 9 pages

1. Introduction
This report will firstly evaluate the usefulness and limitations of the two investment appraisal methods, including the Payback and Net Present Value (NPV). Secondly the report will review historical financial information. Thirdly discuss the financial issues of debt and equity. Finally the report will provide recommendations of how the company’s investment should be finance.
Barra Airways are having a board meeting regarding the financials of the company and advice on the new expansion plans. The new expansion plans are to expand into the Eastern European market, with 20 routes to still be established. Barra already offers cheap flight within Western Europe. The airliner does not offer other service such as meals during the journey; this is one way Barra make revenue. Barra has recently outgrown their aircraft and have decided to replace the old aircrafts with 20 larger fleets; Boeing 737-800. The Boeing 737-800 has significant cost advantages, allowing Barra to offer customers more affordable fares. This advantage is driven through Barra carrying a higher number of seats per aircraft (189 passengers).
The airliner will still offer cheap four one-way flights per day for the first six years, after the sixth year Barra will offer six one-way flights. The figures used in this report are assumptions given by Jura Associates (an equity research firm), Tiree and Coll Ltd (consultancy services to the airline industry) and EU population statistics.
2. Methodology
2.1 Design
The research for this report was obtained by three different institutions (listed above in the introduction). The researchers were making estimated assumption based on primary research they conducted. The calculations for this report were based on the assumptions provided by the three institutions. Using the data the following calculations were conducted; the first calculation was on cost as proportion of revenue, secondly revenue from seat sales and ancillary revenue, by population number (1), number of seats and load factor (2). Following these calculations the cash flow and cumulative cash flow for both methods were obtained. After all the calculations were completed the Net Present Values for both methods were calculated.
2.2 Procedure
Cost as proportion of revenue was calculated by adding all the cost up from the profit and loss account, from all three years and then divided by the number of years. The net income was adjusted so that it is not reduced by depreciation expenses. According to McLany (2006a) Depreciation should not be included because it does not represent a cash inflow. Also maintenance cost was not included, as it will be taken into account in year 9. Interest and other tax are not included either, because it will be taken into account by discounting. The average revenue was taken from the profit and loss account for all three years, from seat sales and ancillary revenue, and then divided ancillary revenue by seat sales to get ancillary...

Find Another Essay On The Current Financial State and Appraisal of Barra Airways

The Current State of the U.S. Economy

632 words - 3 pages The Current State of the U.S. Economy The United States economy is racing ahead at dangerous speeds, and it may be too late to prevent the return of widespread inflation. Ideally the economy should move ahead gradually and grow at a steady manageable rate. Mae West once stated “Too much of a good thing can be wonderful” and it seems the U.S. Treasury Secretary agrees. The Secretary announced that due to our increasing surplus and booming

Current State Of The Australian Economy

1320 words - 5 pages the improved status of the Current Account.Part B There are many ways in which Australia can maintain a Current Account Deficit or continue to reduce it. This can be achieved in the following ways: · Maintaining low inflation to preserve export competitiveness · Eliminate the protection of Australian industry to boost domestic and international competition · Addressing the fundamental structural imbalance

The Current State of Mexican Democracy

1132 words - 5 pages According to Stoner and McFaul when the Institutional Revolutionary Party (PRI) was defeated and voted out of office in 2000 this turnout allowed for a completion of a successful transition to democracy in Mexico (264). Although a transition did occur and Mexico does have solid democratic foundations, bewildering corruption, poor rule of law, and narco related violence have halted Mexican democratic consolidation. The current state of

Current State of the Republican Party

1642 words - 7 pages battleground states of Ohio, Virginia, Iowa, New Hampshire, Wisconsin, Nevada and Colorado and then eventually florida. One key state to the succes was Pennsylvania, where Romney made an 11th-hour bid for support to try to derail the president’s drive for re-election. North Carolina was the only battleground Romney won (Dorning ). This spelled yet another loss for the faltering Republican party and had many of its members on edge and talking of

Current State of the U.S. Economy

1417 words - 6 pages annual rate) decreased $337. The financial condition of U.S. farmers and other agricultural stakeholders is expected to improve in 2003. Net farm income, a measure of the sector's profitability, is forecast to be up $20 billion (58 percent) from the $35.3 billion earned in 2002 and 18 percent above the 10-year average. Median household money income in the United States in 2002 was $42,409, 1.1 percent lower than in 2001 after adjusting for 1.6

An Analysis and Proposition on the Current State of Drunk Driving Laws in the State of Illinois

1610 words - 7 pages getting stopped by the police (1). This statistic is unacceptable. In order to provide safer roads to the people of the State of Illinois, the General Assembly should install a drunk driving safety camera every ten miles of state highway. The video recorded in these cameras would only be used to detect potential drunk drivers and to help with investigations of serious crimes. The cameras and centers to operate them would be paid for by a 10¢ statewide

Intellectual Property The state of Intellectual Property Law and the current debate in modern society

1836 words - 7 pages longer be able to place any value to that resource. There would be no need for trade. Everything would change. This is exactly what the information revolution is doing.The unique nature of information is that it is an unlimited resource. If I have an idea, and I give it to you, I still have that idea. I can give that idea to everyone in the entire world, without losing anything. Scarcity does not exist, thus our current economic models don't make much

The Current Financial Crisis

856 words - 3 pages Frederic Mishkin makes the point in the text, The Economics of Money Banking, and Financial Markets (2010) that “Banks and other financial institutions are what make financial markets work. Without them, financial markets would not be able to move funds from people who save to people who have productive investment opportunities.” (p.7). The movement of funds between savers and those with productive investment opportunities is the means of

The Current State of the United States Economy

2065 words - 9 pages Classical model perspectives so that one has a better understanding of the current state of the United States economy. Unemployment During the last year, there has been a steady decline in the unemployment rate. In November 2013, the United States reported a 7% unemployment rate, down from 8.1% in 2012. We can contribute the job creation to the following industries, transportation and warehousing, health care, and manufacturing (United States

What Is the Current State of the United States Budget?

2351 words - 10 pages Congress creates the discretionary budget (Segal, 2010). The budget is adopted after careful thought by the full House and Senate and each appropriation bill is signed by the President (Segal, 2010; National priorities Project, 2013). Then the budget becomes the law (Segal, 2010; National priorities Project, 2013). What is the current state of the Federal Budget? According to Shultz (2002), individuals and businesses fund the Federal Government

The Conceptual Framework for Financial Reporting: Bega´s Current Accounting Practice of Property, Plant and Equipment

2182 words - 9 pages Overview of the report This report analyses the disclosures of objective of general purpose financial reporting and the qualitative characteristics of useful financial information according to The Conceptual Framework for Financial Reporting. It investigates Bega’s current accounting practice of Property, Plant and Equipment in accordance with AASB 116 Property, Plant and Equipment, and how it satisfies the objective of general purpose financial

Similar Essays

The History And Current State Of Myanmar

3015 words - 13 pages to grow into the new positions left vacant. With this natural transition peasants raised into this culture, bring their ideals with them and change gradually comes. Eventually, the common people dominated the military, allowing a new way of thought to enter and change the political culture of the country. The current government of Myanmar is on its third constitution since its independence. Although the military no longer runs the government

The Current State Of Marriage Essay

935 words - 4 pages Marriage is an institution that has always been considered sacrosanct in societies around the world; however, recent trends and statistics indicate that the importance of having a sound and lasting marriage has declined in recent years. The divorce rate in America is currently 50% of all marriages; this means that for every two couples wed, one of those couples will end up separated. (CITATION) The current state of marriage as exemplified in

The Current State Of Russia And It's Neighbouring Republics

2473 words - 10 pages at their communist past, and even more eager to lay blame. Traditional communist ideology was to 'provide for every individual an equal amount of goods and services, thus creating a state of equality amongst the populous' (Leveler, 16). Many people felt as if their current hardships could be blamed on the communists and their economic policies, specifically their 'Core-Periphery' plan.The communist sponsored 'Core-Periphery' economic policy that

Critical Appraisal Of Amazon.Com Current E Business Strategy And Activities

1477 words - 6 pages converting Amazon into a "product-less platform provider", directly impacting its bottom line, with no inventory costs. Results The business model adopted by Amazon has given it a boost in its online business. By making strategic alliances with the industry leader and making the life of customer has made Amazon a profit making company. According to the recent financial results. Amazons' "Operating cash flow was $567 million for 2004, compared