Delta Airlines
Delta Airlines began its business as a crop dusting company in the early 1920s with guiding principles that defined the organization to include ownership of values and setting up a system that guided the organization. The owner of the company, Mr. C.E. Woolman believed that integrity was of importance as well as being successful at whatever was attempted. This set the guideline for the company that is still present (History of Delta Airlines, 2016). The company has managed to be successful through many changes within the airline industry to include rising fuel prices, air fare wars, and the filing of a bankruptcy in order to protect the business. Delta has managed to overcome these obstacles while remaining a main player in the airline industry.
Delta Airlines new stock began trading in May 2007 under the DAL ticker symbol. The company made the initial distribution of its new common stock to unsecured creditors with allowed claims. The company recovered intact after exiting bankruptcy proceedings in May 2007 (USA, 2007).
Summary of Findings
This report will discuss the company’s strategic intent, successful strategies, strategies that required altering, as well as four financial ratios. The ratios include growth ratios, ratio of financial condition, profitability ratio, and liquidity ratio. This information will reveal the strengths and weaknesses of the organization.
Company’s Strategic Intent
The airline business is a business where the end product is most essential as the airline performs the same service over and over again. This means that the outlook for the domestic airline is not only to grow the business domestically; but also globally thereby creating its business in a manner to allow the airline to be as successful in its global alignment as well as its domestic alignment. Delta Airlines must exercise benchmarking to be successful in the competitive airline market.
Successful Strategies
Successful strategy involves an organization having insight on what is needed to ensure business success. Key factors include an organization understanding how to align its strategy with the demands and realities of the business market and customer. Delta Airlines has positioned its business in a manner that involves clear customer focus as well as the setting of strategic business goals to ensure safety in flight, on-time arrival, and being customer focused. This has been a successful strategy that has been used successfully since the company began its business.
The next successful strategy has been the use of talent practices that enables the success of not only organizational goals but also meeting customer needs. For the airline business to be successful, employees must understand customer service and practice this process on a daily basis. Delta Airlines has hired individuals who love people, the company, and who will go the extra mile to meet customer needs.
Altering of Strategies
No matter the success of the business, there will be a time when alterations to the business strategy are necessary to ensure business success. Delta has had to ensure leadership behaviors of executive leadership and middle management ensuring consistency with the strategy. In 2014 Delta Airlines realized that there was a need to understand the new challenges of the traditional airline business model. The company’s leaders realized that was the need to adjust the business strategy because of the market realities. The company needed to add scale and expand geographically via a connection with another carrier thereby having the ability to partner with a foreign partner. Delta would be able to strengthen the company culturally while at the same time pursing more innovative strategies. The company elected to buy minority stake in three overseas carriers to include Aero México, Brazil’s GOL, and the UK’s Virgin Atlantic which enabled the organization to strengthen its existing alliance with Air France-KLM. This was a positive strategic move that assisted in vertical integration for the airline (Anderson, 2014).
This was an altering strategy that worked successfully for the company as this is a major change from the traditions that the company had practiced in the past. The key to success for any organization is to make the necessary changes in order to be a strong surviving business within the business market. Without the ability to change, growth is hindered.
Four Financial Ratios to include Significance and Recommendations Based on Company Values
There are four financial ratios that include significance for the company based on the followed recommendations of business planners and that are based on core company values to include (DAL, 2016)
Growth Ratios – refers to expansion of the business service/product or expanding within a target market or a combination of both. An analysis has shown that Delta Airlines growth by December 2016 is expected to be 41.32 percent and long term growth (5 year) is expected to be 16.99 percent. The analysis expected growth for 2017 is expected to be 2.44 percent.
Ratio of Financial Condition – these are financial statement items that can include net sales, net worth, net income, net sales, and are classified as primary financial information. As of May 13, 2016, Delta Airlines Company Financials showed the stock at $41.6 up .53. This reveals that the company is a solid company. Profitability shows a Gross Margin of Trend at 58 percent; Operating Margin Trend at 19 percent; Pre-tax Margin Trend at 18 percent; Profit Margin Trend at 11 percent, Pre-Tax ROE at 66 percent and After Tax ROE at 42 percent.
Profitability Ratios – the measure of profitability which is a measure of the company’s performance. Delta Airlines Profitability information is listed in the chart below:
(DAL,2016)
Liquidity Ratio – is a comparison of current assets to current liabilities and is an indicator to the organization’s ability to meet any short term obligations. Delta Airlines liquidity ratio is listed below (DAL, 2016)
Current ratio as of March 31, 2016 = 0.51
Quick ratio as of March 31, 2016 = 0.28
Cash ratio as of March 31, 2016 = 0.16
Conclusion
This report lists information relative to a public-owned company. The chosen company is Delta Airlines which has been a successful airline for over 50 years. The summary of findings includes the company’s strategic intent, successful strategies that include unique customer service and business strategy. Altering strategies include the ability to acquire minority stake in three companies to enable the successful expansion of the airline into other markets. The four financial ratios used that include significance and recommendations based on company values include growth ratios, ratio of financial condition, profitability ratio, and liquidity ratio. The combination of this information shows the strength of the airline and its plan to remain in business over the long haul.
References
Anderson, R. (2014, December). Delta’s CEO on Using Innovative Thinking to Revive a Bankrupt Airline. Retrieved May 14, 2016, from
https://hbr.org/2014/12/deltas-ceo-on-using-innovative-thinking-to-revive-a-bankrupt-airline
Baunwoll, J., Howland, B., Kruse, J., Lam, S., & Shepherd, J. (2008, June). Delta Airlines: An Analytical View. Retrieved May 14, 2016, from http://www.academicmind.com/unpublishedpapers/business/management/2008-06-000aao-delta-an-anyalytical-view.html
DAL (2016): Retrieved May 14, 2016, from
https://www.stock-analysis-on.net/NYSE/Company/Delta-Air-Lines-Inc/Ratios/Liquidity#Ratios-Summary
History of Delta Airlines. (2016). Retrieved January 6, 2016, from http://avstop.com/history/historyofairlines/33.htm
USA. (2007, May 3). Delta Air Lines' New Stock Begins Trading. Retrieved May 14, 2016, from http://usatoday30.usatoday.com/money/industries/travel/2007-05-03-delta-air-stock_N.htm
