Module Eight: Executive Summary
Blake A. Davis
MBA 620
12/08/24
Executive Summary
In preparation for TransGlobal's final presentation regarding potential acquisitions of two
small airlines, verifying research and data checking have been conducted. I believe the
information uncovered by this final research should be shared with the company and board of
directors. Below is a summary of the situation and how it might influence my recommendation
for acquiring the company.
Summary of Situation
Recently, Company B faced technical problems with multiple aircraft, resulting in the
aircraft being grounded for months, possibly because of an FAA safety violation. Additionally,
the ground crew's questionable actions have resulted in negative customer feedback and a 10%
drop in revenue this month. Also as a result of mitigation costs, the company's operating costs
have increased by $80,000. In addition to the financial repercussions, there are also reputational
and safety issues to be addressed.
Impact on Factors Other Than Revenue
Due to these worries, Company B has received a lot of unfavorable reviews from clients,
which could be dangerous for TransGlobal after the takeover, especially if we keep the same
planes and employees. In addition, we need to be cautious about possible safety issues with the
older aircraft we would be purchasing, which would call for further mitigating measures if we
proceed with the purchase. In addition to the financial consequences, these projects can take up
time and resources that our team could use to increase TransGlobal's worth.
Impact on Performance Analysis
I discovered that Company B's net profit margin is already dangerously low when I first
investigated their performance. The scenario will only worsen because of the growing operating
expenses, which will reduce their remaining margin. Furthermore, the average age of their fleet's
aircraft is 18 years, which is older than TransGlobal's present fleet. The price of acquiring these
vintage airplanes could be high if there are any safety issues. I do not intend to change my
original evaluation of Company B in light of all of these considerations. This circumstance
supports my previous findings regarding the performance of the business.
Acquisition Recommendation
I have not changed my advice to acquire Company B in light of the new information. I
still have the same reservations about the company's poor profit margin, outdated aircraft, and
inadequate FAA training. Actually, those concerns are simply strengthened by the new findings.
As a result, I will move forward with my suggestion to buy just Company A.
Additional Information
It should be noted that TransGlobal may be able to get more information about this
incident if they prefer. We might ascertain if the aircraft malfunction, a personnel error, or a
confluence of factors was the main cause, for instance, by pinpointing the specific infractions or
safety concerns related to the technical issues. Additionally, knowing if this incident was an
isolated incident or a part of a wider pattern inside the company would be beneficial. Even still, I
firmly feel that Company B would be too risky to think of pursuing at this time, even with this
knowledge.
