Impact of Macroeconomic Factors on Virgin Atlantic Airlines Business

This report examines the influence of macroeconomic factors on Virgin Atlantic Airlines, a British company operating globally. It discusses the impact of inflation and unemployment on the airline's operations, highlighting how these factors affect costs and workforce management. The report analyzes the UK's economic growth rate and its cyclical patterns, including expansion, peak, contraction, and trough, and their respective effects on Virgin Atlantic. Government interventions, such as fiscal and monetary policies and the furlough scheme, are also evaluated for their impact on the business. Furthermore, the report identifies current global challenges faced by Virgin Atlantic, including foreign policy nuances and fuel efficiency, and provides recommendations for overcoming these challenges. The report concludes by emphasizing the importance of adapting to economic changes and implementing strategic measures to ensure the airline's sustainability and profitability. Desklib provides a platform to access similar solved assignments and past papers for students.

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Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK...............................................................................................................................................3
Describe the macroeconomic factors and its influence on its business outputs..........................3
How the UK economic growth rate impact the selected business..............................................4
How the current government intervention techniques impact the business...............................6
Describe the current global challenges faced by the businesses in UK and also give
recommendation on how to over the current situation................................................................7
CONCLUSION ...............................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Macro-economic is a concept which helps in dealing with the performance, behaviour,
structure and decision-making. Economics is a wide subject which studies various aspects of the
business environment. Indicators such as economic performance are effectively monitored by the
consumer, government and businesses (Amador-Castro and et.al., 2021) . Covid has effected
businesses world-wide and its working has affected adversely. Virgin Atlantic Airlines is a
British company established in Crawlway, England in 1984. It is operating his flights over 32
destinations of the world. It also contributes to the economic growth of the UK. It further
evaluates the government interventions which affects the working of the company. At last, it
further access certain challenges faced by the business organisation and also provide
recommendations, on to overcome the current situation.
TASK
Describe the macroeconomic factors and its influence on its business outputs.
Macroeconomic factors are the key factors which influences the geopolitical factor, fiscal
factor which majorly influence the national and regional economy of UK. This factor studies the
factors which influences the economy as a whole. Macroeconomics emphasis on the overall
performance of the economics, change in the inflation, output, interest and foreign exchange
rates and the balance of payments (Chauhan, Singh and Quraishi, 2020). There are certain issues
such as poverty reduction, social equity and sustainable growth and only possible with the sound
monetary policies. It is the branch of economics which is related to the study of the behaviour
and performance of the economy as a whole. This basically focuses on the aggregate variation in
the economy that includes the growth rate, gross domestic product and inflation.
It is the study of economics which assesses a single and the only unit of the combination
which comes up with a combination of firms, households, countries, industries and markets. It
deals with the tools and techniques of aggregate demand and supply. The variables which are
used in it are the taxes, public expenditures, private consumption, savings and investment,
balance of payment and many others. The assumption taken in this is the opposite of
microeconomic variables and in this all the microeconomic variables are constant. It deals with
the aggregate variables of economics. The external and environmental issues of the business
application. The theories of national income, aggregate consumption, economics growth and the

general price level is defined under this. Majorly, inflation and unemployment are the two factors
which are explained as follows:
Inflation: It is defined as the rate which increases the price over the period of time.
Fundamentally, a broad measure is the rising cost or cost expansion of most everyday items in
the country. It is essentially due to excessive interests pursuing too few commodities, which
affects the expansion of costs. Virgin Atlantic's chief executive has warned that the expansion
will come with huge costs (Ismail and et.al., 2022). Organizations will feel the impact strongly
and travellers will bear the burden due to difficult inventory this year, expanded work costs, and
more reasonable flight costs. However, the CEO warned that the overall measure to increase
maintainable flight fuel is now costing three to many times as much as conventional fuel, which
is causing a stir directly around the CEO's town (Virgin Atlantic). The CEO warned that inflation
will drive higher costs, fares in 2022). They further added that the plane is not the one who
should pay for more maintainable fuel, which will be shared entirely by each partner.
Unemployment: It refers to people who are available and are looking for work but they
cannot get a new job. It combines parties that cannot work due to the influence of different
elements. For now, however, COVID-19 is having a major impact on jobs within the UK. At this
point, individuals have liberates their careers due to the severe recession in the economy. On its
way to Virgin Atlantic, the Transporter gets as ahead of the pack as possible on its most
memorable enduro trip. It laid off 45% of its workers, reducing its spending base by more than
$530 million. Because this agility will play a big role in the coming year, they can adapt to
changing procedures and respond effortlessly to changes in the economy. A tight job market
means wages for new and capable people will rise while travelling. They further add that 4.5
million people left their jobs during the December period, which impeccably describes the scale
of the problem (MacPhillamy and et.al., 2022).
These factors of macroeconomics affect Virgin Atlantic's overall operations and
economy. Costs have risen due to expanded creative fees and reduced availability of skilled
representation.
How the UK economic growth rate impact the selected business.
People in UK having quality living standards and well earning because UK have fastest
growing economy. COVID-19 hit to UK economy and it have impact over business as there is
downfall of 9.4 % in year 2020 due to health regulation and pandemic restrictions. After

pandemic, annual GDP rise by 7.5 % in year 2021(GDP first quarterly estimate, UK: October to
December 2021). There are some consents by that the affect of UK economic growth can be seen
in the Virgin Atlantic Airlines which are discussed below:
Economic life cycle: This is the four stage overall life of the economy that is in cyclical
pattern and these are expansion, peak, contraction and trough (Pereira and et.al., 2018). There are
certain factors that provide better understanding about GDP, interest, consumer spending and
total employment helps to analyse the current levels of economic cycle (Economic Cycle,2022).
These understanding are helpful for the investors and businesses. In the regard to Atlantic
Airlines, the four stages of economic life cycle is discussed below:
 Expansion: In this factor, less interest rates are relatively low, production up, the
economy comparatively growing and the pressure of inflection rises. Increase in the
inflection Due to increase in the demand at the marketplace and massive increase in fuel
cost, these challenges are faced by Virgin Atlantic Airlines.
 Peak: When the growth touches its highest rate then peak of a cycle reached extend. Peak
growth make fluctuation in the economy which need to be rectified. In Accordance to
such stage Virgin Atlantic Airlines make some possible changes to improve profitability.
But this situation create some fluctuation in the activities of the businesses.
 Contraction: It is a situation which come after the peak. A correction take place by a
time of contraction while growth rate become slow, downfall in employment rate and
prices are changed. Correction are made in this stage to overcome form peak situations
and these corrections are helpful to get rid from faults (Rafiei and Ricardez-Sandoval,
2020).
 Trough: It is the stage where economy touches lowest point and recovery of growth
started in the economy. In this stage the growth of Virgin Atlantic Airlines startes recover
itself by understand business environs.
Inflation: The high inflection takes place in the economy of UK, resulting massive
increase in the production cost to the companies that lead to increase in the prices of air fair as
people facing vast changes at the marketplace. Due to rise in inflection rate fuel prices risen and
the price of air fare or tickets also increased.

Unemployment rate: There are certain factors which may affect economy and businesses
of UK. Due to the COVID-19 pandemic unemployment are risen to the peak so that they have to
take step to take into consideration of this situation.
How the current government intervention techniques impact the business.
Government of UK identified some people as a big player in the markets that have power
to make changes in the market. Government has power to make changes in the monetary as well
as fiscal policy that have impacted the overall operations of the business (Ratnakar and et.al.,
2021). Government can rise currency on the temporary basis to increase co-operate profits and
share prices but finally reduce values and this rise interest rates. Virgin Atlantic Airline's
operation may affect by the government policies and interventions. Some are discussed below :
Fiscal policy: Interest rate is another factor that is used to control inflection. This is a
simple factor because it can stimulate the individual from the inflation. This may provide better
services to the customer after fall in interest rates by federal reserves which is expected to be rise
them. This is simply lead to have the bigger lose at the marketplace that tend to provide better
understandings in the market. It increase the interest of the companies and individuals to borrow
more and spend more to but anything. This leads assets bubbles in which is unlike the gradual
erosion of inflation in the market and the huge amount of capital is being destroyed which bring
use to neatly to the next level the government can influence the market.
Monetary policy:
Monetary policy is tool which is used by the central bank to sustain the economic growth
by controlling the supply of money in the country which is available to the consumers,
businesses and banks. The U.S treasury department has to ability to create money, but the supply
of money is influenced by the Federal Reserve, most of the part of the operations is through the
open market operations. The Preferred securities for federal reserves is OMO, agency mortgage
and U.S. Treasury (Sassi and et.al., 2019). The main goal is keep the economy grow at good
pace which controls the spending and forcing the rate to be kept down which attract more
borrowings.
Furlough scheme:
As the country goes into coronavirus lock-down, whole industries have ground to the
major halt. The aviation industry is giving this scheme to the employees in which they are giving
the temporary leave to the employees due to the special need of the company by which the whole

company is having the better consideration in the market. In context to Virgin Atlantic Airlines,
they are focuses on the business so that they can rightly ensures the better working and also
eliminate the unnecessary expenditure to the company specially during the tough time of covid-
19. It is the main consideration better working of the company so that hey can rightly ensures
the higher profitability and job role in the market (Tan and et.al., 2019). Th airlines company
ensures the better working of the company so that they can manage the cost of production.
Describe the current global challenges faced by the businesses in UK and also give
recommendation on how to over the current situation.
This is an important idea to make sure the organization works better, but some of the
difficulties that Virgin Atlantic is working on should be corrected by the organization and the
goal is that they can adequately fill these difficulties in a suitable way. The implications of these
are as follows:
Nuances of Foreign Politics, policy and relations: It is often influenced by government
issues, arrangements, regulations and linkages, and choices are made by pioneers who influence
work, rough material, transport frameworks and school systems. When Virgin Atlantic was
formed, they faced huge losses, so they could properly guarantee better jobs, but generally limit
the general work of the organization and guarantee better operations.
Fuel efficiency: These expenses have been one of the main financial variables affecting the
aircraft business. It fundamentally affects the monetary arrangements of the aircraft organization.
Due to the increase in the number of aircraft organizations, the cost of fuel also expands and
forms an infinite loop. In choosing Virgin Atlantic, they were faced with limiting general interest
and revenue within the association.
Unemployment: Virgin Atlantic faces job losses due to the massive impact of COVID-19,
as their massive freedom and overall productivity decline in their avionics business cuts a
precious open door in the organization in the first place. In any case, after long hours, people
working in this field work less, gradually changing their mission so that they can obtain and
continue to live a quality life. If organizations are centred around simple activities, they can
reduce general work and eliminate unemployment within the association. It also helps to work
better, so they can guarantee higher benefits in the association (Wang and et.al., 2021).
Passenger comfort and experience: The aviation industry is aid-driven, and its prosperity
is based on the general inclination of travellers. The test Virgin Atlantic is looking for is that in

the end there are no identical passengers and customers on a particular flight segment will
always be disappointed, so this has prompted the organisation to ensure that the airline's terminal
routes are consistent, exceptional safety and no issues as well as Simple customer service and
that's just the tip of the iceberg.
Virgin Atlantic was ordered to restart its management by using all safety measures so they
could avoid adversely affecting the health of avionics within the association. Different
companies also support the organization with subsidies so that they can continue their
management normally and can offer different job opportunities within the market. In this way,
they can help the organization and the public, as sufficient vacancies contribute to better
expectations of personal comfort on a daily basis, and they can properly guarantee better
management for travellers, thereby guaranteeing their more interests.
CONCLUSION
As can be seen from the above report, macroeconomics is the study part of design, economy
and overall economic operation. There are different variables that affect businesses and the
general use of the economy, such as unemployment, expansion, and money spending. The
monetary life cycle facilitates the enjoyment of understanding and control, utilizing many
different variables in monitoring. Financial and monetary related policies estimate the progress
of cash and provide individuals with pre-determined loan fees so that they can guarantee the
simple operation and process of cash within the market. The aviation industry is facing huge
repercussions as they face rising fuel costs because of the large number of companies working in
similar industries. Additionally, mandated organizations take advantage of better governance
structures, and they can keep up with labour and product advancements in the marketplace,
thereby guaranteeing better outcomes for the coming year.

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