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Group Assignment Opm554 Article

1) AirAsia took loans from 3 banks and is looking for new shareholders to sustain its operations as it was hit hard by the pandemic but had no major shareholder to provide funds. 2) Airlines and travel groups are appealing to Congress for more aid to prevent further job cuts as talks have stalled and 40,000 workers were recently furloughed. 3) Cost control will be key for airlines to recover as leisure travel is important but expenses must be managed and domestic travel prioritized over international initially.

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Afiq Najmi Rosman
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357 views

Group Assignment Opm554 Article

1) AirAsia took loans from 3 banks and is looking for new shareholders to sustain its operations as it was hit hard by the pandemic but had no major shareholder to provide funds. 2) Airlines and travel groups are appealing to Congress for more aid to prevent further job cuts as talks have stalled and 40,000 workers were recently furloughed. 3) Cost control will be key for airlines to recover as leisure travel is important but expenses must be managed and domestic travel prioritized over international initially.

Uploaded by

Afiq Najmi Rosman
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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EFFECT OF COVID-19 TO

PROCUREMENT MANAGEMENT :

AVIATION
INDUSTRY
PROCUREMENT MANAGEMENT (OPM554)
NBO4B
AFIQ NAJMI BIN ROSMAN 2020878338
NURUL NABILAH BINTI AYOB 2021839444
NUR ADRYANA RATNA BINTI 2020270958
MOHD NOR
ARTICLE 1: Cover Story: AirAsia one year into the pandemic — clear skies
ahead?
WRITER: Adam Aziz
LINK : https://www.theedgemarkets.com/article/cover-story-airasia-one-year-pandemic-%E2%80%94-clear-skies-ahead
Unlike Malaysia Airlines or Singapore Airline Airasia
got no fund from big money share holder

AirAsia Took Loan From 3 Banks to


increase it capital

AirAsia Looking For New


Shareholder to sustain its
operations

Fundraising means that


Airasia is diluting its equity
ARTICLE 2: AIRLINE TRAVEL GROUPS WARN OF MORE JOB CUTS AS COVID AID
TALK STALL
WRITER: DAVID SCHAPER
LINK : https://www.scribd.com/article/479294088/Airlines-Travel-Groups-Warn-Of-More-Job-Cuts-As-Covid-Aid-Talks-Stall
 Airlines and their employee unions are appealing with
Congress and the White House to enact a bill extending
government payroll support for the sector after nearly 40,000
workers were recently furloughed.
AIRCRAFT GROUNDED = ZERO
JOB  One of the sectors most severely affected by the Covid-19
outbreak is the airline and travel-related business sectors.
Since the epidemic started, there has been a 70% decrease in
air travel, and hotel occupancy rates have also dropped
significantly.

 Because of the mounting uncertainty about whether


President Trump and Congress will be able to reach an
agreement on relief for the industry, anxiety is at an all-time
high among employees in the airline, travel, and
transportation businesses.

 The president also urged Congress to authorize direct


payments of $1,200 to many Americans as well as an
additional $135 billion for the Paycheck Protection Program
to aid small companies.
FOCUS ON COST STRUCTURE

• Since the price-conscious leisure traveler is crucial to


the recovery, AirAsia will need to be very disciplined
about their cost structures.

• Particularly mainline carriers will need to control their


expenses and alter their business plans.

• Airasia must prioritize their domestic travel first upon


overseas to slowly get back on their feet.
USE THE ADVANTAGE OF BEING
IN A CAPITALIST BLOC

• By being in that position in the world ,there's certain things


that in inevitable for America to be able to pull off which is
monetary recovery by the aids of their trillion dollar
company.

• Giant Company like Apple, Space Tesla can start an OEM


by phase to manufacture aircraft parts that can be
deteriorate by ages after being grounded.

• All this giant company can also invest in the smaller


company as in 2020 the vaccine is created and as the
smaller line or base maintenance company can be saved
this will create a huge profit in the long haul for all of these
company
BENCHMARKING OF THE EUROPEAN TEMPORARY
COUNTERMEASURE
o The Arabic airline can use the method of benchmarking the European control
method on controlling the airlines operational cashflow as a temporary measures
like below:

o Airport parking The EU has made efforts on a number of fronts to support the
aviation sector. One of the first steps it took was to prevent situations where
airlines would operate flights with extremely low load factors in an effort to
preserve their assigned take-off and landing slots (under EU slot rules, airlines
are required to use their assigned take-off and landing slots at least 80% of the
time during the scheduling period (summer or winter); otherwise, these slots go
back into the slot pool for allocation, with underused slats).

o Very low load factors on flights at the beginning of the pandemic cost air carriers
more money and had a harmful effect on the environment. The "use it or lose it"
rule for slot allocation was suggested to be suspended by the Commission on
March 13 in order to resolve the issue. The EU Slot Regulation amendment was
agreed by Parliament and the Council in late March 2020, and it became
effective on April 1 of that same year. The modification waives the usage
requirement from 1 March 2020 through 24 October 2020, with the possibility of
an extension by the Commission by delegated acts up to 2 April 2021.
Revisit flight economics
 First, decreased commercial traffic may need network modifications.
Using small-size widebodies like the Boeing 787, airlines have
increased the number of flights between hubs and smaller locations
during the past few years. These flights are successful because of the
profitable business demand. Economic theory favours bigger planes
flying less frequently since business demand is weak. Larger aircraft
with lower unit costs, like the Airbus A350 or Boeing 777, may end
up becoming the foundation of an airline's long-haul network.

 Second, to meet the growing portion of leisure traffic, airlines may


also consider rearranging the layout of their cabins. Simply put,
decreasing demand for business class may call for smaller business
class cabins. Taking this a step further, goods may change to better
serve premium-leisure travellers, such as the development of
business-class seats more suited for flying in groups or as couples.
Be a constructive collaborator

 Airlines will have to work more closely with the authorities


as the state takes a more active role, whether as a creditor, a
direct shareholder, or a member of the board. Airlines may
approach this as a chance to work with a significant
stakeholder to influence how the industry develops rather
than seeing it as a need to access desperately needed
funding.

 Airlines and regulators can collaborate to establish standards


for a variety of problems. To make airlines more resilient to
future shocks, these could include increasing the cash-on-
hand requirements; more equitable value sharing between
airlines and other sectors, such as airports; or adjustments to
ownership caps that would allow greater inflows of foreign
capital and lessen the future reliance on state capital.
Aim higher when it comes to IT and digital investment

o Regulators and airlines can work together to create standards for a range of issues.
Increased cash-on-hand requirements, more equitable value sharing between
airlines and other sectors, such as airports, or changes to ownership caps that would
allow greater inflows of foreign capital and reduce future reliance on state capital
are some ways to make airlines more resilient to shocks.

o Airlines could seek to expand their present IT and automation spending. In response
to the domestic and short-haul flying markets rebounding more swiftly, airlines
should, for example, engage in direct sales and seize control of the customer
relationship. It may be necessary to reevaluate relationships with IT and distribution
service providers.

o To reach the next level of efficiency, carriers can also make investments in support
services like revenue accounting and invoicing as well as the customer experience,
such as streamlining the check-in and boarding procedures. Beyond this, analytics
will be the next frontier. Analytics entails, among other things, leveraging data in
better ways to improve decision making, which will require some investment but
have a big payback.

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