Module 8 – Executive Summary: Safety Issues in Company B 1
Module 8 – Executive Summary: Safety Issues in Company B
MBA-620 Measuring Success in an Organization
Southern New Hampshire University
August 3, 2025
Module 8 – Executive Summary: Safety Issues in Company B 2
TransGlobal Airlines (TGA) is enhancing its Caribbean presence through smaller
aircraft charters, aiming for more destinations and competitive pricing. As part of this strategy,
TGA is considering acquiring two companies, but has identified a safety concern with
Company B.
Recent technical issues have prompted the FAA to issue a safety violation notice,
leading to grounded aircraft and a 10% revenue decline over the past month. Additionally,
there has been an $80,000 rise in operating costs due to necessary repairs, and poor handling of
the situation has resulted in increased negative customer feedback. This report examines the
implications of these issues on our acquisition evaluation.
Impact on Factors Other Than Revenue
Grounding a single aircraft could be an isolated incident, but multiple planes grounded
within a month indicate a serious issue, especially with safety malfunctions. This can lead to
broader problems, including potential FAA violations and fines, as seen with United Airlines,
which faced a $1.15 million proposed fine for missing fire system checks on its Boeing 777s
from June 2018 to April 2021. (Josephs, 2023)
If Company B’s fleet is facing mechanical issues due to age—averaging 18 years with
a typical lifespan of 25 years—the cost of replacing older aircraft could be significant. This
financial strain could negatively impact Company B's already low customer return rate of
40%.
The new leadership's goal to innovate and reshape the company’s image may be
hindered by these disruptions, as attention shifts to damage control. Grounded flights affect
customer retention and satisfaction, meaning that acquiring Company B would entail
inheriting problematic aircraft, low customer loyalty, and a negative reputation. Addressing
Module 8 – Executive Summary: Safety Issues in Company B 3
these challenges would require substantial effort from our marketing team, as well as potential
personnel changes or enhanced training to improve crisis management and boost staff morale.
Impact on Performance Evaluation
Company B is facing significant challenges, including an aging fleet that will need
costly repairs, impacting operating costs by $80,000. The company has a high turnover rate of
18% and relies on outsourced HR support. Financially, Company B is struggling, with net
earnings at only $79,000 and rising costs of goods sold and total expenses. These issues may
continue to harm revenue, especially after recent events last month.
Impact on Acquisition Recommendation
I recommend Company A for the acquisition. Company B shows instability in
leadership, identity, and culture, and its financial performance consistently lags behind
Company A. While both companies faced revenue declines, Company A has shown recovery,
unlike Company B.
Additionally, addressing issues from grounding incidents for Company B would
require extensive analysis and safety tests, potentially delaying results. There’s no guarantee
these tasks can meet TGA’s timeline for reviewing acquisition prospects.
Conclusion
The grounding of the aircraft has significantly hindered Company B’s immediate
growth potential. Additionally, the full extent of the impact remains uncertain as the
company continues to investigate the issue. If it turns out to be a widespread problem
affecting the entire fleet, it would necessitate a substantial investment in new aircraft. Based
on the information available, I have pinpointed other areas that are affected by this situation,
beyond just revenue. This incident also alters my performance analysis and the
Module 8 – Executive Summary: Safety Issues in Company B 4
recommendations I would make going forward. Overall, these developments and their
unpredictable effects have heightened the risk associated with this acquisition, making it
irresponsible for me to endorse acquiring Company B.
Module 8 – Executive Summary: Safety Issues in Company B 5
References
Josephs, L. (2023, February 6). FAA proposes more than $1 million fine on United Airlines over
preflight safety checks. Retrieved July 29, 2025, from
https://www.cnbc.com/2023/02/06/faa-proposes-fine-safety-united-airlines.html
SNHU. (2025). MBA 620 Company A Information. Retrieved from SNHU:
chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://learn.snhu.edu/content/
enforced/1958821-MBA62011280.2025571/Course%20Documents/MBA
%20620%20Company%20A%20Information.pdf?ou=1958821
SNHU. (2025). MBA 620 Company B Information. Retrieved from SNHU:
chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://learn.snhu.edu/content/
enforced/1958821-MBA-620-11280.202557-1/Course%20Documents/MBA
%20620%20Company%20B%20Information.pdf?ou=1958821
TransGlobal Airlines. (2025). MBA 620 TransGlobal Airlines Information. TransGlobal
Airlines.
