CorporateMetrics Methodology Application for the Market Risk Quantification in British Airways Company

Lingjie Tan

Master's thesis

Abstract:

The aim of this thesis is to apply CorporateMetrics Methodology to predict net operating profit of British Airways in year 2019 under different market risks. The historical reports are from 2013 to 2017, the report 2018 is not available for now. There are five chapters of our diploma thesis. In chapter 2, the main aim is to introduce the basic principle of CorporateMetrics Methodology. There are 5 parts of this chapter: basic principle of CorporateMetrics Methodology, CorporateMetrics Methodology applied with corporations, modelling for prediction, estimation of net operating profit and frequency distribution analysis with specific procedure and formula equations. In chapter 3, we will introduce our target corporation British Airways in their basic information which contained 4 parts: overview, the history of British Airways, financial conditions and SWOT analysis. Chapter 4 is the practical part of our thesis, which has the largest proportion among the whole thesis. In chapter 4, we will combine the principle of CorporateMetrics Methodology in chapter 2 and our historical data from internet and British Airways’ annual reports to make prediction of Jet Fuel market price, Passengers carried and Exchange rate USD/GBP and estimate the net operating profit of British Airways in year 2019 plus sensitivity analysis of it. The last chapter 5 is the conclusion. It is based on the historical value and predicted value from chapter 4 to summarize the whole thesis.

Abstract:

The aim of this thesis is to apply CorporateMetrics Methodology to predict net operating profit of British Airways in year 2019 under different market risks. The historical reports are from 2013 to 2017, the report 2018 is not available for now. There are five chapters of our diploma thesis. In chapter 2, the main aim is to introduce the basic principle of CorporateMetrics Methodology. There are 5 parts of this chapter: basic principle of CorporateMetrics Methodology, CorporateMetrics Methodology applied with corporations, modelling for prediction, estimation of net operating profit and frequency distribution analysis with specific procedure and formula equations. In chapter 3, we will introduce our target corporation British Airways in their basic information which contained 4 parts: overview, the history of British Airways, financial conditions and SWOT analysis. Chapter 4 is the practical part of our thesis, which has the largest proportion among the whole thesis. In chapter 4, we will combine the principle of CorporateMetrics Methodology in chapter 2 and our historical data from internet and British Airways’ annual reports to make prediction of Jet Fuel market price, Passengers carried and Exchange rate USD/GBP and estimate the net operating profit of British Airways in year 2019 plus sensitivity analysis of it. The last chapter 5 is the conclusion. It is based on the historical value and predicted value from chapter 4 to summarize the whole thesis.

Keywords

Financial modeling, CorporateMetrics, Market risk, Commodity risk, Probability distribution

Keywords

Financial modeling, CorporateMetrics, Market risk, Commodity risk, Probability distribution

Language used: English

Date on which the thesis was submitted / produced: 26. 4. 2019

Thesis defence

• Date of defence: 28. 5. 2019
• Supervisor: Miroslav Čulík
• Reader: Petr Gurný

VŠB - Technical University of Ostrava

Ekonomická fakulta

Master programme / field:
Hospodářská politika a správa / Finance