Turnaround – Aviation – Regional Airline

Background
A group of small Third level airlines had been merged together through the receivership process of one of them. The group was then sold to a businessman with aspirations to compete against the national carrier.
The Airline was losing money and sales were dropping. The ROI was negative. The assets were old but the staff enthusiastic and skilled. We were given the task of either turning it around, selling it off or closing it down.
There were no buyers in the market at the time.

Key Issues
  • Good Governance, excellent Chairman, owner absent
  • Creditability with financiers tied to Owners other companies
  • Owner purchased the Airline against his Board advice
  • Underutilised and aged equipment which was leveraged and not the preferred size for the market volume or the consumers personal preference (they do not enjoy small planes)
  • Declining sales and margins
  • Over capacity on thin routes and under capacity on profitable routes
  • Management reporting especially the reservation system was poorly understood and utilised
  • Tired brand
  • Great staff, committed to good service
  • Most routes incurring trading losses and draining cash from the business.
Key Initiatives
  • Implemented strict cash flow management and aggressive stakeholder management
  • Increased sales volume, prices and margins
  • Negotiated payment plans with major creditors
  • Restructured branch and refocused business and timetable around the most profitable routes
  • Focused management on revenue, yield management and plant utilisation.
  • With new cash generated kept in business, invested in start of the art international reservations system, thereby opening the Airline up to interlining with International carriers
  • Created a Regional Airline alliance of third level airlines to cover the country
  • Upgraded aircraft, branches, uniform and staff training 
Outcomes
  • Cash positive
  • Increased ticket margins and passenger volumes lead to Monthly profitability
  • Increased volume of high value Business travellers
  • Value of Airline increased markedly
  • Two international airlines bid to purchase
  • Airline sold at a substantial profit on the Owners investment.

Contact us today to discover how we can deliver results for you.

Turnaround – Engineering – Marine

Background
A  Boat manufacturer with a previously dominant brand in the market had been purchased by a small family based venture fund.
An expectation of increased market size post America’s Cup led to Directors and GM increasing production significantly as the major strategy. In order to shift this extra production the ex GM dropped margins, added sales staff and increased discounting.

Sales to consumers dropped, this continued in a year in which sales to the dealers increased but margins and thus profitability fell substantially.The ROI was negative. The assets were old but the staff enthusiastic and skilled.

At this point we were appointed and given the task of either turning it around, selling it off or closing it down.

Key Issues
  • Market had contracted sharply after purchase of company
  • The Board had adopted a strategy of significantly increasing production in order to drive down per boat costs and gain market share
  • The company pushed stock into its distribution channels by giving Dealers  large discounts
  • Finance companies offered wide floor plans and encouraged increased stock levels
  • Channels became grossly overstocked and dealers unable to buy more at any price as they had topped out their floorplan and stock was not on selling to the consumer
  • Designs outdated and consumer was preferring new designs and new companies
  • Losing market share
  • Large project for a bigger boat was under costed and endured production over runs in terms of time and materials with a subsequent negative effect on P&L and Balance Sheet
  • Declining sales and low margins
  • All dealers overstocked and undercutting each other in order to shift stock and avoid call up of floorplan
  • Beginning of internet based sales enquiry and quoting
  • Customers prepared to shop around on internet and travel nationwide for best price
  • Directors stressed with capital and reputations on the line
  • Directors credibility with Dealers low
  •  
  • Key Initiatives
• Implemented strict cash flow management and Supplier and Dealer management to improve working capital position
• Increased sales volume, prices and margins by finding new distributors at higher prices, and doing boat shows to reach end buyer and support local distributors in shifting excess stock
• Found cost savings in production systems and production times
• Negotiated payment plans and better purchasing prices with major creditors
• Focused management on increasing revenue and yield management whilst improving stock control, expense control and plant utilisation.
• Created a range of larger boats over 30 feet for sale to the Islands and achieved a full order book
• Developed new designs that went on to win awards and sales in both NZ and Australia
• Shifted to new factory to capture production economies

Outcomes
• Increased per boat margins on lower volumes in tune with market demand
• This lead to Monthly profitability
• Increased volume of higher value bigger boats with cash up front and better margins
• New Director joined the Board
• Business value increased
• Company sold to the new Director.

Contact us today to discover how we can deliver results for you.
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