The accounting part of the airline industry focuses on the financial statements. The financial statements are composed of the balance sheet, the income statement, and the statement of cash flows. The customers and the general public are more interested in the passenger ticket prices as well as the cargo shipping rates. The following paragraphs expounds on some of the many issues on the United States Airline Industry.
In the article The Future of American Transportation Policy, the Federal Highway Act of 1956 was an important milestone in the history of American airline transportation and travel history. For, it focused on the finished the interstate highway system. Finally, the completion occurred in the early 1990s which where the general agreement on transportation among the Americans had faded away. Many economists had expressed their concern over the American government’s management the transportation infrastructure. (Dilger, 2003). And, in the article The Law on Securities, was approved into law within the market economy development and the entrepreneurship program as the 1989 era closed. It was again revised in June of 1990.
For, many airline companies trade their shares of stocks in Wall Street and other stock markets to any one who wants to own a part of airline companies. This law gives the guidelines on the issuance of treasury bills, commercial notes and bonds. This law gives a wide interpretation on how people can ‘buy’ a share of an airline company. Meaning, any airline company that has a profit character can freely offer its shares to the moneyed public. These shares are generally divided into ordinary (common) shares, preferred (as to dividend payments), cumulative, non –cumulative, bearer and registered shares of stocks.
In addition, the airline companies can also enter into a creditor –debtor relationship when it offers bonds and other short term liability securities. However, the stocks offered in the stock markets must be branded as profitable in order to sell like hotcakes. To accomplish this, the airline companies offer to the interested investors free copies of their income statements that show that they have been making (passing) the grade because profits is the bottom line of the company for the past year or years of actual airline operations.
And, to further give credence to the airline companies’ balance sheet and income statements, the companies attached an auditor’s reported that the financial statements are fairly presented. On the other hand, an auditor’s report stating that the financial statements are adversely presented means that the financial reported issued by the company are falsely presented. Also, an auditor’s report that gives a “no opinion” portion shows that the financial statements have not been audited for one reason or another (Skof & Vukmir, 1993).
Further, the article The CEO as an Organization Designery states that Professor Germeshausen, a Professor Emeritus in the Massachusetts Institute of Technology opined that many senior officers in the airline companies can comfortably assess ahead of time the effect ad influence of their many policies on the stableness, growth nuances and the monetary behavior of the organizations that they manage and are responsible for. (Keough & Doman, 1992) Also, the article A Problem –Finding Approach to Tactical Planning states that questions should be answered by the airline managers for tactical planning in terms of strategic planning environment.
Some specific and important questions that could be asks include “What Corporate planning information is needed by top management and corporate planners to give direction to the company tomorrow? ” should be renovated to the better “What tactical plans are needed by middle –level managers to insure a high level of sales (such as an annual increase in prior sales by a minimum benchmark of fifteen percent). Another good question would be to “did the company generate profits generated after deducting total costs and expense from the net sales? ”
One way of answering this question well is for the managers to implement a budget. A budget will state the maximum costs and expenses that the company will pay and the projected net sales and collections of accounts receivables in advance (a month or more ahead of the actual use of the expenses and cots). The budget shows the estimated amounts that will occur in the future such as the budgeted sales, budgeted purchases, budgeted production, budgeted administration expenses, the budgeted marketing and promotion expenses, budgeted balance sheet and other budgets.
In addition, the planning strategy using the “what if this happens? ”, and the accompanying “what must be done to win here? ” approach will be a very useful tool to plan for a future action to resolve a future problem in terms of cost, expenses, sales, production and the like. To resolve this, the company must continuously update its information database because lack of information may result to a wrong decision or interpretation of data.