Components

TRANSAERO Case

Voting to Save TRANSAERO, Russia’s No. 2 Airline

Olga Kandinskaia, Cyprus International Institute of Management
January 7, 2020
SKU:
BUS-006369
Region: 
Europe, North America
Topic: 
Accounting & Finance
Length: 
15 pages
Keywords: 
bankruptcy, intangibles, qualified opinion, airlines, Russia
Student Price: 
$4.00 (€3.36)
Average rating: 
0

This descriptive case is a captivating story of Russia’s No. 2 airline, TRANSAERO, which was forced to abruptly suspend its flights in October 2015 due to bankruptcy proceedings filed against the company by its key creditors. The bankruptcy came against a backdrop of severe turmoil in the Russian economy, and was precipitated by a number of factors beginning with Western sanctions in March 2014 retaliating for Russia’s annexation of Crimea. On the other hand, the airline’s demise occurred during a fall in global oil prices—a time that would normally be particularly favorable for an airline. The case challenges students to understand how the bankruptcy of what had been a safe and successful airline happened. The 2014 assessment of TRANSAERO’s brand value also introduced an interesting twist; one that led to a qualified opinion by independent auditors on the airline’s intangible assets. The case is a good illustration of both the business practices of large enterprises in Russia as well as the challenges posed by the recent economic crisis and continuing Western sanctions.

The case is most appropriate for courses in accounting which cover analysis of financial statements. It is suitable for both undergraduates and the early part of an MBA program. Supplementary Excel files are also included with the case: a template file for students and a solutions file for instructors. Additionally, the case may be used in courses that discuss doing business in Russia provided the participants have a basic grasp of financial analysis.

Learning Outcomes: 

In completing this assignment, students should be able to:
1. Demonstrate the ability to understand and summarize complex information
2. Perform financial statement analysis
3. Conduct an analysis of strengths, weaknesses, opportunities, and threats

Application
The case is most appropriate for courses in accounting which cover analysis of financial statements. It is suitable for both undergraduates and the early part of an MBA program.
Supplementary Excel files are also included: a template file for students and a solutions file for instructors. Additionally, the case may be used in courses that discuss doing business in Russia provided participants have a basic grasp of financial analysis.