RUNNING HEADER: MGT4101_S01
TITLE: WEEK 6 ASSIGNMENT 4:
Final Project — Importance of Capital Investment for Airlines
DATE: February 11, 2013
Importance of Capital Investment for Airlines
Capital investment projects for an airline are the most important financial decisions and expenses made by airlines because capital investment projects involve a significant amount of money, the investment project duration is more than a year, and most often involves several years. If the airline makes a poor capital investment decision it can have a disastrous effect on the Airline and can even cause the Airline to bankrupt, as the Airline will lose a great sum of money.
The 2004 financial Operational Highlights for the U. S Airline Industry indicate that the Return on Investment was as follows:
|1993 |1994 |1995 |1996 |1997 |1998 |1999 |2000 |2001 |2002 |2003 | |Return on Investment % |-0.4 |5.2 |11.9 |11.5 |14.7 |12 |11.1 |6.4 |-6.5 |-9.6 |-0.3 | | In reviewing the company's Return on Investment, we can see an increased in the Airline Return on Investment in 1993 the return on investment was a negative 0.4 in 1994 the return on investment became positive at 5.2 ;and in 1995 the return on investment was 11.9, for 1996 the return on investment was 11.5, for 1997 the return on investment was excellent at a high of 14.7, in 1998 we see a trend on return on investment declining from 14.7 to 12% for 1998 and 11.1 for 1999, the industry's return on investment further drops in 2000 to 6.4 and continues to decline in 2001 the rate of return was a negative 6.5 (-6.5) in 2002 the rate on return further drops to a negative 9.6 (-9.6) and in 2003 the industry start to recover with a change in rate of return from a negative 9.6 in 2002 to a negative .3 (-0.3). The most profitable year for the company return on investment was the year 1997 with a 13.6% increase over the year 1993. However, between the...
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