I am not sure how to work these out
Alaska Airlines, like most other U.S. carriers, sells tickets through online travel agencies (OTAs) such as Orbitz and Expedia, and Alaska pays the OTAs a commission fee for the sales they bring in. The one exception is Southwest; it refuses to sell through OTAs and does not incur the selling expense. In 2019, Alaska Airlines (ALK) had sales of $8.8 billion. Of those sales, an estimated 25% were made through OTAs, and the remaining sales were made through Alaska's website and its corporate relationships. The estimated average commission fee for tickets sold through OTAs was 10% (which equals 2.5% of Alaska's total sales). Alaska's operating profits were $1.1 billion, its net operating profit after tax (NOPAT) was $0.8 billion, and its average invested capital was $8.3 billion. 1. Suppose that Alaska wanted to know whether its operating profits would have been higher in 2019 if it had not sold tickets through OTAs. Assume that 70% of Alaska's OTA sales would have converted to sales through its website and 30% would have been lost to rivals had it not used OTAs. (In other words, 7.5% of its 2019 total sales would have been lost by not selling through OTAS.) Furthermore, assume that Alaska's contribution margin (its sales less its variable costs) was 60% for non-OTA sales and 50% for OTA sales. And assume its fixed costs were 45.4% of sales (or $4.0 billion). How would have Alaska's 2019 operating profits been affected if it had not sold through OTAs? That is, would its operating profits be higher, lower, or unchanged? Explain why. 2. Alaska's return on invested capital (ROIC) in 2019 was 9.6%. If Alaska had not sold through OTAs, would its ROIC be higher, lower, or unchanged? Explain why. (Note, you don't have to calculate an ROIC to explain your answer.)