FIN6554 Strategic Financial Management Assignment 2: Post-Crisis Financial Analysis and Recommendations for AirAsia

TASK:

Prepare a structured report that addresses the following three main sections.

Section 1: Short-term Financial Challenges (600–700 words)

1. Identify and explain the main short-term financial challenges faced by AirAsia.
2. Analyse the cost structure (fixed vs variable components), and how it affects breakeven, pricing flexibility, and risk exposure.
3. Discuss how the company managed short-term cash flows, working capital, or operating costs.
4. Link your analysis to relevant financial theories such as CVP analysis, liquidity management, and cost control frameworks.

Section 2: Investment Strategy and Long-Term Impact (600–700 words)

1. Choose one major investment decision made by AirAsia post-crisis.
2. Describe the financing method used and justify whether it was suitable.
3. Explain how financial tools like NPV, IRR or payback period would be used to assess such investment but do not recalculate the values.
4. Evaluate whether this investment supports long-term shareholder value, financial sustainability, or competitiveness.

Section 3: Capital Structure and Financing Decisions (600–700 words)

1. Examine AirAsia’s capital structure changes.
2. Assess how these decisions affected its cost of capital, financial risk, and investor sentiment.
3. Apply at least one capital structure theory to explain whether the strategy was optimal.
4. Support your discussion with data and financial logic.

Final Section: Strategic Financial Recommendations (300–400 words)

1. Based on your analysis above, propose 2–3 strategic financial recommendations to improve AirAsia’s financial resilience.
2. Each recommendation should be justified using relevant financial theory and clearly aligned to case realities.

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