Limited the amount of profit skywest could earn

Assignment Help Chemistry

Reference no: EM13687345

Fortune magazine reported that SkyWest, an independent regional airline, negotiated a financial arrangement with Delta and United to provide regional jet service for the two major airlines. For its part of the deal, SkyWest agreed to paint its jets the colors of Delta Connection and United Express and to fly routes specified by the two airlines. In return, Delta and United agreed to pay SkyWest a predetermined profit margin and to cover most of the regional airline's costs. Fortune explained that while the deal limited the amount of profit SkyWest could earn, it also insulated the smaller airline from volatility in earnings since Delta and United covered SkyWest's fuel costs, increased its load factor (the percentage of seats occupied), and managed its ticket prices.
Fortune suggested that Wall Street liked the deal because SkyWest's market valuation increased from $143 million to $1.1 billion after it began its service with the two major airlines. Explain carefully how this arrangement with Delta and United could have caused the value of SkyWest to increase dramatically even though it limited the amount of profit SkyWest could earn.

Reference no: EM13687345

Questions Cloud

Fiscal policies can have both subtle and major effects : Fiscal policies can have both subtle and major effects on almost all organizations.

Determine the impact on the economy : Determine the impact on the economy if the central bank in the U.S. used inflation targeting. Explain your rationale.

Interpersonal relationship : Choose an important relationship with one person in your life to explore in more detail and using the concepts listed in that section, explain whether or not you agree with how this relationship formed, or if it followed the steps as listed.

The concise encyclopedia of economics : The Concise Encyclopedia of Economics

Limited the amount of profit skywest could earn : Limited the amount of profit SkyWest could earn.

Overview of the different micro-finance providers in china : Explain why there are 2 different lists of types of providers and descriptive overview of the different micro-finance providers in China

How can this interference be circumvented : The point of that, acc. to my lab, was to figure a method for testing Mg2+ in the presence of Al3+. The question is what ion would interfere with this test and why? And how can this interference be circumvented?

What is the maximum profit you would expect : What is the maximum profit you would expect from the strangle and what are the two break-even prices for AZN on expiration and what is the maximum loss you might experience from the strangle?

Click on the tm memorandum : Click on the TM Memorandum

User Account

All Pages