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Global Aviation & Transport Services
Global solutions for the aviation industry.
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Audit Tax Consulting Financial Advisory
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Contents Global aviation and transportation
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Services tailored to individual needs
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Deloitte clients in the aviation industry
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February 2008
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Global solutions for the aviation industry
Global aviation and transportation An industry in transformation The aviation industry is currently facing challenges unlike any other industry. In particular, the current economic climate, legislative changes, fuel prices and financial chaos of some airlines, and increasingly competitive environment are heightening the need for a radical restructuring of the air transport industry.
The onset of ‘Open Skies’ is likely to lead to a fight for control of prime landing slots at the key hub airports in both Europe and the U.S. These slots can be incredibly valuable (a pair of slots for London Heathrow were recently sold for £30 million), and are likely to be the key driver of consolidation in the market as the major players seek to gain control over the most lucrative routes..
The general consensus is that industry consolidation will be inevitable. Traditional carriers will transform themselves from being national companies with international operators to becoming truly globally focused enterprises. Some experts believe, for example, that in Europe there may be only four to five major players in three to five years’ time.
These complex challenges and changes to the industry require the very best of professional services providers. At Deloitte, we constantly challenge ourselves to improve services to our clients in the aviation and transportation industries.
These trends are also being fuelled by regulatory changes, most significantly, the ambition to develop a liberalizing agreement between the European Union and the United States, known as ‘Open Skies’. The negotiations between the U.S. Department of Transportation and the European Commission, which started in December 2003, came into effect in 2008 and further legislative changes, not least a reduction in the punitive restrictions of foreign ownership of U.S. and European airlines are expected to follow.
Meeting the needs of a global industry The global reach of Deloitte enables us to quickly put professionals on the ground anywhere in the world to address the business challenges of our clients. Our teams are flexible and draw upon the expertise of aviation specialists. We integrate the appropriate blend of sector specific knowledge with functional expertise from across our international practice to provide seamless solutions to our clients. The needs of aviation and related businesses can be complicated by the existence of corporate structures in different domiciles.
Care needs to be exercised in assessing the implications of local laws, taxation, licensing, and regulatory issues. Our local offices play a vital role in these matters. In addition, we work closely with many leading aviation consultants – including lawyers, engineers, and aircraft appraisers – and obtain their services when needed.
“Our teams are flexible and draw upon the expertise of aviation specialists. We integrate the appropriate blend of sector specific knowledge with functional expertise from across our international practice to provide seamless solutions to our clients.”
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Services tailored to Assurance & advisory The success of Deloitte in providing assurance and advisory services is maintained through the continuous development of our professionals. Our approach reflects the increasingly stringent demands for accuracy and accountability. Deloitte’s assurance and advisory practitioners seek to add value by anticipating problems and providing constructive and realistic solutions.
We deliver a full range of audit and related services to:
Our audit involves an in-depth understanding of our client’s business, internal controls, and risk spectrum in order to develop an approach that is tailored to the client’s needs. Before making audit planning decisions and to help in assessing risk, we conduct diagnostics and an analytical review. We have more than 100 diagnostic tools available.
• Make recommendations on revenue recognition, contract allowances, casualty and claims accruals, and the structure and accounting for financing transactions.
This approach helps to identify undetected issues and increases the insight gained during the audit process.
We provide auditing services for leading players within the global aviation industry Air France KLM Alitalia Boeing China Airlines IATA Iberia Qantas SAS United Airlines
• Improve administrative and operating controls; • Provide seamless business processes, including cash flow analysis, business plans, and budgeting; • Advise management of evolving aviationrelated accounting principles; and
Tax Tax affects every transaction a business undertakes and it never stands still. Our tax experts keep you up to speed on the developments that affect your business, help you interpret their significance and integrate tax considerations into your global strategy.
We have extensive experience in the following areas:
The Tax Service Lines include:
• Tax, accounting, and corporate structuring issues;
• Independent business valuations; • Capital raising (debt and equity); • Stock Exchange transactions in the United States and Europe;
• Comprehensive Tax Solutions; • Privatization, disposals, and joint ventures; • Corporate Tax; • Leasing Structures; • European Union; • Global Business Guides; • Indirect Tax; • International Assignment Services; • International Tax; • Mergers & Acquisitions; • Tax Technology Solutions; and • Transfer Pricing.
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Corporate Finance The aviation sector faces major changes in ownership and structure due to economic and regulatory influences. Our corporate finance practice offers comprehensive, independent, and expert advice to the parties involved in such transactions, both aviation businesses and governments and public sector bodies. We help clients through the transaction process from the planning stage through negotiations and detailed implementation with advice, assistance, and project management. Our focus is on lowering the cost of borrowings and improving shareholder value.
• Investigations for investors and regulatory bodies; and • Valuations of intangibles including landing slots. Our professionals come from a multitude of backgrounds and relevant experience including law, accounting, investment banking, venture capital, taxation, and government.
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individual needs Forensic services Deloitte’s forensic services practice is one of the most comprehensive of its kind in the world. With authoritative and experienced practitioners based in North America, Asia, and Europe, we can instantly respond to clients on a truly global basis. We are at the cutting edge of forensic technology and provide clients with unique tools unmatched by our competition. When political and other tensions heighten, our global business intelligence experts offer advice on managing political and commercial risks. Specifically, our country and political risk advisory services can support airlines and airports in reviewing and advising on security risk management issues with special expertise on terrorism risks. In the unfortunate case where a client does suffer a loss, our business insurance claims team will work hard to help that business get back on its feet in the shortest possible time and secure recovery in respect of its insured losses.
Reorganisation services Our reorganization professionals are adept at handling difficult situations created by a lack of financial resources, a depressed operating environment, organizational turmoil, or substantial outside pressure. In many instances we are introduced to companies on the recommendation of major creditors, banks, and lessors. Our experience means that we not only understand the financially and strategically important issues, we also understand the critical issues concerning lessors, bankers, investors, and creditors.
We offer discreet and skilled professional service and a hands-on approach to help clients develop swift and innovative responses to a broad array of operational, financial, and strategic issues. We aim to reorganize such businesses without incurring adverse publicity. Deloitte has handled some of the most significant cases in the aviation industry, including Laker Airways and Debonair Airways.
“Our professionals come from a multitude of backgrounds and relevant experience including law, accounting, investment banking, venture capital, taxation, and government.�
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Transaction services Deloitte’s global transaction services practice is recognized as a worldwide leader in providing high-quality, comprehensive, and strategically focused tax, accounting, and advisory services to buyers or sellers in business combinations.
Our services include:
Our multidisciplinary approach teams mergers and acquisitions professionals with technical, industry, and geographic experts to provide fact-based answers and independent advice geared to maximizing the value of a transaction.
• Internal audit;
Enterprise risk services Aviation and related industries are dependent for survival on rapid and secure access to timely and accurate information. Computer systems are vulnerable to a wide variety of threats, ranging from technical breakdown and fraudulent tickets, to malicious action by disgruntled employees and terrorist attacks on installations. Management needs to have confidence in the security of their information systems, from the boardroom to computer networks.
Human Capital More than almost any other business, success in the aviation sector relies on people. Customers take for granted that the tangible aspects of air transportation will be available, but expect that standards of service will be consistently high.
Our ERS practice provides a broad array of services that allow clients to better measure and manage risk and to enhance the reliability of systems and business processes throughout the enterprise. We have advised on counter-measures that are comprehensive and appropriate to the risks, and above all, cost effective for clients to implement and maintain.
“Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in 140 countries, Deloitte brings world -class capabilities and deep local expertise to help clients succeed wherever they operate. Deloitte’s 150,000 professionals are committed to becoming the standard of excellence.
• Corporate governance; • Risk identification, measurement, and monitoring; • Secure e-business;
• Computer and network security reviews; and • Development of expert systems.
We have assisted clients in ensuring they meet customer expectations through the review of: • Organizational structures best able to meet the demands of the company itself as well as its customers; • Appropriate reward levels and structures for the entire workforce, particular groups and individual employees; • Customer service strategies and implementations; • Recruitment policies and executive search; and • Training policies and implementation. Working with our actuarial practice, we can supply large comprehensive HR solutions to our airline clients, including expatriate tax, structure reward systems, pensions and benefit plans.
Deloitte’s professionals are unified by a collaborative culture that fosters integrity, outstanding value to markets and clients, commitment to each other, and strength from cultural diversity. They enjoy an environment of continuous learning, challenging experiences, and enriching career opportunities. Deloitte's professionals are dedicated to strengthening corporate responsibility, building public trust, and making a positive impact in their communities.”
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Deloitte clients in the aviation industry Airlines Aegean Airlines* Aeroflot* Air Arabia* Air Canada Air France-KLM* Air New Zealand* Air Nostrum Air Transat Air Wisconsin Alitalia* All Nippon Airways (ANA) Alma de Mexico* American Airlines Arkia Israel Airlines* Austrian Airlines Binter Canarias* BMI* British Airways Brussels Airlines Cargolux China Airlines* China Eastern Airlines Continental Airlines * Audit clients
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Croatia Airlines* CSA Czech Airlines* EasyJet El Al Israel Airlines* Far Eastern Air Transport* Gestair* Iberia Airlines* Jat Airways* Jet Airways* JetBlue Airways JetStar Asia* Kenya Airways* Latcharter* Lufthansa Luxair* Malev Hungarian Airlines Meridiana Mesa Air Group* Mesaba Airlines* Middle East Airlines* Midwest Airlines* Monarch Airlines* MyTravel Airlines* Northwest Airlines
Olympic Airlines Oman Air* Qantas Republic Airways* Royal Air Maroc* Royal Brunei Airlines* Royal Jordanian Airlines SAS* Saudi Arabian Airlines* Shandong Airlines* Skybus Airlines* South African Airways* Southwest Airlines Spanair* TAP Air Portugal* Trans Mediterranean Airways* TransAsia Airways* Turkish Airlines* United Airlines* US Airways Vietnam Airlines* Virgin Atlantic
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Airports – Europe AENA (Aeropuertos Españoles y Navegación Aérea)* Amsterdam Schiphol BAA Brussels Budapest* Dresden* Duesseldorf* Hannover* Liverpool* Maastricht Aachen Malta Munich* Nuernberg* Prague Rome* Sofia* Turin* Vienna
Airports – North America Chicago Midway Chicago O’Hare Greenville Spartanburg* Halifax Los Angeles World Airports Massport Metropolitan Nashville* Ottawa* Port Authority NY & NJ (EWR, JFK LGA)* Tampa, Florida* Toronto* Airports – Other Auckland* Chubu* Delhi Kansai (Osaka)* Melbourne* Seoul Incheon Shanghai Pudong Sichuan Sydney*
Related Industry Sectors Airports Council International (ACI)* Amadeus* BBA Aviation* Boeing* Civil Aviation Authority (CAA)* Embraer* Eurocontrol European Aviation Group European Aviation Safety Agency (EASA) European Commission GE Capital Aviation Groundstar* HIS Co Ltd* IATA* JTB Corp* LSG Sky Chefs Menzies National Air Traffic System, UK* NAV Canada Navtech SAS Ground Services SITA* TAG Aviation* *Audit clients
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Contacts For further information, please visit our website on www.deloitte.com/ats or contact one of our ATS leaders below: Paul O’Neill Director, Global Aviation & Transport Services Deloitte Touche Tohmatsu Stonecutter Court 1 Stonecutter Street London EC4A 4TR United Kingdom Tel: +44 (0) 20 7303 7110 Email: paoneill@deloitte.co.uk
Graham Pickett Audit Partner Deloitte & Touche LLP Global House High Street Crawley RH10 1DL United Kingdom
Terry Kurtenbach Tax Partner Deloitte & Touche LLP 555 East Wells Street Suite 1400 Milwaukee Wisconsin 53202-3824 USA
Tel: +44 (0) 1293 761232 Email: gcpickett@deloitte.co.uk
Tel: +1 414 347 6160 Email: tkurtenbach@deloitte.com
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Š Deloitte Touche Tohmatsu 2008. All rights reserved. Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in 140 countries, Deloitte brings world-class capabilities and deep local expertise to help clients succeed wherever they operate. Deloitte's 150,000 professionals are committed to becoming the standard of excellence. Deloitte’s professionals are unified by a collaborative culture that fosters integrity, outstanding value to markets and clients, commitment to each other, and strength from cultural diversity. They enjoy an environment of continuous learning, challenging experiences, and enriching career opportunities. Deloitte's professionals are dedicated to strengthening corporate responsibility, building public trust, and making a positive impact in their communities. Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu and its member firms. Designed and produced by The Creative Studio at Deloitte, London.