Executive Summary The airline industry is one of the most challenging to operate in. This is due to the various issues, for example, those that affect operations of Air Canada. These challenges include stiff competition from other industry players, the global financial crisis, government regulations, fluctuating world fuel prices, unpredictable weather conditions and volcanoes. Despite these challenges, the airline has been able to develop a strategy which has seen it grow and expand. However, it is vital for Air Canada to expand extensively to other areas in order to exploit new markets to increase annual sales. More so, it is crucial for airline to sign agreements with major credit providers in order to be cushioned against annual losses. Background & statement of the problems/issues The company in the case study is Air Canada, involved in air travel. It is a Canadian company ranked as the fifth largest airline in the world. The airline operates mainly in North America. The company has faced numerous challenges including having been declared bankruptcy in the year 2004, terrorist attacks in America (9/11) and poor relationships with stakeholders. Other problems faced by Air Canada include stiff competition, unpredictable weather, financial crisis and fluctuating world fuel prices. Summary of background/situation Air Canada faces a number of problems in its field of operation, that’s the airline industry. These problems include:  1. A fluctuation in the world oil prices has greatly affected the operations of Air Canada. This has lead to a rise in the ticket prices thus lowering the profits from the airline. This was especially evident during the global recession in 2008. Thus, there was a decrease in tourist in tourist and business travel.  2. Increased competition in the airline industry has been a serious problem to the operations of Air Canada. Some of the rival players in the industry that are eating into the profits of Air Canada include WestJet, Air France-KLM, Air Transat, British Airways and JAL.  3. Unpredictable weather has played a major role in the airline operations. Delays and travel disruptions here are caused by severe thunder showers, snowstorms, severe winds and icy weather. Such delays cause cancellation of flights thus causing frustrations among passengers. The volcano that occurred in April 2010, in Iceland, halted air travels in Europe. This led to cancellation of over 100,000 flights.  4. Government policies in terms of regulation have been a major problem to the operations of Air Canada. These are in terms of high security charges, airport improvement fees and excise taxes charged on fuel. Situation analysis of Air Canada Strengths Formation of alliances by Air Canada has been a major strength to the airline. Air Canada is one of the founding members of Star Alliance. By being a member, Air Canada passengers do connect with other partner airlines who are members of Star Alliance. For instance, passengers in flights who are members of Star Alliance do share airline lounges while in airports world wide. Additionally, the extension of partnerships by Air Canada with United, Lufthansa and Continental to create Atlantic-Plus-Plus is strength to Air Canada. The partnership enables Air Canada to integra