In addition to catastrophe and operational risks like e.g. the terrorist attacks on the World Trade Center airlines are exposed to substantial capital market risks. This study examines the cases of three major airlines including Lufthansa, United Airlines, and Qantas. Their risk profiles are analyzed with respect to commodity and exchange rate risks by applying the “Earnings at Risk”-concept to the profit and loss statements of the year 2003. Furthermore, potential hedging strategies are explored. It turns out that airlines are especially sensitive to movements of the oil price. However, hedges can provide (partial) protection against adverse movements of the risk factors.
This paper addresses the capital requirements based on the RiskMetrics™ framework and the BIS standard model. A case study is developed which shows that the capital requirements can be reduced by applying the more accurate RiskMetrics™ framework. Furthermore it gives an overview of the capital requirement rules for credit risk and operational risk in the Basel II Accord.
Worker participation has been subject to controversial debate in Europe. Although the member states' traditions in industrial relations and especially in worker participation vary greatly, the Council of Ministers agreed on some directives in this regard, recently: the EWC directive (94/45/EC) and the information/consultation directive (2002/14/EC), and the directive (2001/86/EC) supplementing the Statute for a European Company with regard to the involvement of employees, which emphasises voluntary negotiations between employees' representatives, a so-called special negotiating body, and the management. The latter directive does not only provide information and consultation procedures but also provisions regarding board-level representation. For that reason, the focus of this paper is on the European Company (Societas Europaea = SE). In this context, the fundamental provisions regarding the SE are presented. After discussing some exemplary cases in order to demonstrate the practical implications of this legal initiative regarding employee involvement, some issues arising are examined.