Macro economic
(External operating)
Decline in the economy and potential impact on consumer demand and capacity commitments. | - Flexible business model (beds and aircraft) in order to adjust capacity in response to changes in demand with only 29% of group bedstock committed and third party flying accounting for 28% of all tour operator capacity
- Majority of aircraft and shops on operating leases. 46% of all aircraft leases and 36% of shop leases due to expire in the next three years
- Strong focus on cost control
- Competitive supplier scale benefits post-merger
- Robust, aligned strategy across Group
- Strong balance sheet and secured lines of finance
|
Climate change
(Strategic and emerging)
Reducing the Group's contribution to global warming whilst operating in a carbon-intensive industry | - Replacing older aircraft with new, more fuel efficient models
- Significant investment in new technology like the Boeing 787
- Fuel efficiency measures in engineering, flight planning and management, maintenance and ground operations
- Carbon management strategy in development to reduce the Group’s greenhouse gas emissions from airlines, water transport, major premises, ground transport and flagship hotel properties
- Preparing for regulatory proposals on climate change
|
Health and Safety
(Internal operating)
Accident or injury being caused to any of our colleagues or customers whilst in our care, as a result of failure in our due diligence process or supplier negligence
| - Risk-based approach to Health and Safety due diligence for Group products and activities
- Destination-based quality reviews carried out for areas of high risk
- Industry-leading expertise employed at the centre to set policy and provide guidance
- Best practice sharing across Group tailored to source market need
- Robust airline safety management systems in place across the Group
|
Hedging and cost base increases
(External operating)
Potential negative impact on margin from volatility of foreign exchange and fuel prices affecting unhedged balances and other general cost base increases as a result of the economic conditions
| - Hedging policies in place across all source markets, controlled and monitored by Group Treasury
- Flexible cost base and strong focus on fixed cost reduction and transitioning fixed to variable costs
- Strong relationships and contracts with key suppliers to control cost increases
- Standing agenda item at the monthly GMB Mainstream Committee meeting
|
Business interruption / technology reliability
(Internal operating)
Inability to resume business operations or trading due to critical systems failure (heavy reliance on key selling systems) or business interruption scenario at any of our key locations, critically affecting our ability to service and trade
| - Robust, centrally supported technology for significant parts of the business
- Investment in disaster recovery plans and reliance testing post-merger
- Dedicated project team established to support the development of business continuity and disaster recovery plans across the Group
|
Geopolitical / natural catastrophes / pandemic
(External operating)
Political volatility, natural catastrophes and global outbreak of Swine flu (H1N1) affecting certain destinations and/or source markets where we operate causing disruption to programme and customer experience, potential safety exposure and negative impact on destination desirability
| - Flexible supplier agreements allowing for capacity to be switched
- Balance of destination mix to minimise concentration
- Strong relationships with local tourism bodies and travel industry associations and government guidance obtained and used
- Crisis management policy established and rolled out and operational plans in place to respond to incidents
- Health and Safety risk assessments conducted post-incident
|
Liquidity and cash management
(Internal operating)
Management of Group cash position over diverse portfolio and potential risk to cost of financing
| - Daily cash balances reported and monitored
- Strong focus on working capital management at the centre
- Centralised cash management system implemented across the Group
- Daily counterparty reviews and investment control by central team
- Strong relationships with banking and financing partners
- Key lines of finance do not expire until mid 2012
- Renegotiation of shareholder loan repayment schedule
- Increased liquidity through Convertible Bond Offering
|
Supply chain / product failure
(External operating)
Failure of key suppliers that we are heavily reliant on which could cause negative customer experience or loss of financial investments
| - Spread of financial commitments across key value chain suppliers
- Well established relationships with key suppliers
- Service levels monitored and managed accordingly
- Centralised purchasing functions for key procurement areas
- Regular inspections of key service providers to assess health and safety, quality and sustainability
|
Aviation finance contract commitments
(External operating)
Ability to secure adequate funding and manage capital cost of aircraft effectively
| - Long and well established partnerships with diverse group of institutions providing aviation financing
- Continued strong operating performance supports status with aviation investment and banking community
- Reduced order book through cancellation or deferral where possible
- Sourcing best market rates for financing and sale and leaseback of current deliveries
|
