TO:
BOARD OF EXECUTIVES
FROM:
SUBJECT:
DATE:
CC:
Introduction
Our company is growing and the planes that we have are reaching an age where they are
becoming unprofitable, and will not support our growth.
The company has a maintenance strategy which is a short term solution, but does not
support our long term strategy for growth. Maintenance costs are increasing year after year for each
airplane in the aging fleet. In addition maintenance requires scheduled downtime which means that
we have fewer seats to sell, resulting in decreased revenue. This problem is affecting our stock
holders because we are unable to grow under current conditions. It is also affecting our customers
because we have fewer available flights while planes are under maintenance.
Primary research will include a look internally into the cost of the proposed aircraft. We will
analyse the projected operational and maintenance cost and how it will impact our current
and future profit margin. This will also include a look into recent years of our fleets
operational expense to see how the current aircraft fleet has been impactinged financially our
profit margin throughout the years. If the margin of profit for the proposed aircraft
compared to our current aircraft projected for the next few years is exceptionally large and
growing, we will know that it is time to improve our aircraft fleet.
We propose researching larger high capacity aircraft that will double the current seating
capacity. This will enable us to take advantage of economies of scale.
We are also exploring a modern fleet of crafts that are more fuel efficient due to new turbine
engine technology.
We will explore logistically, the optimization of our fuel and scheduling resource consumtion
As an example, filling the crafts full of fuel before every flight means that the craft weighs
more, and therefore it costs more fuel to carry the extra weight of the fuel. A possible
alternative is fuel each craft specifically for the right amount of fuel needed to perform the
current scheduled flight. This reduced weight means we can also reduce luggage prices for
our customers.
We will also deeply investigate the best aircraft internal electronics and related software to
make sure they fit to the standards of comfort and safety for our flight crew and customer
base.
Schedule:
Nov. 8th
2014
The most important aspect of the expansion program will be to minimize cost
while effectively making the largest profitable and efficient upgrades. This will
start off by analyzing our choices between trusted commercial aircraft
manufacturers.
Nov. 15th
2014
Nov. 22nd
2014
Basic aspects of the aircraft will be reviewed to identify the top contenders that
fit our criteria.
Nov. 29th
2015
The analysis will comprise thorough scrutiny of features that will include but
not be limited to, fuel efficiency, software efficiency, material dependability,
cabin capacities, features that can provide customer comfort, and an estimated
logistic cost factors.
Dec. 1th
2014
The Engineering Department will discuss and decide on the optimum cost
effective and efficient selection.
Dec. 4th
2014
The final selection will then be taken to the Board of Executives for final
review.
Experience
Our group is made out of individuals who specialize in the fields of aerospace, computer and
software engineering. Omar Sandoval who will be in charge of the Aerospace Engineering aspect,
will provide his knowledge of airplanes. Omar has knowledge and experience with the aerodynamics
of objects and how they affect the efficiency. He is also knowledgeable with engine types,
components and the way they function to optimize the work done to work output ratio. Michele
Pang, Edgar Gonzalez and Phillip Smith who specialize in computer and software engineering will
provide their knowledge on how we can use the computer to the companys advantage by writing
programs that specialize in the costs and profits of the company. With this knowledge we will be able
to deliver a proposal that will best benefit the company.
Works cited:
Watkins, Thayer. "AN INTRODUCTION TO COST BENEFIT ANALYSIS." AN INTRODUCTION
TO COST BENEFIT ANALYSIS. N.p., n.d. Web. 22 Oct. 2014.
"Net Present Value Method." Accounting For Management RSS. N.p., 2014. Web. 22
Oct. 2014.