BACKGROUND OF THE COMPANY
Northern Airlines merged with Southeast Airlines to create the fourth largest U.S. carrier in January 2008. The new North–South Airline inherited both an aging fleet of Boeing 727-300 aircraft and Stephen Ruth. Stephen was a tough former Secretary of the Navy who stepped in as new president and chairman of the board. Peg Jones on the other hand is the vice president for operations and maintenance.

DEFINE THE PROBLEM
Stephen’s objective is to gear the company’s financial performance towards stability and continuous growth. This made him concern that the aging fleet of Boeing 727-300 aircraft’s maintenance cost may impede realization of this goal.

The significant difference in the reported B727-300 maintenance costs (from ATA Form 41s) both in the airframe and engine areas between Northern Airlines and Southeast Airlines made him to probe through Peg Jones’ assistance on determining the quantitative and graphical report of the following : Correlation of the average fleet age to direct airframe maintenance costs Linear relationship between the average fleet age and direct engine maintenance costs

CASE FACTS AND INFORMATION (INCLUDING LIMITATIONS & CONSTRAINTS) 

In addition to the aging formulas below, Peg constructed the aver...

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