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The Air Travel Value Chain and Working Capital Management Leverages in Airline Industry The Airline industry provides passenger and freight transport services through its fleet of aircraft flying to domestic and international destinations. The industry is part of the air travel value chain, which includes suppliers as well as distributors of the leading service provider, the airlines company. The chain is set up to cater to the needs of the ultimate customers in the process, air travellers. Qantas Airlines is the designated national carrier of Australia. It operates both domestically and internationally. The company operates 285 aircraft, has assets of $19.3 billion and employs 29,200 staff. In Australia, Qantas is the dominant local airlines with 62.5% market share. The only other significant competitor, Virgin, is a far second with 27.9%. Through Qantas' subsidiary, low-cost carrier Jetstar, it achieves more comprehensive market coverage, complementing their premium service offering. As you can remember, the case study you did in your tutorial class, up to 2013/14, Qantas struggled financially with poor profit results for several years. Qantas then restructured their operations through capacity realignment and workforce redundancies. The wide- ranging transformation program resulted in a return to after-tax profit with record results for 2017 $ 853millions and 2018 $953m and 2019 $891m. Airlines require aviation fuel which is a significant cost factor in their operations. Aviation fuel can account for more than 40% of an airline's operating costs. Supplying Qantas its fuel requirements are petroleum refiners and wholesalers delivering to airports where Qantas planes depart from. One such aviation fuel provider is Viva Energy which operates a refinery in Geelong, the second-largest facility in the country. Ten per cent of the Geelong refinery's output is for aviation fuel production, which supplies 37% of the airline industry's fuel requirement. Viva negotiates directly with airline companies regarding the supply of aviation fuel for their aircraft to be made available at Australian airports. Viva delivers fuel to 50 airports across the country. Under a license agreement with Royal Dutch Shell, Viva supplies some 1150 petrol retail outlets across Australia with Shell-branded fuels and Ilubricants. Combined with the aviation fuel business, the supply of retail products gives Viva products a 26% share of the total Australian fuel market, second only to market leader Caltex at 38%. The last two decades have seen the prevalence of the Internet and mobile technologies in many business processes. This has spurred the growth of many industries devoted to mediating new modes of interactions between service providers and consumers. The online travel booking industry is an example, and Webjet with annual revenue of $366 million leads the industry in Australia and New Zealand. The company markets and transacts airline tickets and other travel-related services to consumers (82% of revenue) and corporate clients (18% of revenue). Webjet has a predominantly online business model as contrasted with traditional travel agents operating from shop-front outlets. The online travel booking industry in Australia is highly concentrated with the four major players accounting for some 70% market share. The competition has been described as of high intensity. The relatively low barriers in entering the market have encouraged smaller players to participate, thus aggravating competition further. The following figures were extracted from the annual reports of Qantas (an airline company), Viva Energy (an aviation fuel supplier) and Webjet (an online travel booking service provider). Instructions: 1. Assume all sales revenues and purchases are on a credit basis. 2. When calculating year 2017, 2018 and 2019 related ACPS, AAls and APPS, students must consider average values of inventory, accounts receivables and accounts payables. 3. Provide calculated solutions to two decimal places. RMIT Classification: Trusted 2018 2019 Qantas Airways Limited Year 2016 2017 AU $ Millions Sales Revenue Expenditure incurred (Operating material used and other expenditure=COGS) 16,200 14,665 15,839 16,667 3,336 4,818 5,181 5,660 Net Profit 1,029 853 953 891 Cash and cash equivalents 1,980 1,775 1,694 2,157 Receivables 795 784 715 971 Inventories (aircraft operating materials) Other current assets 336 351 351 364 347 209 878 701 Total Current Assets 3,458 3,119 3,638 4,193 Payables Revenue received in advance Short-term borrowings 1,986 2,067 2,220 2,470 3,525 3,685 4,018 4,315 338 330 404 635 Other current liabilities 1,179 1,013 958 1,156 Total Current Liabilities 7,028 7,095 7,600 8,576 Purchases 10,332 9,949 10,413 10,856 2019 Viva Energy Limited Year 2016 Yr 2017 2018 Sales Revenue 14,131 13,905 16,395 16,541 Cost of Goods Sold 12,712 12,158 14,843 15,075 Net Profit 1,219 580 467 695 Cash and cash equivalents 426 164 108 127 Accounts receivables 1,036 950 909 1,004 Inventories 650 965 1011 1,195 Other current assets 105 286 398 302 Total Current Assets 2,217 2,365 2,426 2,628 Accounts payables 1,360 585 619 744 Short-term borrowings 7 246 7 135 Other current liabilities 292 1,301 1,427 1,566 Total Current Liabilities 1,659 2,132 2,053 2,445 Purchases 12,690 14,229 15,697 15,164 RMIT Classification: Trusted 2019 Webjet Limited Year 2016 Yr 2017 2018 Sales Revenue' 152 218 291 366 Net Profit 21 61 87 124 Cash and cash equivalents 211 116 178 190 Receivables 81 117 252 347 Other current assets 9. 35 37 35 Total Current Assets 206 330 499 593 Payables 147 153 191 250 Short-term borrowings 38 13 32 18 Other current liabilities 13 55 280 348 Total Current Liabilities 198 225 503 616 Purchases? 350 545 412 467 Revenue is the commission or margin received as a percentage of travel services booked. 2Purchases include the total value of travel services from providers which have been 'bought' wholesale by Webjet. Required: VALUE CHAIN ANALYSIS (15 Marks) 1. Draw a diagram of the air travel value chain showing the part played by Qantas, Viva and Webjet and the value each contributes. Explain your diagram based on the industry value chain and internal value chain analysis. WORKING CAPITAL MANAGEWENT (10 + 30 + 20 = 60 Marks) 2. Current Liability Management: (5+5=10 marks) a. Calculate for each company's short-term borrowing as a percentage of current liabilities for Year 2017, 2018 and 2019. b. What are short-term borrowings, and what role do they play in working capital management? The Air Travel Value Chain and Working Capital Management Leverages in Airline Industry The Airline industry provides passenger and freight transport services through its fleet of aircraft flying to domestic and international destinations. The industry is part of the air travel value chain, which includes suppliers as well as distributors of the leading service provider, the airlines company. The chain is set up to cater to the needs of the ultimate customers in the process, air travellers. Qantas Airlines is the designated national carrier of Australia. It operates both domestically and internationally. The company operates 285 aircraft, has assets of $19.3 billion and employs 29,200 staff. In Australia, Qantas is the dominant local airlines with 62.5% market share. The only other significant competitor, Virgin, is a far second with 27.9%. Through Qantas' subsidiary, low-cost carrier Jetstar, it achieves more comprehensive market coverage, complementing their premium service offering. As you can remember, the case study you did in your tutorial class, up to 2013/14, Qantas struggled financially with poor profit results for several years. Qantas then restructured their operations through capacity realignment and workforce redundancies. The wide- ranging transformation program resulted in a return to after-tax profit with record results for 2017 $ 853millions and 2018 $953m and 2019 $891m. Airlines require aviation fuel which is a significant cost factor in their operations. Aviation fuel can account for more than 40% of an airline's operating costs. Supplying Qantas its fuel requirements are petroleum refiners and wholesalers delivering to airports where Qantas planes depart from. One such aviation fuel provider is Viva Energy which operates a refinery in Geelong, the second-largest facility in the country. Ten per cent of the Geelong refinery's output is for aviation fuel production, which supplies 37% of the airline industry's fuel requirement. Viva negotiates directly with airline companies regarding the supply of aviation fuel for their aircraft to be made available at Australian airports. Viva delivers fuel to 50 airports across the country. Under a license agreement with Royal Dutch Shell, Viva supplies some 1150 petrol retail outlets across Australia with Shell-branded fuels and Ilubricants. Combined with the aviation fuel business, the supply of retail products gives Viva products a 26% share of the total Australian fuel market, second only to market leader Caltex at 38%. The last two decades have seen the prevalence of the Internet and mobile technologies in many business processes. This has spurred the growth of many industries devoted to mediating new modes of interactions between service providers and consumers. The online travel booking industry is an example, and Webjet with annual revenue of $366 million leads the industry in Australia and New Zealand. The company markets and transacts airline tickets and other travel-related services to consumers (82% of revenue) and corporate clients (18% of revenue). Webjet has a predominantly online business model as contrasted with traditional travel agents operating from shop-front outlets. The online travel booking industry in Australia is highly concentrated with the four major players accounting for some 70% market share. The competition has been described as of high intensity. The relatively low barriers in entering the market have encouraged smaller players to participate, thus aggravating competition further. The following figures were extracted from the annual reports of Qantas (an airline company), Viva Energy (an aviation fuel supplier) and Webjet (an online travel booking service provider). Instructions: 1. Assume all sales revenues and purchases are on a credit basis. 2. When calculating year 2017, 2018 and 2019 related ACPS, AAls and APPS, students must consider average values of inventory, accounts receivables and accounts payables. 3. Provide calculated solutions to two decimal places. RMIT Classification: Trusted 2018 2019 Qantas Airways Limited Year 2016 2017 AU $ Millions Sales Revenue Expenditure incurred (Operating material used and other expenditure=COGS) 16,200 14,665 15,839 16,667 3,336 4,818 5,181 5,660 Net Profit 1,029 853 953 891 Cash and cash equivalents 1,980 1,775 1,694 2,157 Receivables 795 784 715 971 Inventories (aircraft operating materials) Other current assets 336 351 351 364 347 209 878 701 Total Current Assets 3,458 3,119 3,638 4,193 Payables Revenue received in advance Short-term borrowings 1,986 2,067 2,220 2,470 3,525 3,685 4,018 4,315 338 330 404 635 Other current liabilities 1,179 1,013 958 1,156 Total Current Liabilities 7,028 7,095 7,600 8,576 Purchases 10,332 9,949 10,413 10,856 2019 Viva Energy Limited Year 2016 Yr 2017 2018 Sales Revenue 14,131 13,905 16,395 16,541 Cost of Goods Sold 12,712 12,158 14,843 15,075 Net Profit 1,219 580 467 695 Cash and cash equivalents 426 164 108 127 Accounts receivables 1,036 950 909 1,004 Inventories 650 965 1011 1,195 Other current assets 105 286 398 302 Total Current Assets 2,217 2,365 2,426 2,628 Accounts payables 1,360 585 619 744 Short-term borrowings 7 246 7 135 Other current liabilities 292 1,301 1,427 1,566 Total Current Liabilities 1,659 2,132 2,053 2,445 Purchases 12,690 14,229 15,697 15,164 RMIT Classification: Trusted 2019 Webjet Limited Year 2016 Yr 2017 2018 Sales Revenue' 152 218 291 366 Net Profit 21 61 87 124 Cash and cash equivalents 211 116 178 190 Receivables 81 117 252 347 Other current assets 9. 35 37 35 Total Current Assets 206 330 499 593 Payables 147 153 191 250 Short-term borrowings 38 13 32 18 Other current liabilities 13 55 280 348 Total Current Liabilities 198 225 503 616 Purchases? 350 545 412 467 Revenue is the commission or margin received as a percentage of travel services booked. 2Purchases include the total value of travel services from providers which have been 'bought' wholesale by Webjet. Required: VALUE CHAIN ANALYSIS (15 Marks) 1. Draw a diagram of the air travel value chain showing the part played by Qantas, Viva and Webjet and the value each contributes. Explain your diagram based on the industry value chain and internal value chain analysis. WORKING CAPITAL MANAGEWENT (10 + 30 + 20 = 60 Marks) 2. Current Liability Management: (5+5=10 marks) a. Calculate for each company's short-term borrowing as a percentage of current liabilities for Year 2017, 2018 and 2019. b. What are short-term borrowings, and what role do they play in working capital management? The Air Travel Value Chain and Working Capital Management Leverages in Airline Industry The Airline industry provides passenger and freight transport services through its fleet of aircraft flying to domestic and international destinations. The industry is part of the air travel value chain, which includes suppliers as well as distributors of the leading service provider, the airlines company. The chain is set up to cater to the needs of the ultimate customers in the process, air travellers. Qantas Airlines is the designated national carrier of Australia. It operates both domestically and internationally. The company operates 285 aircraft, has assets of $19.3 billion and employs 29,200 staff. In Australia, Qantas is the dominant local airlines with 62.5% market share. The only other significant competitor, Virgin, is a far second with 27.9%. Through Qantas' subsidiary, low-cost carrier Jetstar, it achieves more comprehensive market coverage, complementing their premium service offering. As you can remember, the case study you did in your tutorial class, up to 2013/14, Qantas struggled financially with poor profit results for several years. Qantas then restructured their operations through capacity realignment and workforce redundancies. The wide- ranging transformation program resulted in a return to after-tax profit with record results for 2017 $ 853millions and 2018 $953m and 2019 $891m. Airlines require aviation fuel which is a significant cost factor in their operations. Aviation fuel can account for more than 40% of an airline's operating costs. Supplying Qantas its fuel requirements are petroleum refiners and wholesalers delivering to airports where Qantas planes depart from. One such aviation fuel provider is Viva Energy which operates a refinery in Geelong, the second-largest facility in the country. Ten per cent of the Geelong refinery's output is for aviation fuel production, which supplies 37% of the airline industry's fuel requirement. Viva negotiates directly with airline companies regarding the supply of aviation fuel for their aircraft to be made available at Australian airports. Viva delivers fuel to 50 airports across the country. Under a license agreement with Royal Dutch Shell, Viva supplies some 1150 petrol retail outlets across Australia with Shell-branded fuels and Ilubricants. Combined with the aviation fuel business, the supply of retail products gives Viva products a 26% share of the total Australian fuel market, second only to market leader Caltex at 38%. The last two decades have seen the prevalence of the Internet and mobile technologies in many business processes. This has spurred the growth of many industries devoted to mediating new modes of interactions between service providers and consumers. The online travel booking industry is an example, and Webjet with annual revenue of $366 million leads the industry in Australia and New Zealand. The company markets and transacts airline tickets and other travel-related services to consumers (82% of revenue) and corporate clients (18% of revenue). Webjet has a predominantly online business model as contrasted with traditional travel agents operating from shop-front outlets. The online travel booking industry in Australia is highly concentrated with the four major players accounting for some 70% market share. The competition has been described as of high intensity. The relatively low barriers in entering the market have encouraged smaller players to participate, thus aggravating competition further. The following figures were extracted from the annual reports of Qantas (an airline company), Viva Energy (an aviation fuel supplier) and Webjet (an online travel booking service provider). Instructions: 1. Assume all sales revenues and purchases are on a credit basis. 2. When calculating year 2017, 2018 and 2019 related ACPS, AAls and APPS, students must consider average values of inventory, accounts receivables and accounts payables. 3. Provide calculated solutions to two decimal places. RMIT Classification: Trusted 2018 2019 Qantas Airways Limited Year 2016 2017 AU $ Millions Sales Revenue Expenditure incurred (Operating material used and other expenditure=COGS) 16,200 14,665 15,839 16,667 3,336 4,818 5,181 5,660 Net Profit 1,029 853 953 891 Cash and cash equivalents 1,980 1,775 1,694 2,157 Receivables 795 784 715 971 Inventories (aircraft operating materials) Other current assets 336 351 351 364 347 209 878 701 Total Current Assets 3,458 3,119 3,638 4,193 Payables Revenue received in advance Short-term borrowings 1,986 2,067 2,220 2,470 3,525 3,685 4,018 4,315 338 330 404 635 Other current liabilities 1,179 1,013 958 1,156 Total Current Liabilities 7,028 7,095 7,600 8,576 Purchases 10,332 9,949 10,413 10,856 2019 Viva Energy Limited Year 2016 Yr 2017 2018 Sales Revenue 14,131 13,905 16,395 16,541 Cost of Goods Sold 12,712 12,158 14,843 15,075 Net Profit 1,219 580 467 695 Cash and cash equivalents 426 164 108 127 Accounts receivables 1,036 950 909 1,004 Inventories 650 965 1011 1,195 Other current assets 105 286 398 302 Total Current Assets 2,217 2,365 2,426 2,628 Accounts payables 1,360 585 619 744 Short-term borrowings 7 246 7 135 Other current liabilities 292 1,301 1,427 1,566 Total Current Liabilities 1,659 2,132 2,053 2,445 Purchases 12,690 14,229 15,697 15,164 RMIT Classification: Trusted 2019 Webjet Limited Year 2016 Yr 2017 2018 Sales Revenue' 152 218 291 366 Net Profit 21 61 87 124 Cash and cash equivalents 211 116 178 190 Receivables 81 117 252 347 Other current assets 9. 35 37 35 Total Current Assets 206 330 499 593 Payables 147 153 191 250 Short-term borrowings 38 13 32 18 Other current liabilities 13 55 280 348 Total Current Liabilities 198 225 503 616 Purchases? 350 545 412 467 Revenue is the commission or margin received as a percentage of travel services booked. 2Purchases include the total value of travel services from providers which have been 'bought' wholesale by Webjet. Required: VALUE CHAIN ANALYSIS (15 Marks) 1. Draw a diagram of the air travel value chain showing the part played by Qantas, Viva and Webjet and the value each contributes. Explain your diagram based on the industry value chain and internal value chain analysis. WORKING CAPITAL MANAGEWENT (10 + 30 + 20 = 60 Marks) 2. Current Liability Management: (5+5=10 marks) a. Calculate for each company's short-term borrowing as a percentage of current liabilities for Year 2017, 2018 and 2019. b. What are short-term borrowings, and what role do they play in working capital management? The Air Travel Value Chain and Working Capital Management Leverages in Airline Industry The Airline industry provides passenger and freight transport services through its fleet of aircraft flying to domestic and international destinations. The industry is part of the air travel value chain, which includes suppliers as well as distributors of the leading service provider, the airlines company. The chain is set up to cater to the needs of the ultimate customers in the process, air travellers. Qantas Airlines is the designated national carrier of Australia. It operates both domestically and internationally. The company operates 285 aircraft, has assets of $19.3 billion and employs 29,200 staff. In Australia, Qantas is the dominant local airlines with 62.5% market share. The only other significant competitor, Virgin, is a far second with 27.9%. Through Qantas' subsidiary, low-cost carrier Jetstar, it achieves more comprehensive market coverage, complementing their premium service offering. As you can remember, the case study you did in your tutorial class, up to 2013/14, Qantas struggled financially with poor profit results for several years. Qantas then restructured their operations through capacity realignment and workforce redundancies. The wide- ranging transformation program resulted in a return to after-tax profit with record results for 2017 $ 853millions and 2018 $953m and 2019 $891m. Airlines require aviation fuel which is a significant cost factor in their operations. Aviation fuel can account for more than 40% of an airline's operating costs. Supplying Qantas its fuel requirements are petroleum refiners and wholesalers delivering to airports where Qantas planes depart from. One such aviation fuel provider is Viva Energy which operates a refinery in Geelong, the second-largest facility in the country. Ten per cent of the Geelong refinery's output is for aviation fuel production, which supplies 37% of the airline industry's fuel requirement. Viva negotiates directly with airline companies regarding the supply of aviation fuel for their aircraft to be made available at Australian airports. Viva delivers fuel to 50 airports across the country. Under a license agreement with Royal Dutch Shell, Viva supplies some 1150 petrol retail outlets across Australia with Shell-branded fuels and Ilubricants. Combined with the aviation fuel business, the supply of retail products gives Viva products a 26% share of the total Australian fuel market, second only to market leader Caltex at 38%. The last two decades have seen the prevalence of the Internet and mobile technologies in many business processes. This has spurred the growth of many industries devoted to mediating new modes of interactions between service providers and consumers. The online travel booking industry is an example, and Webjet with annual revenue of $366 million leads the industry in Australia and New Zealand. The company markets and transacts airline tickets and other travel-related services to consumers (82% of revenue) and corporate clients (18% of revenue). Webjet has a predominantly online business model as contrasted with traditional travel agents operating from shop-front outlets. The online travel booking industry in Australia is highly concentrated with the four major players accounting for some 70% market share. The competition has been described as of high intensity. The relatively low barriers in entering the market have encouraged smaller players to participate, thus aggravating competition further. The following figures were extracted from the annual reports of Qantas (an airline company), Viva Energy (an aviation fuel supplier) and Webjet (an online travel booking service provider). Instructions: 1. Assume all sales revenues and purchases are on a credit basis. 2. When calculating year 2017, 2018 and 2019 related ACPS, AAls and APPS, students must consider average values of inventory, accounts receivables and accounts payables. 3. Provide calculated solutions to two decimal places. RMIT Classification: Trusted 2018 2019 Qantas Airways Limited Year 2016 2017 AU $ Millions Sales Revenue Expenditure incurred (Operating material used and other expenditure=COGS) 16,200 14,665 15,839 16,667 3,336 4,818 5,181 5,660 Net Profit 1,029 853 953 891 Cash and cash equivalents 1,980 1,775 1,694 2,157 Receivables 795 784 715 971 Inventories (aircraft operating materials) Other current assets 336 351 351 364 347 209 878 701 Total Current Assets 3,458 3,119 3,638 4,193 Payables Revenue received in advance Short-term borrowings 1,986 2,067 2,220 2,470 3,525 3,685 4,018 4,315 338 330 404 635 Other current liabilities 1,179 1,013 958 1,156 Total Current Liabilities 7,028 7,095 7,600 8,576 Purchases 10,332 9,949 10,413 10,856 2019 Viva Energy Limited Year 2016 Yr 2017 2018 Sales Revenue 14,131 13,905 16,395 16,541 Cost of Goods Sold 12,712 12,158 14,843 15,075 Net Profit 1,219 580 467 695 Cash and cash equivalents 426 164 108 127 Accounts receivables 1,036 950 909 1,004 Inventories 650 965 1011 1,195 Other current assets 105 286 398 302 Total Current Assets 2,217 2,365 2,426 2,628 Accounts payables 1,360 585 619 744 Short-term borrowings 7 246 7 135 Other current liabilities 292 1,301 1,427 1,566 Total Current Liabilities 1,659 2,132 2,053 2,445 Purchases 12,690 14,229 15,697 15,164 RMIT Classification: Trusted 2019 Webjet Limited Year 2016 Yr 2017 2018 Sales Revenue' 152 218 291 366 Net Profit 21 61 87 124 Cash and cash equivalents 211 116 178 190 Receivables 81 117 252 347 Other current assets 9. 35 37 35 Total Current Assets 206 330 499 593 Payables 147 153 191 250 Short-term borrowings 38 13 32 18 Other current liabilities 13 55 280 348 Total Current Liabilities 198 225 503 616 Purchases? 350 545 412 467 Revenue is the commission or margin received as a percentage of travel services booked. 2Purchases include the total value of travel services from providers which have been 'bought' wholesale by Webjet. Required: VALUE CHAIN ANALYSIS (15 Marks) 1. Draw a diagram of the air travel value chain showing the part played by Qantas, Viva and Webjet and the value each contributes. Explain your diagram based on the industry value chain and internal value chain analysis. WORKING CAPITAL MANAGEWENT (10 + 30 + 20 = 60 Marks) 2. Current Liability Management: (5+5=10 marks) a. Calculate for each company's short-term borrowing as a percentage of current liabilities for Year 2017, 2018 and 2019. b. What are short-term borrowings, and what role do they play in working capital management? The Air Travel Value Chain and Working Capital Management Leverages in Airline Industry The Airline industry provides passenger and freight transport services through its fleet of aircraft flying to domestic and international destinations. The industry is part of the air travel value chain, which includes suppliers as well as distributors of the leading service provider, the airlines company. The chain is set up to cater to the needs of the ultimate customers in the process, air travellers. Qantas Airlines is the designated national carrier of Australia. It operates both domestically and internationally. The company operates 285 aircraft, has assets of $19.3 billion and employs 29,200 staff. In Australia, Qantas is the dominant local airlines with 62.5% market share. The only other significant competitor, Virgin, is a far second with 27.9%. Through Qantas' subsidiary, low-cost carrier Jetstar, it achieves more comprehensive market coverage, complementing their premium service offering. As you can remember, the case study you did in your tutorial class, up to 2013/14, Qantas struggled financially with poor profit results for several years. Qantas then restructured their operations through capacity realignment and workforce redundancies. The wide- ranging transformation program resulted in a return to after-tax profit with record results for 2017 $ 853millions and 2018 $953m and 2019 $891m. Airlines require aviation fuel which is a significant cost factor in their operations. Aviation fuel can account for more than 40% of an airline's operating costs. Supplying Qantas its fuel requirements are petroleum refiners and wholesalers delivering to airports where Qantas planes depart from. One such aviation fuel provider is Viva Energy which operates a refinery in Geelong, the second-largest facility in the country. Ten per cent of the Geelong refinery's output is for aviation fuel production, which supplies 37% of the airline industry's fuel requirement. Viva negotiates directly with airline companies regarding the supply of aviation fuel for their aircraft to be made available at Australian airports. Viva delivers fuel to 50 airports across the country. Under a license agreement with Royal Dutch Shell, Viva supplies some 1150 petrol retail outlets across Australia with Shell-branded fuels and Ilubricants. Combined with the aviation fuel business, the supply of retail products gives Viva products a 26% share of the total Australian fuel market, second only to market leader Caltex at 38%. The last two decades have seen the prevalence of the Internet and mobile technologies in many business processes. This has spurred the growth of many industries devoted to mediating new modes of interactions between service providers and consumers. The online travel booking industry is an example, and Webjet with annual revenue of $366 million leads the industry in Australia and New Zealand. The company markets and transacts airline tickets and other travel-related services to consumers (82% of revenue) and corporate clients (18% of revenue). Webjet has a predominantly online business model as contrasted with traditional travel agents operating from shop-front outlets. The online travel booking industry in Australia is highly concentrated with the four major players accounting for some 70% market share. The competition has been described as of high intensity. The relatively low barriers in entering the market have encouraged smaller players to participate, thus aggravating competition further. The following figures were extracted from the annual reports of Qantas (an airline company), Viva Energy (an aviation fuel supplier) and Webjet (an online travel booking service provider). Instructions: 1. Assume all sales revenues and purchases are on a credit basis. 2. When calculating year 2017, 2018 and 2019 related ACPS, AAls and APPS, students must consider average values of inventory, accounts receivables and accounts payables. 3. Provide calculated solutions to two decimal places. RMIT Classification: Trusted 2018 2019 Qantas Airways Limited Year 2016 2017 AU $ Millions Sales Revenue Expenditure incurred (Operating material used and other expenditure=COGS) 16,200 14,665 15,839 16,667 3,336 4,818 5,181 5,660 Net Profit 1,029 853 953 891 Cash and cash equivalents 1,980 1,775 1,694 2,157 Receivables 795 784 715 971 Inventories (aircraft operating materials) Other current assets 336 351 351 364 347 209 878 701 Total Current Assets 3,458 3,119 3,638 4,193 Payables Revenue received in advance Short-term borrowings 1,986 2,067 2,220 2,470 3,525 3,685 4,018 4,315 338 330 404 635 Other current liabilities 1,179 1,013 958 1,156 Total Current Liabilities 7,028 7,095 7,600 8,576 Purchases 10,332 9,949 10,413 10,856 2019 Viva Energy Limited Year 2016 Yr 2017 2018 Sales Revenue 14,131 13,905 16,395 16,541 Cost of Goods Sold 12,712 12,158 14,843 15,075 Net Profit 1,219 580 467 695 Cash and cash equivalents 426 164 108 127 Accounts receivables 1,036 950 909 1,004 Inventories 650 965 1011 1,195 Other current assets 105 286 398 302 Total Current Assets 2,217 2,365 2,426 2,628 Accounts payables 1,360 585 619 744 Short-term borrowings 7 246 7 135 Other current liabilities 292 1,301 1,427 1,566 Total Current Liabilities 1,659 2,132 2,053 2,445 Purchases 12,690 14,229 15,697 15,164 RMIT Classification: Trusted 2019 Webjet Limited Year 2016 Yr 2017 2018 Sales Revenue' 152 218 291 366 Net Profit 21 61 87 124 Cash and cash equivalents 211 116 178 190 Receivables 81 117 252 347 Other current assets 9. 35 37 35 Total Current Assets 206 330 499 593 Payables 147 153 191 250 Short-term borrowings 38 13 32 18 Other current liabilities 13 55 280 348 Total Current Liabilities 198 225 503 616 Purchases? 350 545 412 467 Revenue is the commission or margin received as a percentage of travel services booked. 2Purchases include the total value of travel services from providers which have been 'bought' wholesale by Webjet. Required: VALUE CHAIN ANALYSIS (15 Marks) 1. Draw a diagram of the air travel value chain showing the part played by Qantas, Viva and Webjet and the value each contributes. Explain your diagram based on the industry value chain and internal value chain analysis. WORKING CAPITAL MANAGEWENT (10 + 30 + 20 = 60 Marks) 2. Current Liability Management: (5+5=10 marks) a. Calculate for each company's short-term borrowing as a percentage of current liabilities for Year 2017, 2018 and 2019. b. What are short-term borrowings, and what role do they play in working capital management? The Air Travel Value Chain and Working Capital Management Leverages in Airline Industry The Airline industry provides passenger and freight transport services through its fleet of aircraft flying to domestic and international destinations. The industry is part of the air travel value chain, which includes suppliers as well as distributors of the leading service provider, the airlines company. The chain is set up to cater to the needs of the ultimate customers in the process, air travellers. Qantas Airlines is the designated national carrier of Australia. It operates both domestically and internationally. The company operates 285 aircraft, has assets of $19.3 billion and employs 29,200 staff. In Australia, Qantas is the dominant local airlines with 62.5% market share. The only other significant competitor, Virgin, is a far second with 27.9%. Through Qantas' subsidiary, low-cost carrier Jetstar, it achieves more comprehensive market coverage, complementing their premium service offering. As you can remember, the case study you did in your tutorial class, up to 2013/14, Qantas struggled financially with poor profit results for several years. Qantas then restructured their operations through capacity realignment and workforce redundancies. The wide- ranging transformation program resulted in a return to after-tax profit with record results for 2017 $ 853millions and 2018 $953m and 2019 $891m. Airlines require aviation fuel which is a significant cost factor in their operations. Aviation fuel can account for more than 40% of an airline's operating costs. Supplying Qantas its fuel requirements are petroleum refiners and wholesalers delivering to airports where Qantas planes depart from. One such aviation fuel provider is Viva Energy which operates a refinery in Geelong, the second-largest facility in the country. Ten per cent of the Geelong refinery's output is for aviation fuel production, which supplies 37% of the airline industry's fuel requirement. Viva negotiates directly with airline companies regarding the supply of aviation fuel for their aircraft to be made available at Australian airports. Viva delivers fuel to 50 airports across the country. Under a license agreement with Royal Dutch Shell, Viva supplies some 1150 petrol retail outlets across Australia with Shell-branded fuels and Ilubricants. Combined with the aviation fuel business, the supply of retail products gives Viva products a 26% share of the total Australian fuel market, second only to market leader Caltex at 38%. The last two decades have seen the prevalence of the Internet and mobile technologies in many business processes. This has spurred the growth of many industries devoted to mediating new modes of interactions between service providers and consumers. The online travel booking industry is an example, and Webjet with annual revenue of $366 million leads the industry in Australia and New Zealand. The company markets and transacts airline tickets and other travel-related services to consumers (82% of revenue) and corporate clients (18% of revenue). Webjet has a predominantly online business model as contrasted with traditional travel agents operating from shop-front outlets. The online travel booking industry in Australia is highly concentrated with the four major players accounting for some 70% market share. The competition has been described as of high intensity. The relatively low barriers in entering the market have encouraged smaller players to participate, thus aggravating competition further. The following figures were extracted from the annual reports of Qantas (an airline company), Viva Energy (an aviation fuel supplier) and Webjet (an online travel booking service provider). Instructions: 1. Assume all sales revenues and purchases are on a credit basis. 2. When calculating year 2017, 2018 and 2019 related ACPS, AAls and APPS, students must consider average values of inventory, accounts receivables and accounts payables. 3. Provide calculated solutions to two decimal places. RMIT Classification: Trusted 2018 2019 Qantas Airways Limited Year 2016 2017 AU $ Millions Sales Revenue Expenditure incurred (Operating material used and other expenditure=COGS) 16,200 14,665 15,839 16,667 3,336 4,818 5,181 5,660 Net Profit 1,029 853 953 891 Cash and cash equivalents 1,980 1,775 1,694 2,157 Receivables 795 784 715 971 Inventories (aircraft operating materials) Other current assets 336 351 351 364 347 209 878 701 Total Current Assets 3,458 3,119 3,638 4,193 Payables Revenue received in advance Short-term borrowings 1,986 2,067 2,220 2,470 3,525 3,685 4,018 4,315 338 330 404 635 Other current liabilities 1,179 1,013 958 1,156 Total Current Liabilities 7,028 7,095 7,600 8,576 Purchases 10,332 9,949 10,413 10,856 2019 Viva Energy Limited Year 2016 Yr 2017 2018 Sales Revenue 14,131 13,905 16,395 16,541 Cost of Goods Sold 12,712 12,158 14,843 15,075 Net Profit 1,219 580 467 695 Cash and cash equivalents 426 164 108 127 Accounts receivables 1,036 950 909 1,004 Inventories 650 965 1011 1,195 Other current assets 105 286 398 302 Total Current Assets 2,217 2,365 2,426 2,628 Accounts payables 1,360 585 619 744 Short-term borrowings 7 246 7 135 Other current liabilities 292 1,301 1,427 1,566 Total Current Liabilities 1,659 2,132 2,053 2,445 Purchases 12,690 14,229 15,697 15,164 RMIT Classification: Trusted 2019 Webjet Limited Year 2016 Yr 2017 2018 Sales Revenue' 152 218 291 366 Net Profit 21 61 87 124 Cash and cash equivalents 211 116 178 190 Receivables 81 117 252 347 Other current assets 9. 35 37 35 Total Current Assets 206 330 499 593 Payables 147 153 191 250 Short-term borrowings 38 13 32 18 Other current liabilities 13 55 280 348 Total Current Liabilities 198 225 503 616 Purchases? 350 545 412 467 Revenue is the commission or margin received as a percentage of travel services booked. 2Purchases include the total value of travel services from providers which have been 'bought' wholesale by Webjet. Required: VALUE CHAIN ANALYSIS (15 Marks) 1. Draw a diagram of the air travel value chain showing the part played by Qantas, Viva and Webjet and the value each contributes. Explain your diagram based on the industry value chain and internal value chain analysis. WORKING CAPITAL MANAGEWENT (10 + 30 + 20 = 60 Marks) 2. Current Liability Management: (5+5=10 marks) a. Calculate for each company's short-term borrowing as a percentage of current liabilities for Year 2017, 2018 and 2019. b. What are short-term borrowings, and what role do they play in working capital management? The Air Travel Value Chain and Working Capital Management Leverages in Airline Industry The Airline industry provides passenger and freight transport services through its fleet of aircraft flying to domestic and international destinations. The industry is part of the air travel value chain, which includes suppliers as well as distributors of the leading service provider, the airlines company. The chain is set up to cater to the needs of the ultimate customers in the process, air travellers. Qantas Airlines is the designated national carrier of Australia. It operates both domestically and internationally. The company operates 285 aircraft, has assets of $19.3 billion and employs 29,200 staff. In Australia, Qantas is the dominant local airlines with 62.5% market share. The only other significant competitor, Virgin, is a far second with 27.9%. Through Qantas' subsidiary, low-cost carrier Jetstar, it achieves more comprehensive market coverage, complementing their premium service offering. As you can remember, the case study you did in your tutorial class, up to 2013/14, Qantas struggled financially with poor profit results for several years. Qantas then restructured their operations through capacity realignment and workforce redundancies. The wide- ranging transformation program resulted in a return to after-tax profit with record results for 2017 $ 853millions and 2018 $953m and 2019 $891m. Airlines require aviation fuel which is a significant cost factor in their operations. Aviation fuel can account for more than 40% of an airline's operating costs. Supplying Qantas its fuel requirements are petroleum refiners and wholesalers delivering to airports where Qantas planes depart from. One such aviation fuel provider is Viva Energy which operates a refinery in Geelong, the second-largest facility in the country. Ten per cent of the Geelong refinery's output is for aviation fuel production, which supplies 37% of the airline industry's fuel requirement. Viva negotiates directly with airline companies regarding the supply of aviation fuel for their aircraft to be made available at Australian airports. Viva delivers fuel to 50 airports across the country. Under a license agreement with Royal Dutch Shell, Viva supplies some 1150 petrol retail outlets across Australia with Shell-branded fuels and Ilubricants. Combined with the aviation fuel business, the supply of retail products gives Viva products a 26% share of the total Australian fuel market, second only to market leader Caltex at 38%. The last two decades have seen the prevalence of the Internet and mobile technologies in many business processes. This has spurred the growth of many industries devoted to mediating new modes of interactions between service providers and consumers. The online travel booking industry is an example, and Webjet with annual revenue of $366 million leads the industry in Australia and New Zealand. The company markets and transacts airline tickets and other travel-related services to consumers (82% of revenue) and corporate clients (18% of revenue). Webjet has a predominantly online business model as contrasted with traditional travel agents operating from shop-front outlets. The online travel booking industry in Australia is highly concentrated with the four major players accounting for some 70% market share. The competition has been described as of high intensity. The relatively low barriers in entering the market have encouraged smaller players to participate, thus aggravating competition further. The following figures were extracted from the annual reports of Qantas (an airline company), Viva Energy (an aviation fuel supplier) and Webjet (an online travel booking service provider). Instructions: 1. Assume all sales revenues and purchases are on a credit basis. 2. When calculating year 2017, 2018 and 2019 related ACPS, AAls and APPS, students must consider average values of inventory, accounts receivables and accounts payables. 3. Provide calculated solutions to two decimal places. RMIT Classification: Trusted 2018 2019 Qantas Airways Limited Year 2016 2017 AU $ Millions Sales Revenue Expenditure incurred (Operating material used and other expenditure=COGS) 16,200 14,665 15,839 16,667 3,336 4,818 5,181 5,660 Net Profit 1,029 853 953 891 Cash and cash equivalents 1,980 1,775 1,694 2,157 Receivables 795 784 715 971 Inventories (aircraft operating materials) Other current assets 336 351 351 364 347 209 878 701 Total Current Assets 3,458 3,119 3,638 4,193 Payables Revenue received in advance Short-term borrowings 1,986 2,067 2,220 2,470 3,525 3,685 4,018 4,315 338 330 404 635 Other current liabilities 1,179 1,013 958 1,156 Total Current Liabilities 7,028 7,095 7,600 8,576 Purchases 10,332 9,949 10,413 10,856 2019 Viva Energy Limited Year 2016 Yr 2017 2018 Sales Revenue 14,131 13,905 16,395 16,541 Cost of Goods Sold 12,712 12,158 14,843 15,075 Net Profit 1,219 580 467 695 Cash and cash equivalents 426 164 108 127 Accounts receivables 1,036 950 909 1,004 Inventories 650 965 1011 1,195 Other current assets 105 286 398 302 Total Current Assets 2,217 2,365 2,426 2,628 Accounts payables 1,360 585 619 744 Short-term borrowings 7 246 7 135 Other current liabilities 292 1,301 1,427 1,566 Total Current Liabilities 1,659 2,132 2,053 2,445 Purchases 12,690 14,229 15,697 15,164 RMIT Classification: Trusted 2019 Webjet Limited Year 2016 Yr 2017 2018 Sales Revenue' 152 218 291 366 Net Profit 21 61 87 124 Cash and cash equivalents 211 116 178 190 Receivables 81 117 252 347 Other current assets 9. 35 37 35 Total Current Assets 206 330 499 593 Payables 147 153 191 250 Short-term borrowings 38 13 32 18 Other current liabilities 13 55 280 348 Total Current Liabilities 198 225 503 616 Purchases? 350 545 412 467 Revenue is the commission or margin received as a percentage of travel services booked. 2Purchases include the total value of travel services from providers which have been 'bought' wholesale by Webjet. Required: VALUE CHAIN ANALYSIS (15 Marks) 1. Draw a diagram of the air travel value chain showing the part played by Qantas, Viva and Webjet and the value each contributes. Explain your diagram based on the industry value chain and internal value chain analysis. WORKING CAPITAL MANAGEWENT (10 + 30 + 20 = 60 Marks) 2. Current Liability Management: (5+5=10 marks) a. Calculate for each company's short-term borrowing as a percentage of current liabilities for Year 2017, 2018 and 2019. b. What are short-term borrowings, and what role do they play in working capital management? The Air Travel Value Chain and Working Capital Management Leverages in Airline Industry The Airline industry provides passenger and freight transport services through its fleet of aircraft flying to domestic and international destinations. The industry is part of the air travel value chain, which includes suppliers as well as distributors of the leading service provider, the airlines company. The chain is set up to cater to the needs of the ultimate customers in the process, air travellers. Qantas Airlines is the designated national carrier of Australia. It operates both domestically and internationally. The company operates 285 aircraft, has assets of $19.3 billion and employs 29,200 staff. In Australia, Qantas is the dominant local airlines with 62.5% market share. The only other significant competitor, Virgin, is a far second with 27.9%. Through Qantas' subsidiary, low-cost carrier Jetstar, it achieves more comprehensive market coverage, complementing their premium service offering. As you can remember, the case study you did in your tutorial class, up to 2013/14, Qantas struggled financially with poor profit results for several years. Qantas then restructured their operations through capacity realignment and workforce redundancies. The wide- ranging transformation program resulted in a return to after-tax profit with record results for 2017 $ 853millions and 2018 $953m and 2019 $891m. Airlines require aviation fuel which is a significant cost factor in their operations. Aviation fuel can account for more than 40% of an airline's operating costs. Supplying Qantas its fuel requirements are petroleum refiners and wholesalers delivering to airports where Qantas planes depart from. One such aviation fuel provider is Viva Energy which operates a refinery in Geelong, the second-largest facility in the country. Ten per cent of the Geelong refinery's output is for aviation fuel production, which supplies 37% of the airline industry's fuel requirement. Viva negotiates directly with airline companies regarding the supply of aviation fuel for their aircraft to be made available at Australian airports. Viva delivers fuel to 50 airports across the country. Under a license agreement with Royal Dutch Shell, Viva supplies some 1150 petrol retail outlets across Australia with Shell-branded fuels and Ilubricants. Combined with the aviation fuel business, the supply of retail products gives Viva products a 26% share of the total Australian fuel market, second only to market leader Caltex at 38%. The last two decades have seen the prevalence of the Internet and mobile technologies in many business processes. This has spurred the growth of many industries devoted to mediating new modes of interactions between service providers and consumers. The online travel booking industry is an example, and Webjet with annual revenue of $366 million leads the industry in Australia and New Zealand. The company markets and transacts airline tickets and other travel-related services to consumers (82% of revenue) and corporate clients (18% of revenue). Webjet has a predominantly online business model as contrasted with traditional travel agents operating from shop-front outlets. The online travel booking industry in Australia is highly concentrated with the four major players accounting for some 70% market share. The competition has been described as of high intensity. The relatively low barriers in entering the market have encouraged smaller players to participate, thus aggravating competition further. The following figures were extracted from the annual reports of Qantas (an airline company), Viva Energy (an aviation fuel supplier) and Webjet (an online travel booking service provider). Instructions: 1. Assume all sales revenues and purchases are on a credit basis. 2. When calculating year 2017, 2018 and 2019 related ACPS, AAls and APPS, students must consider average values of inventory, accounts receivables and accounts payables. 3. Provide calculated solutions to two decimal places. RMIT Classification: Trusted 2018 2019 Qantas Airways Limited Year 2016 2017 AU $ Millions Sales Revenue Expenditure incurred (Operating material used and other expenditure=COGS) 16,200 14,665 15,839 16,667 3,336 4,818 5,181 5,660 Net Profit 1,029 853 953 891 Cash and cash equivalents 1,980 1,775 1,694 2,157 Receivables 795 784 715 971 Inventories (aircraft operating materials) Other current assets 336 351 351 364 347 209 878 701 Total Current Assets 3,458 3,119 3,638 4,193 Payables Revenue received in advance Short-term borrowings 1,986 2,067 2,220 2,470 3,525 3,685 4,018 4,315 338 330 404 635 Other current liabilities 1,179 1,013 958 1,156 Total Current Liabilities 7,028 7,095 7,600 8,576 Purchases 10,332 9,949 10,413 10,856 2019 Viva Energy Limited Year 2016 Yr 2017 2018 Sales Revenue 14,131 13,905 16,395 16,541 Cost of Goods Sold 12,712 12,158 14,843 15,075 Net Profit 1,219 580 467 695 Cash and cash equivalents 426 164 108 127 Accounts receivables 1,036 950 909 1,004 Inventories 650 965 1011 1,195 Other current assets 105 286 398 302 Total Current Assets 2,217 2,365 2,426 2,628 Accounts payables 1,360 585 619 744 Short-term borrowings 7 246 7 135 Other current liabilities 292 1,301 1,427 1,566 Total Current Liabilities 1,659 2,132 2,053 2,445 Purchases 12,690 14,229 15,697 15,164 RMIT Classification: Trusted 2019 Webjet Limited Year 2016 Yr 2017 2018 Sales Revenue' 152 218 291 366 Net Profit 21 61 87 124 Cash and cash equivalents 211 116 178 190 Receivables 81 117 252 347 Other current assets 9. 35 37 35 Total Current Assets 206 330 499 593 Payables 147 153 191 250 Short-term borrowings 38 13 32 18 Other current liabilities 13 55 280 348 Total Current Liabilities 198 225 503 616 Purchases? 350 545 412 467 Revenue is the commission or margin received as a percentage of travel services booked. 2Purchases include the total value of travel services from providers which have been 'bought' wholesale by Webjet. Required: VALUE CHAIN ANALYSIS (15 Marks) 1. Draw a diagram of the air travel value chain showing the part played by Qantas, Viva and Webjet and the value each contributes. Explain your diagram based on the industry value chain and internal value chain analysis. WORKING CAPITAL MANAGEWENT (10 + 30 + 20 = 60 Marks) 2. Current Liability Management: (5+5=10 marks) a. Calculate for each company's short-term borrowing as a percentage of current liabilities for Year 2017, 2018 and 2019. b. What are short-term borrowings, and what role do they play in working capital management? The Air Travel Value Chain and Working Capital Management Leverages in Airline Industry The Airline industry provides passenger and freight transport services through its fleet of aircraft flying to domestic and international destinations. The industry is part of the air travel value chain, which includes suppliers as well as distributors of the leading service provider, the airlines company. The chain is set up to cater to the needs of the ultimate customers in the process, air travellers. Qantas Airlines is the designated national carrier of Australia. It operates both domestically and internationally. The company operates 285 aircraft, has assets of $19.3 billion and employs 29,200 staff. In Australia, Qantas is the dominant local airlines with 62.5% market share. The only other significant competitor, Virgin, is a far second with 27.9%. Through Qantas' subsidiary, low-cost carrier Jetstar, it achieves more comprehensive market coverage, complementing their premium service offering. As you can remember, the case study you did in your tutorial class, up to 2013/14, Qantas struggled financially with poor profit results for several years. Qantas then restructured their operations through capacity realignment and workforce redundancies. The wide- ranging transformation program resulted in a return to after-tax profit with record results for 2017 $ 853millions and 2018 $953m and 2019 $891m. Airlines require aviation fuel which is a significant cost factor in their operations. Aviation fuel can account for more than 40% of an airline's operating costs. Supplying Qantas its fuel requirements are petroleum refiners and wholesalers delivering to airports where Qantas planes depart from. One such aviation fuel provider is Viva Energy which operates a refinery in Geelong, the second-largest facility in the country. Ten per cent of the Geelong refinery's output is for aviation fuel production, which supplies 37% of the airline industry's fuel requirement. Viva negotiates directly with airline companies regarding the supply of aviation fuel for their aircraft to be made available at Australian airports. Viva delivers fuel to 50 airports across the country. Under a license agreement with Royal Dutch Shell, Viva supplies some 1150 petrol retail outlets across Australia with Shell-branded fuels and Ilubricants. Combined with the aviation fuel business, the supply of retail products gives Viva products a 26% share of the total Australian fuel market, second only to market leader Caltex at 38%. The last two decades have seen the prevalence of the Internet and mobile technologies in many business processes. This has spurred the growth of many industries devoted to mediating new modes of interactions between service providers and consumers. The online travel booking industry is an example, and Webjet with annual revenue of $366 million leads the industry in Australia and New Zealand. The company markets and transacts airline tickets and other travel-related services to consumers (82% of revenue) and corporate clients (18% of revenue). Webjet has a predominantly online business model as contrasted with traditional travel agents operating from shop-front outlets. The online travel booking industry in Australia is highly concentrated with the four major players accounting for some 70% market share. The competition has been described as of high intensity. The relatively low barriers in entering the market have encouraged smaller players to participate, thus aggravating competition further. The following figures were extracted from the annual reports of Qantas (an airline company), Viva Energy (an aviation fuel supplier) and Webjet (an online travel booking service provider). Instructions: 1. Assume all sales revenues and purchases are on a credit basis. 2. When calculating year 2017, 2018 and 2019 related ACPS, AAls and APPS, students must consider average values of inventory, accounts receivables and accounts payables. 3. Provide calculated solutions to two decimal places. RMIT Classification: Trusted 2018 2019 Qantas Airways Limited Year 2016 2017 AU $ Millions Sales Revenue Expenditure incurred (Operating material used and other expenditure=COGS) 16,200 14,665 15,839 16,667 3,336 4,818 5,181 5,660 Net Profit 1,029 853 953 891 Cash and cash equivalents 1,980 1,775 1,694 2,157 Receivables 795 784 715 971 Inventories (aircraft operating materials) Other current assets 336 351 351 364 347 209 878 701 Total Current Assets 3,458 3,119 3,638 4,193 Payables Revenue received in advance Short-term borrowings 1,986 2,067 2,220 2,470 3,525 3,685 4,018 4,315 338 330 404 635 Other current liabilities 1,179 1,013 958 1,156 Total Current Liabilities 7,028 7,095 7,600 8,576 Purchases 10,332 9,949 10,413 10,856 2019 Viva Energy Limited Year 2016 Yr 2017 2018 Sales Revenue 14,131 13,905 16,395 16,541 Cost of Goods Sold 12,712 12,158 14,843 15,075 Net Profit 1,219 580 467 695 Cash and cash equivalents 426 164 108 127 Accounts receivables 1,036 950 909 1,004 Inventories 650 965 1011 1,195 Other current assets 105 286 398 302 Total Current Assets 2,217 2,365 2,426 2,628 Accounts payables 1,360 585 619 744 Short-term borrowings 7 246 7 135 Other current liabilities 292 1,301 1,427 1,566 Total Current Liabilities 1,659 2,132 2,053 2,445 Purchases 12,690 14,229 15,697 15,164 RMIT Classification: Trusted 2019 Webjet Limited Year 2016 Yr 2017 2018 Sales Revenue' 152 218 291 366 Net Profit 21 61 87 124 Cash and cash equivalents 211 116 178 190 Receivables 81 117 252 347 Other current assets 9. 35 37 35 Total Current Assets 206 330 499 593 Payables 147 153 191 250 Short-term borrowings 38 13 32 18 Other current liabilities 13 55 280 348 Total Current Liabilities 198 225 503 616 Purchases? 350 545 412 467 Revenue is the commission or margin received as a percentage of travel services booked. 2Purchases include the total value of travel services from providers which have been 'bought' wholesale by Webjet. Required: VALUE CHAIN ANALYSIS (15 Marks) 1. Draw a diagram of the air travel value chain showing the part played by Qantas, Viva and Webjet and the value each contributes. Explain your diagram based on the industry value chain and internal value chain analysis. WORKING CAPITAL MANAGEWENT (10 + 30 + 20 = 60 Marks) 2. Current Liability Management: (5+5=10 marks) a. Calculate for each company's short-term borrowing as a percentage of current liabilities for Year 2017, 2018 and 2019. b. What are short-term borrowings, and what role do they play in working capital management? The Air Travel Value Chain and Working Capital Management Leverages in Airline Industry The Airline industry provides passenger and freight transport services through its fleet of aircraft flying to domestic and international destinations. The industry is part of the air travel value chain, which includes suppliers as well as distributors of the leading service provider, the airlines company. The chain is set up to cater to the needs of the ultimate customers in the process, air travellers. Qantas Airlines is the designated national carrier of Australia. It operates both domestically and internationally. The company operates 285 aircraft, has assets of $19.3 billion and employs 29,200 staff. In Australia, Qantas is the dominant local airlines with 62.5% market share. The only other significant competitor, Virgin, is a far second with 27.9%. Through Qantas' subsidiary, low-cost carrier Jetstar, it achieves more comprehensive market coverage, complementing their premium service offering. As you can remember, the case study you did in your tutorial class, up to 2013/14, Qantas struggled financially with poor profit results for several years. Qantas then restructured their operations through capacity realignment and workforce redundancies. The wide- ranging transformation program resulted in a return to after-tax profit with record results for 2017 $ 853millions and 2018 $953m and 2019 $891m. Airlines require aviation fuel which is a significant cost factor in their operations. Aviation fuel can account for more than 40% of an airline's operating costs. Supplying Qantas its fuel requirements are petroleum refiners and wholesalers delivering to airports where Qantas planes depart from. One such aviation fuel provider is Viva Energy which operates a refinery in Geelong, the second-largest facility in the country. Ten per cent of the Geelong refinery's output is for aviation fuel production, which supplies 37% of the airline industry's fuel requirement. Viva negotiates directly with airline companies regarding the supply of aviation fuel for their aircraft to be made available at Australian airports. Viva delivers fuel to 50 airports across the country. Under a license agreement with Royal Dutch Shell, Viva supplies some 1150 petrol retail outlets across Australia with Shell-branded fuels and Ilubricants. Combined with the aviation fuel business, the supply of retail products gives Viva products a 26% share of the total Australian fuel market, second only to market leader Caltex at 38%. The last two decades have seen the prevalence of the Internet and mobile technologies in many business processes. This has spurred the growth of many industries devoted to mediating new modes of interactions between service providers and consumers. The online travel booking industry is an example, and Webjet with annual revenue of $366 million leads the industry in Australia and New Zealand. The company markets and transacts airline tickets and other travel-related services to consumers (82% of revenue) and corporate clients (18% of revenue). Webjet has a predominantly online business model as contrasted with traditional travel agents operating from shop-front outlets. The online travel booking industry in Australia is highly concentrated with the four major players accounting for some 70% market share. The competition has been described as of high intensity. The relatively low barriers in entering the market have encouraged smaller players to participate, thus aggravating competition further. The following figures were extracted from the annual reports of Qantas (an airline company), Viva Energy (an aviation fuel supplier) and Webjet (an online travel booking service provider). Instructions: 1. Assume all sales revenues and purchases are on a credit basis. 2. When calculating year 2017, 2018 and 2019 related ACPS, AAls and APPS, students must consider average values of inventory, accounts receivables and accounts payables. 3. Provide calculated solutions to two decimal places. RMIT Classification: Trusted 2018 2019 Qantas Airways Limited Year 2016 2017 AU $ Millions Sales Revenue Expenditure incurred (Operating material used and other expenditure=COGS) 16,200 14,665 15,839 16,667 3,336 4,818 5,181 5,660 Net Profit 1,029 853 953 891 Cash and cash equivalents 1,980 1,775 1,694 2,157 Receivables 795 784 715 971 Inventories (aircraft operating materials) Other current assets 336 351 351 364 347 209 878 701 Total Current Assets 3,458 3,119 3,638 4,193 Payables Revenue received in advance Short-term borrowings 1,986 2,067 2,220 2,470 3,525 3,685 4,018 4,315 338 330 404 635 Other current liabilities 1,179 1,013 958 1,156 Total Current Liabilities 7,028 7,095 7,600 8,576 Purchases 10,332 9,949 10,413 10,856 2019 Viva Energy Limited Year 2016 Yr 2017 2018 Sales Revenue 14,131 13,905 16,395 16,541 Cost of Goods Sold 12,712 12,158 14,843 15,075 Net Profit 1,219 580 467 695 Cash and cash equivalents 426 164 108 127 Accounts receivables 1,036 950 909 1,004 Inventories 650 965 1011 1,195 Other current assets 105 286 398 302 Total Current Assets 2,217 2,365 2,426 2,628 Accounts payables 1,360 585 619 744 Short-term borrowings 7 246 7 135 Other current liabilities 292 1,301 1,427 1,566 Total Current Liabilities 1,659 2,132 2,053 2,445 Purchases 12,690 14,229 15,697 15,164 RMIT Classification: Trusted 2019 Webjet Limited Year 2016 Yr 2017 2018 Sales Revenue' 152 218 291 366 Net Profit 21 61 87 124 Cash and cash equivalents 211 116 178 190 Receivables 81 117 252 347 Other current assets 9. 35 37 35 Total Current Assets 206 330 499 593 Payables 147 153 191 250 Short-term borrowings 38 13 32 18 Other current liabilities 13 55 280 348 Total Current Liabilities 198 225 503 616 Purchases? 350 545 412 467 Revenue is the commission or margin received as a percentage of travel services booked. 2Purchases include the total value of travel services from providers which have been 'bought' wholesale by Webjet. Required: VALUE CHAIN ANALYSIS (15 Marks) 1. Draw a diagram of the air travel value chain showing the part played by Qantas, Viva and Webjet and the value each contributes. Explain your diagram based on the industry value chain and internal value chain analysis. WORKING CAPITAL MANAGEWENT (10 + 30 + 20 = 60 Marks) 2. Current Liability Management: (5+5=10 marks) a. Calculate for each company's short-term borrowing as a percentage of current liabilities for Year 2017, 2018 and 2019. b. What are short-term borrowings, and what role do they play in working capital management? The Air Travel Value Chain and Working Capital Management Leverages in Airline Industry The Airline industry provides passenger and freight transport services through its fleet of aircraft flying to domestic and international destinations. The industry is part of the air travel value chain, which includes suppliers as well as distributors of the leading service provider, the airlines company. The chain is set up to cater to the needs of the ultimate customers in the process, air travellers. Qantas Airlines is the designated national carrier of Australia. It operates both domestically and internationally. The company operates 285 aircraft, has assets of $19.3 billion and employs 29,200 staff. In Australia, Qantas is the dominant local airlines with 62.5% market share. The only other significant competitor, Virgin, is a far second with 27.9%. Through Qantas' subsidiary, low-cost carrier Jetstar, it achieves more comprehensive market coverage, complementing their premium service offering. As you can remember, the case study you did in your tutorial class, up to 2013/14, Qantas struggled financially with poor profit results for several years. Qantas then restructured their operations through capacity realignment and workforce redundancies. The wide- ranging transformation program resulted in a return to after-tax profit with record results for 2017 $ 853millions and 2018 $953m and 2019 $891m. Airlines require aviation fuel which is a significant cost factor in their operations. Aviation fuel can account for more than 40% of an airline's operating costs. Supplying Qantas its fuel requirements are petroleum refiners and wholesalers delivering to airports where Qantas planes depart from. One such aviation fuel provider is Viva Energy which operates a refinery in Geelong, the second-largest facility in the country. Ten per cent of the Geelong refinery's output is for aviation fuel production, which supplies 37% of the airline industry's fuel requirement. Viva negotiates directly with airline companies regarding the supply of aviation fuel for their aircraft to be made available at Australian airports. Viva delivers fuel to 50 airports across the country. Under a license agreement with Royal Dutch Shell, Viva supplies some 1150 petrol retail outlets across Australia with Shell-branded fuels and Ilubricants. Combined with the aviation fuel business, the supply of retail products gives Viva products a 26% share of the total Australian fuel market, second only to market leader Caltex at 38%. The last two decades have seen the prevalence of the Internet and mobile technologies in many business processes. This has spurred the growth of many industries devoted to mediating new modes of interactions between service providers and consumers. The online travel booking industry is an example, and Webjet with annual revenue of $366 million leads the industry in Australia and New Zealand. The company markets and transacts airline tickets and other travel-related services to consumers (82% of revenue) and corporate clients (18% of revenue). Webjet has a predominantly online business model as contrasted with traditional travel agents operating from shop-front outlets. The online travel booking industry in Australia is highly concentrated with the four major players accounting for some 70% market share. The competition has been described as of high intensity. The relatively low barriers in entering the market have encouraged smaller players to participate, thus aggravating competition further. The following figures were extracted from the annual reports of Qantas (an airline company), Viva Energy (an aviation fuel supplier) and Webjet (an online travel booking service provider). Instructions: 1. Assume all sales revenues and purchases are on a credit basis. 2. When calculating year 2017, 2018 and 2019 related ACPS, AAls and APPS, students must consider average values of inventory, accounts receivables and accounts payables. 3. Provide calculated solutions to two decimal places. RMIT Classification: Trusted 2018 2019 Qantas Airways Limited Year 2016 2017 AU $ Millions Sales Revenue Expenditure incurred (Operating material used and other expenditure=COGS) 16,200 14,665 15,839 16,667 3,336 4,818 5,181 5,660 Net Profit 1,029 853 953 891 Cash and cash equivalents 1,980 1,775 1,694 2,157 Receivables 795 784 715 971 Inventories (aircraft operating materials) Other current assets 336 351 351 364 347 209 878 701 Total Current Assets 3,458 3,119 3,638 4,193 Payables Revenue received in advance Short-term borrowings 1,986 2,067 2,220 2,470 3,525 3,685 4,018 4,315 338 330 404 635 Other current liabilities 1,179 1,013 958 1,156 Total Current Liabilities 7,028 7,095 7,600 8,576 Purchases 10,332 9,949 10,413 10,856 2019 Viva Energy Limited Year 2016 Yr 2017 2018 Sales Revenue 14,131 13,905 16,395 16,541 Cost of Goods Sold 12,712 12,158 14,843 15,075 Net Profit 1,219 580 467 695 Cash and cash equivalents 426 164 108 127 Accounts receivables 1,036 950 909 1,004 Inventories 650 965 1011 1,195 Other current assets 105 286 398 302 Total Current Assets 2,217 2,365 2,426 2,628 Accounts payables 1,360 585 619 744 Short-term borrowings 7 246 7 135 Other current liabilities 292 1,301 1,427 1,566 Total Current Liabilities 1,659 2,132 2,053 2,445 Purchases 12,690 14,229 15,697 15,164 RMIT Classification: Trusted 2019 Webjet Limited Year 2016 Yr 2017 2018 Sales Revenue' 152 218 291 366 Net Profit 21 61 87 124 Cash and cash equivalents 211 116 178 190 Receivables 81 117 252 347 Other current assets 9. 35 37 35 Total Current Assets 206 330 499 593 Payables 147 153 191 250 Short-term borrowings 38 13 32 18 Other current liabilities 13 55 280 348 Total Current Liabilities 198 225 503 616 Purchases? 350 545 412 467 Revenue is the commission or margin received as a percentage of travel services booked. 2Purchases include the total value of travel services from providers which have been 'bought' wholesale by Webjet. Required: VALUE CHAIN ANALYSIS (15 Marks) 1. Draw a diagram of the air travel value chain showing the part played by Qantas, Viva and Webjet and the value each contributes. Explain your diagram based on the industry value chain and internal value chain analysis. WORKING CAPITAL MANAGEWENT (10 + 30 + 20 = 60 Marks) 2. Current Liability Management: (5+5=10 marks) a. Calculate for each company's short-term borrowing as a percentage of current liabilities for Year 2017, 2018 and 2019. b. What are short-term borrowings, and what role do they play in working capital management? The Air Travel Value Chain and Working Capital Management Leverages in Airline Industry The Airline industry provides passenger and freight transport services through its fleet of aircraft flying to domestic and international destinations. The industry is part of the air travel value chain, which includes suppliers as well as distributors of the leading service provider, the airlines company. The chain is set up to cater to the needs of the ultimate customers in the process, air travellers. Qantas Airlines is the designated national carrier of Australia. It operates both domestically and internationally. The company operates 285 aircraft, has assets of $19.3 billion and employs 29,200 staff. In Australia, Qantas is the dominant local airlines with 62.5% market share. The only other significant competitor, Virgin, is a far second with 27.9%. Through Qantas' subsidiary, low-cost carrier Jetstar, it achieves more comprehensive market coverage, complementing their premium service offering. As you can remember, the case study you did in your tutorial class, up to 2013/14, Qantas struggled financially with poor profit results for several years. Qantas then restructured their operations through capacity realignment and workforce redundancies. The wide- ranging transformation program resulted in a return to after-tax profit with record results for 2017 $ 853millions and 2018 $953m and 2019 $891m. Airlines require aviation fuel which is a significant cost factor in their operations. Aviation fuel can account for more than 40% of an airline's operating costs. Supplying Qantas its fuel requirements are petroleum refiners and wholesalers delivering to airports where Qantas planes depart from. One such aviation fuel provider is Viva Energy which operates a refinery in Geelong, the second-largest facility in the country. Ten per cent of the Geelong refinery's output is for aviation fuel production, which supplies 37% of the airline industry's fuel requirement. Viva negotiates directly with airline companies regarding the supply of aviation fuel for their aircraft to be made available at Australian airports. Viva delivers fuel to 50 airports across the country. Under a license agreement with Royal Dutch Shell, Viva supplies some 1150 petrol retail outlets across Australia with Shell-branded fuels and Ilubricants. Combined with the aviation fuel business, the supply of retail products gives Viva products a 26% share of the total Australian fuel market, second only to market leader Caltex at 38%. The last two decades have seen the prevalence of the Internet and mobile technologies in many business processes. This has spurred the growth of many industries devoted to mediating new modes of interactions between service providers and consumers. The online travel booking industry is an example, and Webjet with annual revenue of $366 million leads the industry in Australia and New Zealand. The company markets and transacts airline tickets and other travel-related services to consumers (82% of revenue) and corporate clients (18% of revenue). Webjet has a predominantly online business model as contrasted with traditional travel agents operating from shop-front outlets. The online travel booking industry in Australia is highly concentrated with the four major players accounting for some 70% market share. The competition has been described as of high intensity. The relatively low barriers in entering the market have encouraged smaller players to participate, thus aggravating competition further. The following figures were extracted from the annual reports of Qantas (an airline company), Viva Energy (an aviation fuel supplier) and Webjet (an online travel booking service provider). Instructions: 1. Assume all sales revenues and purchases are on a credit basis. 2. When calculating year 2017, 2018 and 2019 related ACPS, AAls and APPS, students must consider average values of inventory, accounts receivables and accounts payables. 3. Provide calculated solutions to two decimal places. RMIT Classification: Trusted 2018 2019 Qantas Airways Limited Year 2016 2017 AU $ Millions Sales Revenue Expenditure incurred (Operating material used and other expenditure=COGS) 16,200 14,665 15,839 16,667 3,336 4,818 5,181 5,660 Net Profit 1,029 853 953 891 Cash and cash equivalents 1,980 1,775 1,694 2,157 Receivables 795 784 715 971 Inventories (aircraft operating materials) Other current assets 336 351 351 364 347 209 878 701 Total Current Assets 3,458 3,119 3,638 4,193 Payables Revenue received in advance Short-term borrowings 1,986 2,067 2,220 2,470 3,525 3,685 4,018 4,315 338 330 404 635 Other current liabilities 1,179 1,013 958 1,156 Total Current Liabilities 7,028 7,095 7,600 8,576 Purchases 10,332 9,949 10,413 10,856 2019 Viva Energy Limited Year 2016 Yr 2017 2018 Sales Revenue 14,131 13,905 16,395 16,541 Cost of Goods Sold 12,712 12,158 14,843 15,075 Net Profit 1,219 580 467 695 Cash and cash equivalents 426 164 108 127 Accounts receivables 1,036 950 909 1,004 Inventories 650 965 1011 1,195 Other current assets 105 286 398 302 Total Current Assets 2,217 2,365 2,426 2,628 Accounts payables 1,360 585 619 744 Short-term borrowings 7 246 7 135 Other current liabilities 292 1,301 1,427 1,566 Total Current Liabilities 1,659 2,132 2,053 2,445 Purchases 12,690 14,229 15,697 15,164 RMIT Classification: Trusted 2019 Webjet Limited Year 2016 Yr 2017 2018 Sales Revenue' 152 218 291 366 Net Profit 21 61 87 124 Cash and cash equivalents 211 116 178 190 Receivables 81 117 252 347 Other current assets 9. 35 37 35 Total Current Assets 206 330 499 593 Payables 147 153 191 250 Short-term borrowings 38 13 32 18 Other current liabilities 13 55 280 348 Total Current Liabilities 198 225 503 616 Purchases? 350 545 412 467 Revenue is the commission or margin received as a percentage of travel services booked. 2Purchases include the total value of travel services from providers which have been 'bought' wholesale by Webjet. Required: VALUE CHAIN ANALYSIS (15 Marks) 1. Draw a diagram of the air travel value chain showing the part played by Qantas, Viva and Webjet and the value each contributes. Explain your diagram based on the industry value chain and internal value chain analysis. WORKING CAPITAL MANAGEWENT (10 + 30 + 20 = 60 Marks) 2. Current Liability Management: (5+5=10 marks) a. Calculate for each company's short-term borrowing as a percentage of current liabilities for Year 2017, 2018 and 2019. b. What are short-term borrowings, and what role do they play in working capital management?
Expert Answer:
Answer rating: 100% (QA)
Answer 1 In the above air travel value chain the Webjet has the worth included in the initial three exercises and the arrival last travel Be that as it may the Qantas viva will convey an incentive aft... View the full answer
Related Book For
Management and Cost Accounting
ISBN: 978-1405888202
4th edition
Authors: Alnoor Bhimani, Charles T. Horngren, Srikant M. Datar, George Foster
Posted Date:
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