Risk Management Plan for Hawaiian Airline - Case Study Example

The paper "Risk Management Plan for Hawaiian Airline" is a great example of a case study on business. No strategic plan for any company is risk proof. Hawaiian Company is no different. For the company to realize its sustained growth strategy risky elements included in its strategic plan to oversee the growth and debt reduction requires a risk management plan. The following is a risk management plan for Hawaiian Company focusing on elements that require special attention to avoid plunging the company into a debt crisis and ensuring contingency growth.

The company has a huge debt totaling $ 661. If not managed properly, this debt could escalate into a financial crisis for the airline. In its plan, the company hopes to increase its current revenue by focusing more on the most lucrative routes and leaving the less profitable ones. This will help the company to reduce the costs involved in realizing profits. Increased revenues will help the company to repay its debts, minimizing the likelihood of further borrowing (Khatta, 2008). Of great importance, however, is the company’s ability to translate the lucrative routes into income-generating hotspots by optimal revenue collection. Customer satisfaction is one way of ensuring this. Being at the helm of the route is likely to win loyalty to the company. The company’s way of doing this is to tailor its services according to the needs of its clients at the most competitive prices (Hawaiian Holdings Inc. 2013).

According to Hawaiian Airlines (2013), Hawaiian’s debt-equity ratio is at a devastating 246%, an investor turn-off. Investors bring in external capital to the organization, strengthening its debt-equity ratio. More investors ought to be brought on board to help in strengthening the company’s debt-equity ratio. The capital they plunge into the company boosts its strength in a magical way. Hawaiian Airlines hopes to bring in more long-term investors by selling part of its massive expansion program to interested individuals.

The management of the company is planning on tight budgeting to cut on financial resources wastage. Top on the company’s priority is a classified procurement process. Stringent measures are to be put to ensure extra costs involved in the procurement process are slashed, with the company seeking to go for competency and reliability in choosing suppliers offering the best competitive prices. Tenders shall be awarded in terms of merit (Silverstein, 2012). A tighter measure the airline is considering undertaking is laying off a number of employees to cut on its operating costs. Although this is likely to be met by political resistance, the long-term benefits of this move will rescue the company’s over-expenditure on staff. Elimination of paid vacations for the

To improve the creditworthiness of the company, and boost investor confidence, the company aims at increasing the premium repayment amount for the agreed periods. The company hopes to offset the huge debt through this method and reach a secure debt threshold.

In conclusion, if these steps are adopted by the company, the likelihood of offsetting the debt is very high.