SOLUTION: Performance Evaluation Memorandum – Studypool


You are a former Navy officer and fighter pilot who is now the controller of a
division of TransGlobal Airlines, which utilizes a fleet of corporate jets for
charter at several airports in the southeast part of the United States. Your
division’s private charter clients include several Fortune 500 companies in the
region. The Chief Financial Officer (CFO) has informed you that the company is
considering the acquisition of two smaller aviation firms in the Caribbean
specializing in chartered flights for luxury vacations using light aircraft (60
passengers or less). The CFO has tasked you with assessing the organizational
benefits of acquiring these aviation firms.
Before evaluating these aviation firms, you want to evaluate the performance
of TransGlobal Airlines.
Prompt
Write a memo to the rest of the leadership team at TransGlobal Airlines,
identifying strategic goals and key performance indicators (KPIs) to help
evaluate the company’s performance. Use the information provided to you in
the TransGlobal Airlines Company Information document to complete your
memo.
Specifically, you must address the following rubric criteria:
A. SMART Goals: Write at least one strategic goal using SMART criteria for
each of the four components in a balanced scorecard. Explain
your rationale for choosing each goal.
a. Financial
b. Internal process
c. Customer
d. Learning and development
B. KPIs: Identify at least one KPI corresponding to each strategic goal.
a. Explain how you determined the KPIs.
Guidelines for Submission:
Submit a 1- to 2-page Word document using double spacing, 12-point Times
New Roman font, and one-inch margins. Sources should be cited according to
APA style. Consult the Shapiro Library APA Style Guide for more information
on citations.
MBA 620 TransGlobal Airlines 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)
Major Competitors
All international and domestic U.S. airlines
Company Leadership
Publicly held with a board, president, VP admin, CEO, CFO, COO, VP sales, division VPs, subsidiaries
Current Financials










Annual gross revenues: $20.683 billion
Annual net income: $2.099 billion
Adjusted earnings per share of $3.22, a 28% 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 forward-thinking 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 webbased training.
1
The popular 737 aircraft has been the subject of considerable controversy and safety concerns
worldwide.
ASSETS (in millions)
Current Assets
Cash and cash equivalents: $1,268
• Accounts receivable: $1,256
• Fuel inventory: $321
• Expendable parts and supplies inventories, net: $229
• Prepaid and other expenses: $559
• Total current assets: $3,629
Other Assets:







Property and equipment: $13,776
Operating lease right-of-use assets: $2,476
Goodwill: $4,304
Identifiable intangibles: $2,272
Cash restricted for airport construction: $280
Other noncurrent assets: $1,657
Total other assets: $24,765
Total assets: $28,394
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
• Current maturities of long-term debt: $806
• Finance leases: $200
• Current maturities of operating leases: $352
• Air traffic liability: $2,251
• Accounts payable: $1,437
• Accrued salaries and related benefits: $1,628
• Loyalty program deferred revenue: $1.416
• Fuel card obligation: $ 324
• Other accrued liabilities: $474
• Total current liabilities: $8,888
Noncurrent Liabilities
• Long-term debt: $3,000
• Finance leases: $904
• Pension, postretirement Related benefits: $3,719
• Loyalty program deferred revenue: $1,544
• Noncurrent operating leases: $2,329
• Deferred income taxes: $641
• Other noncurrent liabilities: $610
• Total noncurrent liabilities: $12,747
• Total liabilities: $21,635
Stockholders’ equity: $6,759
Total liabilities and stockholders’ equity: $28,394
Margins









Operating margin: 14.08%
Net profit margin: 10.14%
Operating cash flow margin: 41.7%
Debt to equity: 3.20
ROE: 31.04%
ROA: 7.39%
Receivables turnover: 16.47%
Aircraft capacity: 98%
Current ratio: 0.408

Quick ratio: 0.2839

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