PRIN.OF CORPORATE FINANCE
PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Chapter 11, Problem 21PS
Summary Introduction

To discuss: Reason of flying older models makes money while competitors are flying newer planes.

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Is it possible for the airline to increase their ticket price further? How will it affect their revenue?
What drives the basic economies of the airline industry? The refining industry?2. How is Delta different from other airlines?3. How would owing the Trainer Refinery help Delta manage its fuel costs in the future? Is this offset by operation cost?4. What impact does buying an oil refinery have on Delta as a company? Is this a good strategic move? Why/why not?5. How does the merger between Delta and Virgin Airlines impact the company as a whole?
Break into teams and identify costs that an airline such as Delta Air Lines would incur on a flight from Green Bay to Minneapolis. (1) Identify the individual costs as variable or fixed. (2) Assume that Delta is trying to decide whether to drop this flight because it seems to be unprofitable. Determine which costs are likely to be saved if the flight is dropped.
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