Economic Transportation

Companies whose stock is publicly bought and sold must file certain financial disclosure forms with the US Securities & Exchange Comission (SEC) – these forms are all made public. A copy of the year 2020 form (covering year 2019) is posted with this assignment. Read pages 1 (from “FORWARD LOOKING STATEMENTS” – a legal disclaimer) through 11 (just before list of corporate officers). Answer the following questions (the questions are in no particular order, and you may need to do outside research to answer some of them). Type your answers into a downloaded copy of this document, and be sure to list outside references.

1. In 2014 fuel accounted for about 35.4% of Delta’s operating expenses. What is the equivalent figure for 2019 and why do you think there has been a significant change? (1 point)

2. Delta has hedging agreements concerning fuel costs. (a) Describe hedging in this context and (b) explain what typically happens under different hedging strategies if fuel prices go up and if they go down (i.e., show that you understand the risks and rewards of hedging). (c) How does Monroe Energy fit into Delta’s fuel strategy? (1+1+1 = 3 points)

(a) Definition:

(b) Possible strategies and outcomes:

3. (a) Describe some of the competitive pressures that Delta cites in their domestic market. (b) Which do they seem to be most concerned about? (1+1 = 2 points)

(a) Domestic competition:

(b) Biggest concern:

4. (a) Describe some of the competitive pressures that Delta cites in their international market. (b) Why are they concerned about airlines based in the [Persian] Gulf? (1+1 = 2 points)

(a) International competition:

(b) Persian Gulf airlines:

5. How unionized is Delta, and which group(s) of employees are the most unionized? (1 point)

6. (a) What law governs Delta’s labor relations and why? (b) Under what conditions are employees allowed to go on strike? (1+1 = 2 points)

(a) Law:

(b) Strikes:

7. (a) Where is Delta incorporated (not headquartered, which is different)? (b) Explain why Delta and many other firms choose to incorporate there. (1+1 = 2 points)

(a) Incorporation location:

(b) Why?

References (besides Delta Form 10-K):

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