Xylon Aviation, Inc. is a publicly held corporation that has been in business since 1970. Their main

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Xylon Aviation, Inc. is a publicly held corporation that has been in business since 1970. Their main product is helicopters and helicopter components. Current annual revenues are $1.4 billion. Approximately 75 percent of their business comes from governments, while the remainder is from commercial customers. While Xylon has been profitable for many years, economic constraints and a decline in demand has kept revenue growth flat for the past five years. Last year the company lost revenue. With the earnings report coming up, it is estimated that Xylon will come up $15 million short of projected earnings. Part of this revenue shortfall has to do with the delayed delivery of a massive order to Turkey. A malfunction had been discovered in the components, requiring Xylon to fix the entire order and causing a major delay. Management knows that if Xylon misses earnings for the second year in a row, its stock will take a free fall. Investors have already expressed their discontent.

Also, many of Xylon’s most loyal customers through the years have dropped Xylon in exchange for its main competitor. In addition to the drop in value the shortfall would cause, managers would not receive their bonuses, and stock options that are expiring within the year will become worthless if the stock drops too much. The board of directors has also made it clear that if things do not pick up, many higher-level employees will lose their jobs. The situation will also harm lower-level employees. More than 20 percent of the company’s stock is owned by employees through the company’s 401K plan. Poor financial performance would cause employees to lose a significant investment and likely decrease employee morale.

The CEO has met with top management over the past week to discuss solutions. Most agree that the only way to make up for the revenue shortfall at this stage is to make cuts in other areas. Three solutions have seemed to gain the most favor: getting rid of the employee donation matching program that Xylon has had for the past decade, reach into pension fund, or take money from reserves and report it as profit. The CEO has called a final meeting this afternoon. In the meantime, managers are tasked with discussing possible solutions that can be implemented in the short-term, mid-term, and long-term.

Read your role as CEO, Virginia Thomas.

Chief Executive Officer—Virginia Thomas You are trying to prepare yourself for this meeting with the executive team. For the past week you have been talking with your team about possible solutions to the budget shortfall. Some of the suggestions made you uncomfortable as they could be perceived as deceptive, but you are certain that the managers were kidding when they made the suggestions. You know that solving the current problem is only half the battle. The economy is not looking any brighter and competition is fierce. Even if you avert this crisis, your team will have to come up with some more ideas on how to make the firm sustainable once again. You are very comfortable with your team and have known most of the executives for many years. In fact, some have been here longer than you have. They had always pulled together in the past. You are proud to point out that the company has never engaged in unethical or illegal behavior under your watch. However, you have become concerned about some of the pressures being placed on executives, especially since their bonuses depend on meeting earnings expectations.

You would have to forgot your own $2 million bonus if the shortfall is allowed to occur. Your jobs may well be at stake. Two members of the board have never seemed to like you and would be glad to replace you with someone else. Out of all of the solutions proposed by the executive team, you feel like getting rid of the employee-matching program for charities is the best bet. It makes you uncomfortable, especially since the employees had already given their contributions to the local United Way with the understanding their contributions would be matched. But you know you could come up with at

Based on the background of Xylon and the information detailed in your CEO role, create a short-term and long-term plan with specific action items for Xylon Aviation.