FINAL PROJECTS -FINA 408 Individual Project - FINA 408 - Delta Airlines

FINA 408 FINA 408: Delta Airlines company Analysis Professor Date of submission Introduction Purpose of Project It is imperative to note that all corporate entities across the world are founded on a specific structure, including financial, corporate, strategic, and governance, among others. As such, the primary purpose of this paper is to conduct an in-depth and objective analysis of the Delta Airlines Company. To achieve that objective, the paper will explicitly present the company’s governance and communication structures, financial analysis, strategic analysis, and finally present forecasts for its growth rate as well as its income statement (Khan, 2017). The information to be used for the analysis will be drawn from the company’s annual reports and financial statements, as well as its websites. To present an objective financial analysis of the company, the paper will objectively examine the company’s financial statements (10K) for the last three years, including 2015, 2016, and 2017. It is worth noting the fact that a company analysis serves as a mirror through which different individuals can view a particular corporate entity (Khan, 2017). Therefore, the company analysis serves as a simplified presentation of different aspects of a corporate entity for ease of understanding to different stakeholders. Description of the Company With its head offices situated in Atlanta, Georgia, USA, Delta Airlines, Inc. is a US-based airline, viewed as a global leader in the provision of local and international aviation services. It is critical to highlight the fact that the business’ operations are spread in six continents across the world through its subsidiaries and regional affiliates; whereby it is estimated to complete over 5,400 daily flights. The company is among the pioneers of the Sky Team airline Alliance. The foundation of the establishment can be traced back to the Huff Daland Dusters, which was established in 1924 to offer crop dusting operations; only to progress to the provision of passenger services in 1929 (Delta Airlines, 2018a). Over the years, the company has recorded substantial success in all its operational aspects despite the numerous business challenges, including stiff competition and global economic whims. The company is currently an employer of over 80,000 individuals, and reported total annual revenues of US$41.2 billion in 2017. Governance and Communication Analysis CEO, Board, and Decision Making Delta Airlines, Inc. is currently led by Edward H. Bastian, in the position of the Chief Executive officer since 2nd May 2016. It is also critical to highlight the fact that Edward Bastian had served as the company’s president for the ten years between 2007 and 2016 (Bloomberg, 2018). Since the assumption of the CEO’s position at Delta, Mr. Bastian has been instrumental in the improvement of the company’s performance as well as the expansion of its services’ portfolio over the years. He has also offered substantial input in other aspects such as the company’s investment in corporate social responsibility, as evidenced by his commitment to spend 1% of the business’ 2015 net income on charitable organizations (Basttian, 2016). Also, from the available information about the company, it is clear that Mr. Bastian only serves as the company’s CEO, and not the chairman. Instead, the company’s current chairman is Francis S. Blake, who joined the entity in 2002, in the capacity of an Executive Vice president (Delta Air Lines, 2018c). The concept of CEO duality implies to a corporate situation whereby an individual holds the positions of the company’s CEO and chairman at the same time (Tang, 2017). As such, it is evident that this is not the case for Delta Airlines, Inc. It is imperative to reiterate the fact that the primacy of corporate governance refers to the specific sets of guidelines and procedures designed to steer the activities of a company, the separation of the chairmanship from the CEO position is critical for the successful implementation of corporate governance. As such, despite the fac that there is a minimal manifestation of the company’s corporate leadership structure on its corporate governance, Delta’s decision to avoid CEO duality can be justified by the great need to avoid the possibility of agency problems in its leadership. The problem could arise in the case of CEO duality since the same person acting as the CEO and the chairman would have conflicting roles. For instance, the board of directors, including the chairman, is responsible for overseeing the performance of the CEO, a mandate which is compromised in CEO duality since the CEO, who is also the chairman, becomes an integral element of the oversight body. It is, therefore, arguable that the separation of the CEO from the chairmanship is the best leadership structure for a company since it significantly eliminates the agency principle in entities while boosting the aspect of personal responsibility among the CEO and the chairman. When different individuals serve in the positions of the chairman and the CEO, it is easy for the board to evaluate the CEO’s performance objectively and effectively, unlike in the case of CEO duality. As such, this separation of powers increase...

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