Get instant access to this case solution for only $19

Transaero Turbulent Times Case Solution

Solution Id Length Case Author Case Publisher
1742 1107 Words (5 Pages) Elena Senatorova, Grigori Erenburg, Ruth Ann Strickland Ivey Publishing : W18439
This solution includes: A Word File A Word File and An Excel File An Excel File

Transaero shows a negative cash conversion cycle, which indicates that it is earning from its clients before paying its suppliers for inventory. The negative cash conversion cycle is good for the Transaero in these difficult times because it does not have finances to pay its suppliers. Which means that customers are paying before it has to pay its suppliers. Leverage ratios show how much asset is financed from debt and equity.

11625463410.png
21625463409.png
31625463409.png

Case Analysis for Transaero Turbulent Times Case Solution

Transaero was one of the largest private airline company in Russia. It was established in 1990 and became one of the top 30 airlines in the world in the year 2012. It believed in increasing the efficiency of the airline and providing good quality service to its customers. The number of passengers increased by 21.04% in the year 2013. Despite the increase in revenue, the company go bankrupt in the year 2015. The increase in the oil prices in the year 2014 and the depreciation of the Russian ruble resulted in the decline in the financial position of the Transaero. Moreover, limitations were levied against flying over Ukraine, which led to a rise in the operating expenses of the Transaero airline. The sharp growth in the interest rates leading to an increase in the debt reimbursement resulted in the liquidity problems for the company. Also, banks started limiting lending and Transaero was not able to obtain financing for paying its liabilities.

The Table-1 below shows the Revenue and Net income of Transaero from the year 2011 to 2015. The growth table (Table-2) shows a positive trend in the revenue of Transaero company. The revenue of Transaero increased at a decreasing rate from the year 2011 to 2015. The increase in the year 2012 was the largest, i.e. 34.6%. Then the revenue increased at a slow rate, i.e. 14.8%, 7.9% and 2.2% in the year 2013, 2014 and 2015 respectively. However, net income shows a decreasing trend. Transaero generated a profit of RUB 2,192.10 million in the fiscal year 2011, and then the profit declined t0 RUB 228 million in 2012. In 2014, the net income change was -8.4% because the decline in the net income from the previous year was low. However, the net income showed a positive trend in 2015 of 50.3% because the net loss was reduced. The chart of both the revenue and net income is shown below.

 

2011

2012

2013

2014

2015

Revenue (RUB millions)

68,226

91,843.50

105,449.30

113,761.50

116,258.90

Net income (RUB millions)

2,192.10

-228

-13,341.10

-14,463

-7,192.10

Table-1: Revenue and Net income for Transaero 

Growth table

 

 

 

 

 

Years

 

2012

2013

2014

2015

Revenue

 

34.6%

14.8%

7.9%

2.2%

Net income

 

-110.4%

-5751.4%

-8.4%

50.3%

Table-2: Growth Table

The table below shows the financial ratios calculated for the Transaero company for the year 2013 and 2014 and the data of its competitors for comparison. The liquidity ratios show whether the firm has sufficient assets to pay off its liabilities or not. The current ratio is calculated by dividing current assets by current liabilities. Current ratio indicates the ability of the firm to pay off its current liabilities from current assets. The current ratio of Transaero was lower than 1, i.e. 0.24 and 0.18 in 2013 and 2014, respectively, which signifies that it does not have enough assets to settle its current obligations. The current ratio was also lower than its major competitor, Aeroflot. The quick ratio was also less than that of the industry, i.e. 1.2, for both the years. 

Get instant access to this case solution for only $19

Get Instant Access to This Case Solution for Only $19

Standard Price

$25

Save $6 on your purchase

-$6

Amount to Pay

$19

Different Requirements? Order a Custom Solution

Calculate the Price

Approximately ~ 1 page(s)

Total Price

$0

whatsapp chat icon

Hi there !

We are here to help. Chat with us on WhatsApp for any queries.

close icon