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Corporate Finance Academic year 2021-2022
TRAVEL INDUSTRY
Group E
Izabela Borkowska
Juliette Cordier
Marie-Jeanne Dieu
Marion Loiseau
Pauline Verlaine
Teacher : James Thewissen
1. Introduction
““Business is back on track”, assures Fritz Joussen, CEO of the group TUI” (Cited by RTBF, 2021).
Indeed, due to the Covid-19 crisis, the travel industry has been negatively impacted and among this,
the airline industry. However, thanks to the resumption of travel activities, this business is picking up.
In this critical financial report, we will focus on the following question: “Considering the Gross Profit
Margin of two large American companies of the airline industry, namely American Airlines and
United Airlines, what should these firms need to do to improve it for the future?”. Firstly, we will
justify the choice of this indicator to measure the financial impact of the Covid-19 and then we will
calculate the Gross Profit Margins. As a result, we will address our main question. Finally, we will
present two scenarios based on our research regarding the evolution of the airline industry.
The Gross Profit Margin represents the Gross Income as a percentage of sales.
Gross%Profit%Margin% = % 𝑇𝑜𝑡𝑎𝑙%𝑅𝑒𝑣𝑒𝑛𝑢𝑒 −𝐶𝑜𝑠𝑡%𝑜𝑓%𝐺𝑜𝑜𝑑𝑠%𝑆𝑜𝑙𝑑%
𝑇𝑜𝑡𝑎𝑙%𝑟𝑒𝑣𝑒𝑛𝑢𝑒
According to Bloomenthal (2021), the Gross Profit indicates what is remaining, as a profit, for the
company after the deductions of directs costs. Hence, the left over is dedicated to cover basic
operating costs. Therefore, the higher the Gross Profit Margin, the better for a company, in any
industry.
We chose this indicator because we believe that the revenues and costs of goods sold were the most
representative impacts of the sanitary pandemic. Indeed, it has direct consequences on the revenues
due to the diminution of sales (owing to sanitary restrictions, travel prohibitions, lockdowns, etc.).
2. Presentation of data
