module specification

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
 
65 hours Assessment Preparation / Delivery
90 hours Guided independent study
45 hours Scheduled learning & teaching activities
Assessment components
Type Weighting Qualifying mark Description
Coursework 60%   Group Project - Presentation (20 minutes)
Unseen Examination 40%   1.5 hours
Running in 2018/19
Period Campus Day Time Module Leader
Spring semester City Wednesday Afternoon

Module summary

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.

Syllabus

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.

Learning outcomes

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 strategy

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%

Bibliography

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.