Link: Airline industry rebounding: IATA
Summary
The article I read mentions that the airline industry has rebounded faster than expected from the economic recession in 2008 to 2009.The International Air Transport Association reported that the profit will be $8.9 million on the revenue of $560 million. Air Canada has been losing money during the first six months of 2010. On the other hand, Rival WestJet Airlines has been profitable, and it earned $34.8 million in the first half of 2010. moreover, the quick recovery of Asian economy helps boost the demands for airplane, indirectly stimulating the airline industry in North America. However, IATA predicts that there will be a decline in profit among the airline industry because of the slow-down of government stimulus spending and the high unemployment rates. In addition, as the crude oil price increases, the whole airline industry's expenses will rise correspondingly.
Connection
The connection to chapter one is the importance of financial statements. Financial statements are elaborate reports that summarize the financial position and activities of businesses. Financial statement can be used to determine your financial situation in the past or present, it is also a good predictive material for the users of financial statement because it shows you all the relative financial information of the business. In this case, the revenue of the two Canadian airlines increased respectively on accounting of a quick economic recovery from the global recession. All this information can be obtained from the companies' financial statements and used to predict the outlook of the companies. Another connection to the textbook is the operating activities of business. A large portion of revenue comes from operating activities. The global recession affects the demand for airplanes during 2008-2009, resulting in less profit from operating activities. however, in 2010 , West Jet and Air Canada both had increased revenue on account of the higher demand for air transportation.
Reflection
This article were telling and predicting the performance based on the financial information that is showed on the financial statement from the management. If the financial statement is poor, the prediction of the analysis will not be accurate. On the other hand, the financial statement was done really well, the prediction will be good and the management can make right decisions to the problem of the analysis that they have predicted.
