System for calculation of flights’ profitability 8 stycznia 2001 r. 3 System for calculation of...

System for calculation of flights’ profitability

Paris 2002

DC 8 stycznia 2001 r. 1


• LOT Mission ! LOT is the Polish flag carrier meeting quality expectations

of its customers, combining tradition with modern technology, desiring to maintain the leading position in providing air travel service to, from and through Poland.

! LOT is operating in one of the largest and fastest developing markets in Europe, offering a convenient flight network, understanding of the region, its needs, demands, and dynamics of change.

! LOT is striving to achieve a profitable growth and appropriate return on capital while offering stable employment and professional development to its employees.



• LOT Goals ! To create value. ! To maintain a strong position in the air travel market to,

from, and through Poland. ! To be an attractive employer! To offer quality services according to the STAR Alliance

standards



Due to realization of this project we would like to:

• Calculate of flights’ and aircrafts’ profitability with 250 types of costs and incomes

• Monitor over 800 types of costs and incomes for more than 300 profit/cost centers

• Distribute data from operating systems • Prepare own reports based on the financial warehouse • Implement data store for financial users according to users needs.


QUARTERYEAR

YEAR QUARTER


Profitability system is based on 6 dimentions:ACCOUNTING ACCOUNTING

TIMETIME::

REALIZATION REALIZATION TIMETIME::

ACCOUNTACCOUNT::

Profit & Profit & lost lost accountaccount::

FLIGHTFLIGHT::

AIRCRAFTAIRCRAFT::

MONTH

MONTH

Management accounts for profitability reports

Management accounts for profit&lost reports

ZASIĘGRANGE STATE CONNECTION LINIALINE REJSFLIGHT

AIRCRAFT TYPE AIRCRAFT SUBTYPE


Estimated quantity of data for this structure

exceeds 200 MM positionsfor 1 year


This is a basic structure of the report:

CZASACCOUNTING TIMEACCOUNTING TIME

REALIZATION TIMEREALIZATION TIME

Account

FLIGHTFLIGHT

ACCOUNTACCOUNT

HEADLINES

ROWHEADS



How does the system look like?


BASED PROBLEM:

PREPARATION OF ALGORITHMS FOR ALLOCATION KEYS


THERE ARE OVER 80 ALLOCATION KEYSMOSTLY BASED ON ACTIVITIES



typical example of allocation keyfor salaries

Data base

Indirect allocation key

Data cleaning

Effects of indirect allocation key

Effects of indirect allocation key

Drill down process

Reports & controll of indirect results

Comparative reports



Proportions before modification of key Proportions after modification of keyCost of meal in Y class Cost of meal in Y class

Due to deeper process recognition we achieved significant change of results:



Recapitulation of processes:

• Data analysis of financial information from 11 sources

• Settlement and verification of data between database-systems

• Correction (automatic or manual) of cost documents’ descriptions

• Split 320 K agregated documents on about 7 millions detailed items

from operational systems

• Elaboration (on today) 77 different allocation keys



Recapitulation of processes :

• System methodology that obtain:

+ branch terms dictionary,

+ rules of source data verification,

+ rules of source data correction,

+ maintenance services procedures for dictionaries used by system

including: cost centers identification, codes of costs’ list, dictionary of

foreign transport agents etc.

+ rules of allocation keys builder,

+ rules of integration between accounting system and others operating

systems



Projects schedule:

• Advance a question by LOT – April• Specification of business – April• Start of project– May• Importing data from operating systems - August• First report, testing and corrections of keys - August• Report with functionality of cost centers’ allocation - November• Full functionality of system – December• Implementation of CFO full functionality and Training – January 2002• Final corrections and detailed modifications of functionality – February• End of project – March 2002.



• Building of new aplication for budgeting and results’ monitoring

• Preparing of financial planning for the next year including Profit / Loss

reporting, Balance sheet and Cash Flow

• Preparing longterm forecatsting

• System for automation registration of hadgling costs in all branches.

• System to analysing commercial contracts profitability.

• Management reports in new standards for STAR ALLIANCE reporting.

• Etc.....

Plans for systems development



• Improving knowledge about costs/profits centers

• Improving and introducing technical automation

• Permits on better controlling of revenue and costs allocations

• Makes possible for data analisys on a high and detailed level

• Gives possibility to developing and changing of reporting system

• Decreasing IT administration for reports preapering

Recapitulation solutions

Advantages



•

Recapitulation solutions

Defects



• Duration of project – 5 months.

• Works ware realized with allowance of specificity.

• More than 100 workers of LOT Group participated

in project, including about 20 financial officers full

time.

Recapitulation of implementation



QUESTIONS?

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