When performing an evaluation to determine the performance or health of a company, it is important to identify and evaluate any current or potential risks the company might face.
In this assignment, you will perform a risk assessment for TransGlobal Airlines to better understand its business environment.
Perform a risk assessment for TransGlobal Airlines and write a report describing the results.
Specifically, you must address the following rubric criteria:
1. Identification : Identify two risks the company is facing, including at least one high-impact risk.
Identify the balanced scorecard component each risk corresponds to.
Classify the risk based on these two types:
2. Evaluation : Determine whether the probability and impact of each identified risk is low, medium, or high. Justify your evaluation of the impact and probability of each risk.
3. Mitigation : Recommend a possible risk-prevention or mitigation strategy for each identified risk.
Guidelines for Submission
Submit a 1 page Word document using double spacing, 12-point Times New Roman font, and one-inch margins. Sources should be cited according to APA style.
TransGlobal Airlines Company Information
Location, size, and age of the firm:
• Name: TransGlobal Airlines
• Home Country: USA
• HQ Location: Miami, FL
• Size: 40,000 employees
• Age: began operations in 1951
Customer segment and target market:
• Class: global airliner with dominant U.S. presence
• Market: global
• Destinations: 242 destinations serving 52 countries across six continents
• Market segment: first class, luxury, business class, and economy
• Global market share: 18% (ranked 2nd, American is number one at 18.6%)
• U.S. market share: 18.3% (ranked 2nd, Southwest first at 19.1%)
• Retention: 80% return customers
• New customer growth: 27% annually (prior to COVID)
• Passenger kilometers: 278 billion (American is number one at 287 billion)
• All international and domestic U.S. airlines
• Publicly held with a board, president, VP admin, CEO, CFO, COO, VP sales, division
• Annual gross revenues: $13.2 billion
• Annual net income: $1.5 billion
• Adjusted earnings per share of $2.31, a 30% increase year-over-year
• Delivery of 88 new aircraft during the year
• Number of aircraft in fleet, end of period: 1,062
• Average age of aircraft: 13 years
• Domestic revenue grew 7.7% in the last quarter on 1.6% higher passenger unit
revenue (PRASM) and 6% higher capacity. Domestic premium product revenue grew
11% and corporate revenue grew 6%, driven by strength in business and leisure
demand through the holiday period. Revenue and margin improved in all domestic
hubs, with revenue up 10% in coastal hubs and 6% in core hubs.
• Atlantic revenue grew 0.8% in the last quarter on 2.4% higher capacity and a 1.6%
decline in PRASM, driven almost entirely by foreign exchange rates
• Latin revenue grew 6.7% on a 6.3% increase in unit revenue and 0.4% higher
capacity. This revenue improvement was driven by continued double-digit unit
revenue growth in Brazil and Mexico.
• Pacific revenue was down 0.5% vs. the prior year on a 4.4% decline in unit revenue
primarily due to continued softness in China. This was a 3.2 point improvement vs.
the September quarter on improved trends in Japan.
Strategic Plans and Goals
The Board of Directors has recently approved a comprehensive plan identified as TransGlobal
2030. The plan is the result of eight months of data collection, customer focus groups,
leadership retreats, and employee input.
The TransGlobal 2030 Vision is to lead the industry in three critically important areas: safety,
excitement, and stewardship (SES). This SES vision has been translated into a collection of
guiding principles and goal statements:
• SES Principles
o We will always treat our customers with respect.
o We will value our employees and business partners.
o We will innovate to provide our customers with the most forwardthinking and exciting travel experience.
o We will build lifelong relationships with our customers.
o We will protect our planet.
• SES Goals
o Safely re-introduce and promote the MAX 737 aircraft1
o Expand the fleet of regional aircraft with capacities below 70.
o Upgrade the reservation and ticketing experience, including
smartphone apps and integration with apps associated with lodging,
ground transportation, and attractions.
o Achieve top-10 status in the 2030 World’s Best Workplaces rankings
(currently not ranked in top 100).
o Reach net-zero carbon footprint by 2075.
o Accelerate adoption of fuel-efficient aircraft and alternative fuels.
o Expand use of carbon offset measures.
o Improve our Airlines.com safety rating from 5 stars to 7 stars.
o Build brand awareness and customer loyalty.
o Address workplace inequities and build an inclusive culture.
o Train every employee in the basics of FAA’s SAS (Safety Assurance
System) via 2-hour web-based training.
1 Note: The popular 737 aircraft has been the subject of considerable controversy and safety concerns worldwide.
• Cash: $2,882
• Cash equivalents: $1,565
• Accounts receivable: $2,854
• Fuel inventory: $730,592
• Expendable parts and supplies inventories, net: $521,463
• Prepaid expenses: $1,262
• Other expenses: $1,406
• Total current assets: $8,249
• Property and equipment: $31,311
• Operating lease right-of-use assets: $5,626
• Goodwill: $9,781
• Identifiable intangibles: $5,167
• Cash restricted for airport construction: $1,136
• Other noncurrent assets: $3,759
• Total other assets: $24,969
• Total assets: $64,529
LIABILITIES AND STOCKHOLDERS’ EQUITY
• Current maturities of long-term debt: $2,287
• Finance leases: $1,518
• Current maturities of operating leases: $1801
• Air traffic liability: $5,116
• Accounts payable: $3,266
• Accrued salaries and related benefits: $3,701
• Accrued salaries related benefits: $3,287
• Loyalty program deferred revenue: $3,219
• Fuel card obligation: $ 1,075
• Other accrued liabilities: $1,078
• Total current liabilities: $20,204
• Long-term debt: $8,873
• Finance leases: $8,253
• Pension, postretirement: $8,344
• Pension, postretirement Related benefits: $9,163
• Loyalty program deferred revenue: $3,509
• Noncurrent operating leases: $5,294
• Deferred income taxes: $1,478
• Other noncurrent liabilities: $1,387
• Total noncurrent liabilities: $28,885
• Stockholders’ equity: $15,440
• Total liabilities: $64,529
• Stockholders’ equity: $60,266
• Gross profit margin: 37.84%
• Operating margin: 14.078%
• Net profit margin: 10.14%
• Cash flow margin: 30.35%
• Debt to equity: .0782
• ROE: 31.03%
• ROA: 7.08%
• Inventory turnover: 23.35%
• Receivables turnover: 16.47%
• Aircraft capacity: 98%
• Current ratio: 0.681
• Quick ratio: 0.3824. For more information on Performing a Risk Assessment see this: https://www.britannica.com/topic/risk-finance
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