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Profits have been decreasing for several years at Pegasus Airlines. In an effort to improve the company s performance, the company is thinking about dropping
Profits have been decreasing for several years at Pegasus Airlines. In an effort to improve the companys performance, the company is thinking about dropping several flights that appear to be unprofitable.
A typical income statement for one roundtrip of one such flight flight is as follows:
Ticket revenue seats times occupancy times $ ticket price $
Variable expenses $ per person
Contribution margin
Flight expenses:
Salaries, flight crew $
Flight promotion
Depreciation of aircraft
Fuel for aircraft
Liability insurance
Salaries, flight assistants
Baggage loading and flight preparation
Overnight costs for flight crew and assistants at destination
Total flight expenses
Net operating loss $
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