Report finds companies guilty of reckless management

Citation

(2002), "Report finds companies guilty of reckless management", Aircraft Engineering and Aerospace Technology, Vol. 74 No. 6. https://doi.org/10.1108/aeat.2002.12774faf.005

Report finds companies guilty of reckless management

Report finds companies guilty of reckless management

Keywords: Aircraft industry, Business, Management

As victims of short-term gains, 126 companies in the UK Air Transport industry have been identified as having “Reckless Management”, according to the latest Plimsoll Analysis, 3rd ed., 2002.

“Recent corporate-collapses like Enron and WorldCom examples of reckless management driven by over ambitious managers opting to take on great risk from high debts”, says David Pattison, senior analyst at Plimsoll.

Plimsoll’s latest analysis reveals 126 companies in the Air Transport industry also following this risky path. Financed by high debts and focused on the euphoria of market share, these companies deliver a staggering growth of 19.6 per cent on average; yet return a woeful 1.2 per cent average margin. Fifty one of these companies are currently loss making.

The report also highlights 20 companies that while amongst the most profitable in the sector seem guilty of “Cautious Management”. Despite 8 companies now making more profit than they were 2 years ago, they have accepted a lesser share of the market. In fact, at 7 companies sales have dropped by over 10 per cent in the last 2 years. These companies are not so much at risk from collapse, as they are simply fading away.

“It is not the quality of information available but knowing what to look for. For Enron and WorldCom fraud was simply the final symptom, not the cause. Business leaders need to understand the whole company to make an informed opinion, not just single numbers thrown around. That’s why the Plimsoll Analysis was developed”, says Pattison of Plimsoll.

The essence of a Plimsoll Model is to give shareholders, commentators and busy managers the means to make informed decisions by bringing out a company’s strong and weak points. The Plimsoll Model assesses several years of individual company performance on a single page of analysis. Created for the non-accountant, each analysis carries 7 charts geared so that a falling line is “bad news” and a rising line is “44 good news”.

The strengths and weaknesses are on show for each of the top 473 UK Air Transport companies in the Plimsoll Portfolio Analysis, 3rd ed., 2002. Readers of this publication will receive a 5 per cent discount if mentioning this article upon ordering.

Details available from: Plimsoll publishing Ltd, Tel: +44 (0) 1642 626400; Fax: +44 (0) 1642 626410;E-mail: plimsoll@dial.pipex.com; Web site: www.plimsoll.co.uk