DE LA SALLE UNIVERSITY

Ramon V. Del Rosario College of Business

NORTH-SOUTH AIRLINE
A rou! Re!or"

In Partial Fulfillment of
the Requirements for
MSC530M

#resen"e$ %&'
ROU# (
Arnie%elle Doria
)ar*in +ran,is,o
ee )analo
Berna$e""e Re&es
-o.n Ro%inson U&

#resen"e$ "o'
Dr. Dennis Berino
/
rou! 0
12 No*em%er 3145
I. Ba,6groun$ an$ Summar& of ".e Case
Nor".-Sou". Airline is a merger of ".e Nor".ern Airlines an$ Sou".eas" Airlines in -anuar& 31178
ma6ing i" ".e four". larges" U.S. ,arrier. An aging flee" of Boeing 232-511 air,raf" an$ i"s #resi$en"8 S"e!.en
Ru".8 9.o 9as ".e former Se,re"ar& of ".e Na*& an$ ".e ,.airman of ".e %oar$8 9as in.eri"e$ %& ".e ne9
airline.
+or an airline ,om!an&8 main"enan,e ,os" is one of ".e ma:or e;!enses ".a" is ine*i"a%le. I" is a gi*en
alrea$& ".a" ".e main"enan,e ,os"s rise 9i". ".e age of ".e air,raf". So for S"e!.en8 ".is is a ma:or ,on,ern
".a" mig." ge" in ".e 9a& for .im "o ,rea"e a finan,iall& s"a%le airline ,om!an&. Base$ on .is o%ser*a"ions on
.is"ori,al $a"a8 ".ere 9as a $ifferen,e in ".e $o,umen"e$ main"enan,e ,os"s in %o". ".e airframe an$ engine
areas of ".e Nor".ern Airlines an$ Sou".eas" Airlines8 9.ere Sou".eas" Airlines .a*e ne9er flee"s.
T.e *i,e !resi$en" for o!era"ions an$ main"enan,e8 #eg -ones8 9as "as6e$ %& ".e !resi$en" "o loo6
,arefull& on ".e re!or" an$ !resen" .is fin$ings <uan"i"a"i*el& an$ gra!.i,all&. In or$er "o ,ome u! 9i". ".is
re!or"8 -ones as6e$ .er s"aff "o !re!are ".e a*erage age of Nor".ern an$ Sou".eas" B232-511 flee"s8 an$
a*aila%le ,os" $a"a8 %o". of ".e airframe ,os"s an$ engine ,os"s. T.e !resi$en" 9an"e$ "o 6no9 if ".ere is a
,orrela"ion %e"9een ".e a*erage flee" age an$ $ire," airframe main"enan,e ,os"= an$ if ".ere is a s"rong
rela"ions.i! %e"9een a*erage flee" age an$ $ire," engine main"enan,e ,os".
Su,. $a"a are s.o9n in ".e su,,ee$ing "a%les %elo9'
NORTHERN AIRLINE
Year Airframe ,os" !er Air,raf" >?@ Engine ,os" !er Air,raf" >?@ A*erage Age >Hours@
3114 (4.71 A5.AB 08(43
3113 (A.B3 57.(7 78A1A
3115 0B.21 (4.A7 448122
311A 07.B1 (7.23 448242
311( 05.23 A(.A2 45832(
3110 7A.25 (1.30 4(834(
3112 27.2A 2B.01 4785B1
SOUTHERN AIRLINE
Year Airframe ,os" !er Air,raf" >?@ Engine ,os" !er Air,raf" >?@ A*erage Age >Hours@
3114 45.3B 47.70 (8412
3113 3(.4( 54.(( 784A(
3115 53.47 A1.A5 28501
311A 54.27 33.41 (8225
311( 3(.5A 4B.0B 284(1
3110 53.27 53.(7 B850A
3112 5(.(0 57.12 7.3(B
II. S"a"emen" of ".e #ro%lem
T.e airframe ,os" !er air,raf" an$ ".e engine main"enan,e ,os"s %e"9een Nor".ern Airlines an$
Sou".eas" Airlines signifi,an"l& $iffer. i*en ".a" fa,"8 is ".ere a rela"ions.i! %e"9een ".e 4@ $ire," airframe
main"enan,e ,os"s an$ a*erage flee" age8 an$ 3@ $ire," engine main"enan,e ,os"s an$ a*erage flee" ageC If
".ere are8 9.a" are ".e rela"ions.i!s of a*erage flee" age "o airframe an$ engine main"enan,e ,os"s of Nor".-
Sou". AirlineC
III. O%:e,"i*eDs
a. To %e a%le "o $e"ermine if ".ere is a signifi,an" rela"ions.i! %e"9een ".e a*erage flee" age "o $ire,"
airframe an$ "o $ire," engine main"enan,e ,os"s.
%. To %e a%le "o i$en"if& ".e rela"ions.i! %e"9een ".e a*erage flee" age "o $ire," airframe an$ "o $ire,"
engine main"enan,e ,os"s of ".e "9o airlines.
,. To %e a%le "o use a!!ro!ria"e <uan"i"a"i*e an$ gra!.i,al $es,ri!"ions of ".e rela"ions.i! "o su!!or"
".e anal&sisDans9ers.
IV. +a,"s of ".e Case8 Limi"a"ions8 an$ Cons"rain"s
+a,"s of ".e ,ase'
A. T.e "9o airlines ".a" merge$ are Nor".ern an$ Sou".eas" Airlines. Bo". in.eri"e$ an aging flee" of
Boeing 232-511 air,raf"s an$ S"e!.en Ru".. Sou".eas" .a*e ne9er flee".
B. T.e !resi$en"8 S"e!.en Ru". *ie9s a finan,iall& soun$ ,om!an& %& lo9ering main"enan,e ,os"s as i"
is ,ommon in ".e airlines in$us"r& "o .a*e .ig. main"enan,e ,os"s as ".e flee" gro9s ol$er.
C. Ru". no"i,e$ a $ifferen,e in ".e main"enan,e ,os"s in ".e airframe an$ engine %e"9een Nor".ern an$
Sou".eas" Airlines an$ or$ere$ for a s"u$& on ".e ,orrela"ion of a*erage flee" age "o $ire," airframe
main"enan,e ,os"s an$ rela"ions.i! %e"9een a*erage flee" age an$ $ire," engine main"enan,e ,os"s.
D. A*erage age of ea,. flee" is ,om!u"e$ as'
A*e. age >.rs@ E >F of ,alen$ar $a&s ".e air,raf" in ser*i,e ; a*e. $ail& u"iliGa"ion@
"o"al flee" .ours flo9n D"o"al num%er of air,raf" in ser*i,e
A*erage $ail& u"iliGa"ion is 7.2 .ours a $a& for Nor".ern an$ 7.5 .ours for Sou".eas".
Limi"a"ions an$ Cons"rain"s'
A. I" is ,ommonl& surmise$ in ".e airline in$us"r& ".a" main"enan,e ,os" rise 9i". ".e age of ".e air,raf"
B. His"ori,al $a"a from Nor".ern an$ Sou".eas" airline are no" !arallel as Sou".eas" .a*e ne9er flee"
C. T.e ,orrela"ion ,an onl& %e %ase$ on ".e se*en-&ear $a"a !resen"e$.
D. T.e in$e!en$en" *aria%le !resen"e$ in ".e ,ase 9as flee" age an$ $e!en$en" *aria%le 9as onl&
main"enan,e ,os" >%o". airframe an$ engine@
V. Al"erna"i*e A!!roa,.es "o Sol*e ".e #ro%lemDs
Consi$ering ".e o%:e,"i*es of ".e ,ase s"u$& 9.i,. is "o $e"ermine rela"ions.i!s %e"9een "9o
*aria%les >".e a*erage age of ".e air,raf" an$ i"s engine an$Dor airframe ,os"s@8 $ifferen" "&!es of regression
mo$els 9ill %e use$ in our ,ase anal&sis <uan"i"a"i*el&.
A. Regression anal&sis is a fore,as"ing !ro,e$ure em!lo&e$ "o un$ers"an$ ".e rela"ions.i! %e"9een
*aria%les an$ "o !re$i," ".e *alue of one %ase$ on ".e o".er. I" uses ".e leas" s<uare a!!roa,. on one
or more in$e!en$en" *aria%le "o $e*elo! as a fore,as"ing mo$el.
B. A s,a""er $iagram or s,a""er !lo" is ".e $iagram of ".e *aria%le fore,as"e$ ".a" is .el!ful "o
$e"ermine 9.e".er ".ere is a rela"ions.i! %e"9een *aria%les.
C. Coeffi,ien" of De"ermina"ion >r
3
@ is ".e !er,en" of ".e *aria%ili"& in ".e $e!en$en" *aria%le >Y@ ".a" is
e;!laine$ %& ".e regression e<ua"ion.
D. Coeffi,ien" of Correla"ion >r@ is ".e measure of ".e s"reng". of ".e rela"ions.i! %e"9een "9o *aria%les.
E. Sim!le Linear Regression )o$el is a regression mo$el using one in$e!en$en" *aria%le.
+. )ul"i!le Regression )o$el is a regression mo$el ".a" .as more ".an one in$e!en$en" *aria%le.

VI. Huan"i"a"i*e )e".o$sDUsage of )anagemen" S,ien,e )o$els
T.e grou! i$en"ifie$ ".e *aria%les !resen" in ".e ,ase. T.ese are ".e $ire," airframe an$ engine
main"enan,e ,os"s 9.i,. are ".e $e!en$en" *aria%les an$ ".e a*erage flee" age 9.i,. is ".e in$e!en$en"
*aria%le.
i*en one in$e!en$en" *aria%le an$ ".e re<uiremen" of i$en"if&ing ,orrela"ion an$ "es"ing
rela"ions.i! among *aria%les8 ".e grou! use$ ".e sim!le linear regression mo$el.
In H) for Iin$o9s8 un$er ".e )o$ule +ore,as"ing8 ".e Leas" S<uares J Sim!le an$ )ul"i!le
Regression is u"iliGe$.
+our si"ua"ions are anal&Ge$ "o res!on$ "o ".e nee$ of Nor".-Sou". Airlines. T.ese are'
4. Nor".ern Airlines Airframe Cos" an$ A*erage Age
3. Nor".ern Airlines Engine Cos" an$ A*erage Age Rela"ions.i!
5. Sou".eas" Airlines Airframe Cos" an$ A*erage Age
A. Sou".eas" Airlines Engine Cos" an$ A*erage Age Rela"ions.i!
VII. Anal&sis of Resul"s
In s"a"is"i,s8 $e!en$en,e refers "o an& s"a"is"i,al rela"ions.i! %e"9een "9o ran$om *aria%les or "9o
se"s of $a"a. Correla"ion refers "o an& of a %roa$ ,lass of s"a"is"i,al rela"ions.i!s in*ol*ing $e!en$en,e.
Correla"ion is also $efine$ as ".e measure of ".e $egree of rela"ions.i! %e"9een "9o *aria%les 9.i,. is
re!resen"e$ 9i". r, ,alle$ #earson !ro$u,". T.is re!resen"a"ion ,an %e an& num%er %e"9een -4 "o K4 9.i,.
e;!lains ".a" if ".e slo!e is on ".e rig." si$e or is !osi"i*e8 ".en ".ere is a !osi"i*e rela"ions.i! %e"9een ".e "9o
*aria%les ".a" are %eing "es"e$= an$ if ".e slo!e is on ".e lef" si$e or is nega"i*e8 ".en ".ere is a nega"i*e
rela"ions.i! %e"9een ".e "9o *aria%les %eing "es"e$.
To resol*e one of our s"a"e$ !ro%lems if ".ere is a rela"ions.i! %e"9een ".e a*erage flee" age "o
airframe main"enan,e ,os" an$ "o $ire," engine main"enan,e ,os"s !er airline8 ".e grou! 9ill %e using H) for
9in$o9s af"er i$en"if&ing ".e $e!en$en" an$ in$e!en$en" *aria%les.
Ie 9ill %e using L$ire," airframe main"enan,e ,os"M an$ L$ire," engine main"enan,e ,os"M as ".e
$e!en$en" *aria%le >Y@ !er airline an$ La*erage flee" ageM as ".e in$e!en$en" *aria%le >N@.
4@ NORTHERN AIRLINES'
A. Airframe Costs vs. Average Fleet Age
Ta%le 4. Using H) for Iin$o9s8 Airframe Cos"s as $e!en$en" *aria%le >Y@ an$ A*erage +lee" Age as
in$e!en$en" *aria%le >N@
Ta%le 3. +ore,as"ing Resul"s of Ta%le 4

INTER#RETATION of RESULTS' Airframe Costs vs. Average Fleet Age
T.e airframe main"enan,e ,os"s in,rease %& 1.1130 as a*erage age of ".e air,raf" in,rease %&
a uni". Onl& 22O of ".e ,.anges in ".e $ire," airframe main"enan,e ,os"s are e;!laine$ %& air,raf"
age. T.e 35O remaining a""ri%u"es "o o".er *aria%les no" men"ione$ in ".e ,ase.
T.e regression e<ua"ion is LAirframe Cos" E 50.1B7 K 1.1130 P A*erage Age.M T.ere is a
!osi"i*e rela"ions.i! %e"9een ".e Lairframe ,os"M an$ ".e La*erage ageM %e,ause ".e ,oeffi,ien" of
,orrela"ion is 1.7223.
Tes" for Signifi,an,e'
i. H1 ' Q4 E 1 >T.ere is no linear rela"ions.i! %e"9een airframe ,os"s an$ a*erage age@
H4 ' Q4 R 1 >T.ere is linear rela"ions.i! ing%e"9een airframe ,os"s an$ a*erage age@
ii. Sele," S E 1.1(
iii. Cal,ula"e for F statistic:
+rom ".e ANOVA summar&
)SR E 0(5.3014
)SE E 5B.4(42
F statistic = 40.0754
Using ".e $f4 E 4 an$ $f3 E ( a" (O le*el of signifi,an,e8 + *alue is 0.0127 >!lease see Anne; A@.
Sin,e + *alue is 0.0127. Sin,e +s"a"is"i,sT +*alue8 >40.0754 T 0.0127@ H4 9ill %e a,,e!"e$. T.erefore8 ".ere is
signifi,an" rela"ions.i! %e"9een ".e airframe main"enan,e ,os"s an$ a*erage age.

B. Engine Cost vs. Average Age
Ta%le 5. Using H) for Iin$o9s8 Engine Cos" as $e!en$en" *aria%le >Y@ an$ A*erage +lee" Age as
in$e!en$en" *aria%le >N@

Ta%le A. +ore,as"ing Resul"s of Ta%le 5
INTER#RETATION of RESULTS' Engine Costs vs. Average Fleet Age
T.e engine main"enan,e ,os"s in,rease %& 1.1130 as a*erage age of ".e air,raf" in,rease %& a
uni". T.ere is 04O of ".e ,.anges in engine main"enan,e ,os"s ".a" ,an %e e;!laine$ %& air,raf" age.
T.e 5BO remaining a""ri%u"es "o o".er *aria%les no" men"ione$ in ".e ,ase.
T.e regression e<ua"ion is LEngine Cos" E 31.(2AA K 1.1130 P A*erage Age.M T.ere is a
!osi"i*e rela"ions.i! %e"9een ".e Lengine ,os"M an$ ".e La*erage ageM %e,ause ".e ,oeffi,ien" of
,orrela"ion is 1.2730.
Tes" for Signifi,an,e'
i. H1 ' Q4 E 1 >T.ere is no linear rela"ions.i! %e"9een engine ,os" an$ a*erage age@
H4 ' Q4 R 1 >T.ere is linear rela"ions.i! e;is"ing %e"9een engine ,os"s an$ a*erage age@
ii. Sele," S E 1.1(
iii. Cal,ula"e for F statistic:
+rom ".e ANOVA summar&
)SR E 02(.7(53
)SE E 7(.(557
F statistic = 2.B140
Using ".e $f4 E 4 an$ $f3 E ( a" (O le*el of signifi,an,e8 + *alue is 0.0127 >!lease see Anne; A@.
Sin,e + *alue is 0.0127. Sin,e +s"a"is"i,sT +*alue8 >2.B140 T 0.0127@ H4 9ill %e a,,e!"e$. T.erefore8 ".ere is
signifi,an" rela"ions.i! %e"9een ".e engine ,os"s an$ a*erage age.
3@ SOUTHEAST AIRLINES'
A. Airframe Costs vs. Average Fleet Age
Ta%le 4. Using H) for Iin$o9s8 Airframe Cos"s as $e!en$en" *aria%le >Y@ an$ A*erage
+lee" Age as in$e!en$en" *aria%le >N@
Ta%le 3. +ore,as"ing Resul"s of Ta%le 4
INTER#RETATION of RESULTS' Airframe Costs vs. Average Fleet Age
Airframe ,os" !er air,raf" in,reases %& 1.1153 as ".e airline in,rease a*erage age of air,raf"
%& a uni". T.ere is onl& 5BO of ".e ,.anges in airframe ,os" ".a" ,an %e e;!laine$ %& air,raf" age.
T.e 04O remaining a""ri%u"es "o o".er *aria%les no" men"ione$ in ".e ,ase.
T.e regression e<ua"ion is LAirframe Cos" E A.(B00 K 1.1153 P A*erage Age.M T.ere is a
!osi"i*e rela"ions.i! %e"9een ".e La*erage ,os"M an$ ".e La*erage ageM %e,ause ".e ,oeffi,ien" of
,orrela"ion is 1.03AB.
Tes" for Signifi,an,e'
i. H1 ' Q4 E 1 >T.ere is no linear rela"ions.i! %e"9een airframe ,os" an$ a*erage age@
H4 ' Q4 R 1 >T.ere is linear rela"ions.i! e;is"ing %e"9een airframe ,os"s an$ a*erage age@
ii. Sele," S E 1.1(
iii. Cal,ula"e for F statistic:
+rom ".e ANOVA summar&
)SR E 45A.1034
)SE E A4.7(0A
F statistic = 5.313B
Using ".e $f4 E 4 an$ $f3 E ( a" (O le*el of signifi,an,e8 + *alue is 0.0127 >!lease see Anne; A@.
Sin,e + *alue is 0.0127. Sin,e +s"a"is"i,sU +*alue8 >5.313B U 0.0127@ H1 9ill %e a,,e!"e$. T.erefore8 ".ere is
no signifi,an" rela"ions.i! %e"9een ".e airframe main"enan,e ,os"s an$ a*erage age.
B. Engine Cost vs. Average Age
Ta%le 5. Using H) for Iin$o9s8 Engine Cos"s as $e!en$en" *aria%le >Y@ an$ A*erage +lee"
Age as in$e!en$en" *aria%le >N@
Ta%le A. +ore,as"ing Resul"s of Ta%le 5
INTER#RETATION of RESULTS' Engine Costs vs. Average Fleet Age
Engine ,os" !er air,raf" in,reases %& 1.11A4 4as ".e airline in,rease a*erage age of air,raf"
%& a uni". T.ere is onl& A0O of ".e ,.anges in engine ,os" ".a" ,an %e e;!laine$ %& air,raf" age. T.e
(AO remaining a""ri%u"es "o o".er *aria%les no" men"ione$ in ".e ,ase.
T.e regression e<ua"ion is LEngine Cos" E -1.021B K 1.11A4 P A*erage Age.M T.ere is a
!osi"i*e rela"ions.i! %e"9een ".e Lengine ,os"M an$ ".e La*erage ageM %e,ause ".e ,oeffi,ien" of
,orrela"ion is 1.0273.
Tes" for Signifi,an,e'
i. H1 ' Q4 E 1 >T.ere is no linear rela"ions.i! %e"9een engine ,os" an$ a*erage age@
H4 ' Q4 R 1 >T.ere is linear rela"ions.i! e;is"s %e"9een engine ,os"s an$ a*erage age@
ii. Sele," S E 1.1(
iii. Cal,ula"e for F statistic:
+rom ".e ANOVA summar&
)SR E 34(.7(47
)SE E (1.0BA5
F statistic = A.3(2B
Using ".e $f4 E 4 an$ $f3 E ( a" (O le*el of signifi,an,e8 + *alue is 0.0127 >!lease see Anne; A@.
Sin,e + *alue is 0.0127. Sin,e +s"a"is"i,sU +*alue8 >A.3(2B U 0.0127@ H1 9ill %e a,,e!"e$. T.erefore8 ".ere is
no signifi,an" rela"ions.i! %e"9een ".e engine main"enan,e ,os"s an$ a*erage age.
VIII. E".i,al Consi$era"ions
4. As !er re<ues" of S"e!.en Ru".8 i" seems ".a" ".e $ire,"ion of ".e ,om!an& 9oul$ %e on ".e re$u,"ion
of main"enan,e ,os"s. If ".is 9oul$ %e ".e ,ase8 ".ere 9oul$ %e a foreseea%le ,risis on la%or rela"ions
!ar"i,ularl& among ".ose 9.o are regularl& em!lo&e$ in ".e airline ,om!an&. T.is 9oul$ gi*e rise "o
la&offs an$ ne9 ,on"ra,"s for !ros!e,"i*e ,.ea!er ser*i,e !ar"ners. eneral 9elfare of ".e em!lo&ees
an$ ser*i,e !ar"ners s.oul$ no" %e ,om!romise$ 9i". ".e merger. An o!"ion 9oul$ %e8 ins"ea$ of
la&ing off8 i" is %e""er if ".ese L9oul$-%e-lai$-offM em!lo&ees %e assigne$ "o ne9 ser*i,esD$e!ar"men"
un$er ".e ne9 merge$ airline ,om!an& for ".eir sus"en"a"ion. As in,lu$e$ in ".e ,ase8 %efore ".e
merger "oo6 !la,e8 %o". airline ,om!anies >Nor".ern an$ Sou".eas"@ .a*e se!ara"e se"s of !ersonnel
>$ire,"ors8 managers8 an$ su!er*isors@. Conse<uen"l&8 af"er ".e merge8 ".e ne9 airline ,om!an&
>Nor".-Sou". Airlines@ 9ill .a*e "o a!!oin" i"s ne9 o9n $ire,"ors8 managers8 an$ su!er*isors in an
e".i,al 9a& in or$er "o main"ain ,om!an&Ms o!era"ion.
3. Ii". ".e !ressure "o ,on"inuall& mee" mar6e" $eman$s an$ "o re$u,e main"enan,e ,os"s8 Nor".-
Sou". Airlines ma& im!lemen" s"ra"egies an$ a,"ions ".a" "en$ "o .am!er ".e <uali"& an$ safe"& of
".eir airline ser*i,e. Sin,e ".eir no9-merge$ flee" is ,om!rise$ of %o". ol$ an$ ne9 air,raf"8 Nor".-
Sou". Airlines ma& .a*e a $iffi,ul"& of %alan,ing ,os" minimiGa"ion an$ ".e main"enan,e of safe an$
<uali"& ser*i,es.
5. Sin,e Nor".-Sou". Airlines is a merger of "9o organiGa"ions manage$ %& a $ifferen" grou! of
in$i*i$uals8 ,ul"ural $ifferen,es s.oul$ also %e ,onsi$ere$. Cul"ural $ifferen,es %e"9een em!lo&ees of
".ese !re-merge$ organiGa"ions largel& affe," ".e 9a& ".ese in$i*i$uals ".in68 an$ ".e same largel&
affe,"s .o9 ".e& !er,ei*e e".i,al or non-e".i,al ,on$u,"s. T.ese $ifferen,es s.oul$ %e resol*e$ so ".a"
".ere 9ill %e uni"& of ".oug." an$ !ra,"i,e 9i".in Nor".-Sou". Airlines.
A. Sooner ".an la"er8 ".e flee" of air,raf"s ".a" Nor".-Sou". Airlines ,urren"l& .as 9ill %e,ome ou"$a"e$.
Asi$e from ".e fa," ".a" ".ese 9oul$ en"ail .ig.er main"enan,e ,os"s8 ".ese air,raf"s 9oul$ also !ose
a gra*e ".rea" "o ".e en*ironmen" %e,ause ol$er fuel-,onsuming ma,.ines !ro$u,e more
en*ironmen"-.aGar$ous gases an$ o".er %&-!ro$u,"s. Nor".-Sou". Airlines s.oul$ %e sensi"i*e on
".is lig." an$ a$*o,a"e for a .eal".& an$ li*a%le e,olog& no" onl& for ".eir imme$ia"e ,ommuni"& %u"
also for ".e u!,oming genera"ions.
(. #assenger Safe"&. Loo6ing in"o ano".er *ie9 !oin"8 ".e !resi$en" of Nor". - Sou". Airline ma&%e is
no" :us" af"er ".e $ifferen,e in ".e main"enan,e ,os"s of ".e air,raf"s from %o". airlines. E;is"ing
air,raf"s 9ill s"ill %e use$ 9i". ".e merger. Sin,e ".ese air,raf"s .a*e %een use$ for <ui"e8 i" is s"ill
safe "o fl& ".emC
0. #assenger Sa"isfa,"ion. #assengers 9.o .a*e "rie$ %o". airlines surel& 6no9 of 9.a" %o". ,an offer.
II". ".e merger %eing Nor". - Sou". Airline8 !assengers s.oul$ e;!e," a ne9 e;!erien,e 9.ile fl&ing
"o ".eir $es"ina"ion an$ ".is s.oul$ %e ser*e$ %& ".e ne9 Nor". - Sou". Airline. I" is !ossi%le "o a!!l&
9.a" ea,. airlines .a$ $i$ in ".eir !re*ious *o&ages8 %u" ".e& nee$ "o es"a%lis. a ne9 %ran$ or mar6
%e,ause ".e& are no9 a ne9 airline ,om!an& as one.
IN. Con,lusion
)a;imi;ing !rofi" an$ minimi;ing ,os" are among ".e goals of all managers "o %e a%le "o su,,ee$
finan,iall&. Ho9e*er8 in or$er "o a,.ie*e su,.8 a lo" of ,onsi$era"ions in "erms of ".e %usiness o!era"ion mus"
%e "a6en in"o a,,oun". Consi$ering ".e merging of Nor".ern an$ Sou".eas" airlines8 ,.anges in ".e !ra,"i,es
an$ fun,"ions of ea,. mus" %e e;!e,"e$. C.anges an$ im!ro*emen" on ".e ,urren" !ra,"i,es 9ill ini"iall&
.a!!en af"er ".e re*ie9 an$ anal&sis of %o". ,om!aniesM .is"ori,al $a"a. Ii". ne9 #resi$en" S"e!.en Ru".Ms
a""em!" "o ,rea"e a finan,iall& soli$ ,om!an&8 signifi,an" $ifferen,es in ".e num%ersD$a"a of ea,. ,om!an&
9ere no"i,e$ s!e,ifi,all& ".e main"enan,e ,os"s ".a" lea$ "o our grou!Ms <uan"i"a"i*e anal&sis.
Bo". airframe ,os"s an$ engine ,os"s in Nor".ern Airline .a*e a signifi,an" ,orrela"ion 9i". age as
%o". a,,e!"e$ ".e al"erna"i*e .&!o".esis in ".e "es"s for signifi,an,e. T.e "es"s s.o9e$ ".a" airframe ,os"s
.a*e a .ig.er ,orrela"ion "o air,raf" age as ,om!are$ "o engine ,os"s an$ age.
+or Sou".eas" Airline8 nei".er airframe nor engine s.o9s a ,orrela"ion %e"9een ,os"s an$ a*erage age
!er air,raf". T.ere is failure in "es"s for signifi,an,e an$ ".ere is lo9 ,orrela"ion ,oeffi,ien"s an$ ,oeffi,ien" of
$e"ermina"ion. O%*iousl&8 engine ,os"s .a*e .ig.er ,orrela"ion ,oeffi,ien"s an$ ,oeffi,ien" of $e"ermina"ion
9.ile ".e ,os"s of airframe .a*e lo9er )SE.
Ii". ".e foregoing8 9e ,an ,on,lu$e ".a" ".ere are o".er fa,"ors ".a" affe," ".e mo*emen" of
airframe an$ engine ,os"s in Sou".eas" Airlines asi$e from air,raf" age.
N. Anne;
A. +-$is"ri%u"ion C.ar"' S E 1.1(
$f4 E 4
$f3 E (
+-s"a"is"i, E 0.0127
B. Nor".ern Airline' Airframe Cos"s *s. A*erage +lee" Age ra!.
C. Nor".ern Airline' Engine Cos"s *s. A*erage +lee" Age ra!.
D. Sou".eas" Airline' Airframe Cos"s *s A*erage +lee" Age ra!.
E. Sou".eas" Airline' Engine Cos"s *s. A*erage +lee" Age ra!.