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- Creators: Barrett, The Honors College
Description
The project mainly involves creating a standardized tool to help American Airlines evaluate the cost of Non-Recurring Engineering fees (NRE fees) that arise as a result of maintenance and repairs on airplanes. Since there are few manufacturers licensed by the FAA to complete these modifications, let alone have the capabilities to complete them, American Airlines is often charged substantial fees to complete even minor work. The team will begin by conducting academic research looking into how parallel industries such as Automotive, Aerospace, High-Tech Manufacturing, etc. deal with heavily regulated modifications. We will then use this academic research to building a framework that American Airlines is able to use to estimate the fair cost of completing some of these modifications. The hope is that American Airlines can use this framework to determine whether they are being charged fair prices, and if they are not, to use the framework as leveraging tool in negotiations.
ContributorsShah, Shimoli (Co-author) / Harris, Taylor (Co-author) / Hebel, Ryan (Co-author) / Taylor, Todd (Thesis director) / Faris, Kay (Committee member) / Department of Information Systems (Contributor, Contributor) / Department of Economics (Contributor) / Department of Finance (Contributor) / Department of Supply Chain Management (Contributor) / Computer Science and Engineering Program (Contributor) / Barrett, The Honors College (Contributor)
Created2016-12
Description
This thesis examines the fuel hedging strategies and their performance in the airline industry. Hedging allows an airline to establish a semi-fixed cost for fuel prices in the future. Unexpected increases in fuel costs can easily move an airline into bankruptcy while a decrease in fuel prices can create massive profits. With fuel prices that can vary 70% in several months, many airlines hedge fuel costs in order to cap a massive expense for the company. It is extremely difficult for airlines, or anyone, to predict what fuel prices will do next week, yet alone next quarter. This thesis notes there is no advisable portion of fuel that should be hedged for any airline; it is instead a complex set of variables that must be analyzed for each individual firm on an ongoing basis. Hedging is notably advised if a firm can accept the added costs of hedging premiums, the wages of employees to actively manage a hedging portfolio and the additional accounting regulations that must be followed. It can be performed using a variety of hedging instruments and utilizing various commodities. Over time, hedging will have a net effect of zero, therefore adding zero value to the firm. In reality, it is assumed that hedging fuel costs will help stabilize fuel prices and therefore stabilize cash flows and profits. The ideal implication is that the market will respond to increased stability in profits with a higher value of the firms publicly traded stock.
ContributorsMiller, Brent Fuller (Author) / Simonson, Mark (Thesis director) / Hertzel, Michael (Committee member) / School of Accountancy (Contributor) / WPC Graduate Programs (Contributor) / Barrett, The Honors College (Contributor)
Created2016-05
Description
September 11th, 2001 was a day that affected everyone. The world came to a stop. The aviation industry was affected, and the national airspace system was closed for a few days. The events that occurred on that specific day enacted changes that affect the industry to this day. This paper analyzes some of the changes that were made and discusses some of the changes the industry is going through again, about 20 years after the events on September 11th. The coronavirus pandemic has changed the way we all live our daily lives and aviation is not exempt. Changes to aircraft cleaning procedures, boarding processes, and seat design have all been ways the industry has gone through changes. The results of a potential recovery as well as the long-term changes are discussed.
ContributorsPomerantz, Spencer (Author) / Niemczyk, Mary (Thesis director) / Pearson, Michael (Committee member) / Aviation Programs (Contributor, Contributor, Contributor) / Human Systems Engineering (Contributor) / Barrett, The Honors College (Contributor)
Created2021-05