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.