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Lufthansa Case (0)

5 VÄGA HEA
Punktid
Angelina Kolesnik
114189
Lufthansa Case
1)I think that Herr Ruhnau decided to purchase the Boing jets at the right time. He couldn`t wait till the dollar /deuchemark exchange rate would drop . In addition he thought about safety of flights and wanted to renew company planes. We can also observe the given trend in movements of the dollar/deuchemark rate over previous 3 years. Trend tends upward, so the postponing the desision of purchase can bring company to a higher dollar exchange rate, that, as a result, will mean that expences will be substantially higher.
2)To leave the whole amount of exposure unhedged was too risky at that time. Herr Ruhnau wasn`t also hundred percent confident, that exchange rate would drop. Remaining the whole explosure unhedged could bring Lufthansa to bankrupt. It was in Herr Ruhnau interests to protect Lufthansa Investments. Herr Ruhnau decision to cover partly an explosure was based on a research, which he had made. As a result Ruhnau didn’t loss. His decision to cover half an explosure brought to company 225 mil. DEM, because in the worst case if he used full forward cover company would pay 1,6 billion DEM against 1,375 billion Ruhnau paid .
3)In 1985 the foreing currency options were a related new financial instrument for explosure management. Also analysts thought that 96 mil dollars was too big money amount for the purchase of an instrument, which hedger expected not to use.
4)We cant exactly answer , why Herr Ruhnau preffered Boeing to Airbus . But we can suppose that quality of Boeing jet and its technical characteristics surpassed Airbus jets. Also we can suppose thar Herr Ruhnau got a very good offer from Boeing and bought jets at a discount price. In conclusion we must to say that Board of Lufthansa should retain Herr Heinz Ruhnau as Chairman because he achieved a significant business results.
Lufthansa Case #1
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