Running Head: EXECUTIVE SUMMARY
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8-2 Executive Summary: Safety Issues in Company B
MBA 620
SNHU
Feb 25,2022
EXECUTIVE SUMMARY
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Transglobal Airlines is planning to acquire Company A and Company B, the firms
specializing in chartered flights for luxury vacations. The analysis of both the companies has
been completed, and it is found that Company A and Company B are ideal for acquisition as
they possess unique strengths. However, while researching in order to ensure up-to-date and
accurate information, it has been found that two of the aircrafts of Company B have been
grounded for the last couple of months. The reason behind this is some technical issues and
FAA safety violations. Due to the grounded flights and technical repairs, the revenue of
Company B has decreased by 10% in the last month. The mitigation expenses have further
increased the operating costs and added nearly $80,000. The ground crew members of
Company B have mishandled the situation, thereby leading to negative feedback from the
customers. All such situations have had a significant and direct impact on Company B in the
last month.
The news of Company B’s flights being grounded due to safety issues will definitely
affect the revenues of the company. However, there are a number of other factors that this
news will affect. It is likely to affect the value of the company. For instance, it will have a
negative social impact (Della & Repon, 1999). It will affect the emotions of the people, and
people are less likely to choose the flights of Company B for their vacation owing to the
potential risk to their lives. The news will ultimately result in the spreading of the negative
image of the company in the market, thereby affecting the reputation of the company.
The grounding of the aircraft of Company B will significantly affect the initial
performance as well as analysis of the company (Della & Repon, 1999). The revenue of the
company, profit margin, as well as the number of aircraft in the fleet, will have to be taken into
consideration again.
The situation also involves additional risks. Some of the risks are the imposition of
penalties and restrictions on the flying of the aircraft due to violation of the FAA safety rules.
EXECUTIVE SUMMARY
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The authorities of FAA may take certain legal action against the company for risking the lives
of people. This can further affect the revenue of Company B as well as its image in the market.
The current situation of Company B will have a significant impact on the
recommendation made previously relating to the acquisition of Company B by Transglobal
Airlines. It is mainly because Company B was selected as an acquisition target due to the
reputation of the company as a value leader. However, the reputation of the company has been
affected due to the safety issues identified in the past couple of months. So, Transglobal
Airlines will have to contemplate again on whether to acquire Company B or not.
In order to make the final decision, additional information relating to the situation will
be required. The required information includes how Company B is dealing with the situation.
What are the different corrective measures are taken by the company, and how the company
commits to ensuring that safety issues are not compromised in the future.
EXECUTIVE SUMMARY
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References
Della Rocco, P. S., & Repon, F. (1999). US Department of Transportation Federal Aviation
Administration.
