CA7006 - Finance and Forecasting Methods for Airline and Airport Operations (2018/19)
|Module specification||Module approved to run in 2018/19|
|Module title||Finance and Forecasting Methods for Airline and Airport Operations|
|Module level||Masters (07)|
|Credit rating for module||20|
|School||Guildhall School of Business and Law|
|Total study hours||200|
|Running in 2018/19||
This module introduces the vital appreciation of the management of airline costs as a key management skill for commercial airline managers. The airline industry in particular is highly volatile because of the complex costs of production of the service and is subject to violent external shocks on a regular basis. A sound financial strategy is therefore vital to airline survival and the module introduces techniques and tools to assess the steps to take for long term profitability.
The module takes an in-depth look at factors affecting costs, revenues and profitability at both airlines and airports and the ramifications of any such changes. Attention will also be given to forecasting for
The module aims are therefore to evaluate the complex range of financial issues that airline managers have to address to ensure a sustainable business in the long term and how to manage the critical aspects of negative financial exposure that are common in the sector.
Fuel Hedging and risk management LO1
Airline industry financial turbulence – the historical lessons LO1
The critical role of finance in the airline industry LO1
Airline and airport cost classifications LO2
Airline financial statements and ratio analysis LO2
Working capital and current asset management LO2
Time value of money LO1
Investment appraisal LO1
Buy versus Lease Decision- Making LO1
Airline business plans and their significance LO2
Fleet planning LO2
Airline Capital Structure and Cost of Capital LO1
Sources of finance for airlines and airports LO1
Outsourcing of services and cost benefit analysis LO1
Airline and airport financial and commercial relationships LO1
Forecasting elements of the syllabus will include;
Forecasting methods for air routes – how to analyse air travel demand from available data and, how to analyse and evaluate new route feasibility
Forecasting passenger levels and passenger demand to determine airport capacity.
Causal methods for predicting passenger figures and propensity to fly. LO2
Balance of independent study and scheduled teaching activity
The module will be delivered through a combination of lectures and student-led seminars. It is envisaged that each 3-hour weekly session will be split into a 2-hour lecture and a 1-hour seminar.
Students are required to undertake the assigned readings from the recommended textbook before lectures and read additional material after lectures to consolidate their understanding of the lectures and seminar topics.
Furthermore, students are required to spend some time searching online sources for data relevant to assessments, solving numerical problems and preparing for seminar presentations in groups.
The learning, teaching and assessment strategy for this module will enable students to develop their capabilities in digital literacy and information handling appropriate to professional/master’s level study.
On successful completion of the module students will have knowledge of or be able to:
1. Critically appraise a variety of financial strategies airlines and airports can use to manage their financial exposure to operational aspects of the business.
2. Analyse complex data and evidence pertaining to forecasting techniques and their importance to the aviation sector in relation to strategy and costs/profit
Assessment of this module is to be the writing of an exam weighted as 40% and a group project to incorporate the analysis of a company, weighted 60%
Specific Aviation Texts
Clark, P. (2017) Buying the Big Jets, Ashgate Publishing, Aldershot
Holloway, S. (2017) Straight and Level: Practical Airline Economics. Routledge
Jorge-Calderon, D. (2016) Airline Finance and Investment in the Global Economy. Ashgate Publishing, Aldershot.
Morrell, S. (2017) Airline Finance, Ashgate Publishing, Aldershot
Pilarski, A. (2007) Why Can't We Make Money in Aviation?, Ashgate Publishing
Vasigh,B. (2017) Foundations of Airline Finance, Ashgate Publishing, Aldershot
Ancillary Generic Texts
Arnold, G. (2013). Corporate Financial Management, 5th edn. Harlow: Financial Times/Pitman Publishing,
Atrill, P. and McLaney, E. (2013). Accounting and Finance for Non-Specialists. Harlow: Pearson (also available on E-Book) (Full text from the library)
Baker, H. K. and Martin, G. S. (2011). Capital Structure and Corporate Financing Decisions: Theory, Evidence, and Practices. New Jersey: John Wiley and Sons Inc
Black, G (2005). Introduction to Accounting & Finance. Harlow: Pearson
Benninga, S. (2014). Financial Modelling, 4th Edition. Cambridge, Mass: MIT Press.
Berk, J. and DeMarzo, P. (2013). Corporate Finance, 3rd Edition. Boston, Mass: Pearson/Addison Wesley.
Brealey, R. A., Myers, S. C. and Allen, F. (2013). Principles of Corporate Finance, 10th Edition. London: McGraw Hill.
Copeland, T, Koller, T. and Murin, J. (2014). Valuation: Measuring and managing the value of companies. New Jersey: John Wiley and Sons.
Copeland, T. E. Weston, J. F. and Shastri, K. (2013) Financial Theory and Corporate Policy, 4th Edition. Harlow: Pearson New International Edition.
Damodaran, A. (2014). Applied Corporate Finance, 4th Edition. New Jersey: John Wiley and Sons, Inc.
Davies, T., Boczko, T. and Chen, J. (2008). Strategic Corporate Finance. Maidenhead: McGraw-Hill.
DeMello, J (2006). Cases in Finance, 2nd Edition. Maidenhead: McGraw-Hill
Drury, C. (2015). Management and Cost Accounting. Andover: Cengage Learning
Grossman, T. and Livingstone, J. L. (2009). The Portable MBA in Finance and Accounting, 4th Edition. New Jersey: Wiley and Sons.
Kim, S. H., Kim S. H. & Kim. K. A. (2006). Global Corporate Finance, 6th Edition. Oxford: Blackwell Business.
Palepu, K G, Healey, P. M and Bernard, V. L. (2012). Business Analysis and Valuation using financial statements. Cincinnati: South Western College Publishing/Thompson Learning
Pike, R. and Neale, B. Linsley, P. (2013). Corporate Finance and Investment, 8th Edition. London: Prentice Hall.
Watson, D. & Head, A. (2013). Corporate Finance: Principle and Practice, 6th Edition. London: Prentice Hall & Financial Times.
Wood, F & Sangster, A (2012) Business Accounting 1, 12th Edition, Harlow: Pearson (students are supplied with an ebook)
Academic Journals & Websites
1) 1) Journal of Business Management
2) Journal of Applied Corporate Finance
3) Corporate Finance
4) Accounting & Business Research
5) Accounting, Auditing and Accountability Journal
6) Accounting, Organisation and Society
7) British Accounting Review
8) The European Accounting Review
9) Financial Accountability & Management
10) Administrative Science Quarterly
11) Review of Financial Studies
12) European Financial Management
13) Harvard Management Review
Other essential sources of information:
1) The Financial Times
2) The Economist
3) Bank of England Quarterly Bulletin
Specific Aviation Journals:
There are a range of e journals of management generally and the aviation industry to access via the online library facilities for this module. For example – The Journal of Air Transport Management, Aviation Management and Education, Airline Business, Airport Business, Flight International etc.