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Describe the Situation
Classic Airlines (Classic) is known as the fifth largest airline in the world. They command a fleet of more than 375 jets that serve 240 cities. They are composed of 32,000 employees and earned $10 million on $8.7 billion in sales last year. Though profitable, they have been facing some challenges recently. In the past year, they experienced a 10 percent decrease in share prices. They are also having trouble keeping consumer confidence and loyalty. Their rewards program in the last year shows a declination of 19 percent in the number of classic rewards members and a 21 percent decrease in remaining members. They have been unable to compete for the valued frequent flier due to rising costs, particularly of fuel and labor. Recently, their Board of Directors (BOD) mandated a 15 percent across-the-board cost reduction over the next 18 months. Classic must now find a way to beef up its frequent flier program in a way that will yield a good return on investment, while meeting the cost reduction requirements. Classic faces a chance of bankruptcy if they are unable to meet the reduction.
Issues
Employee morale at Classic is at the? lowest it has ever been due to the negativity from Wall Street and the public.
Share prices decreased by 10 percent in the past year?
Classic is? losing alleged loyal customers to their competition
The Classic rewards? program measured a 19 percent decrease in Classic rewards members and 21 percent decrease in flights per remaining members.
Rising costs, particularly? those of fuel and labor, are limiting Classic's ability to compete for the valued frequent flier
Classic's BOD recently mandated a 15 percent? across-the- ...