airBaltic - Airline Restructuring and Fleet Selection
In late 2011/early 2012, Nyras was asked by the newly appointed CEO at airBaltic to help carry out an initial health check on the airline, identify the main strategic options available to the Supervisory Board and develop a long-term business plan. The main areas of focus were as follows:
- Initial diagnostic on fleet and commercial strategy.
- Fleet option recommendations.
- Network restructuring.
- Commercial, financial and fleet-related advice.
We initially worked with the CEO and senior management team to review the current business model, aircraft fleet, lease portfolio and the most recent financial results. Our initial review and diagnostic was developed within the first month and included an assessment of people, processes, systems and product. The output from this work culminated in the presentation of a strategic options analysis together with recommendations for profit improvement, quick wins and urgent fleet to the CEO and Supervisory Board.
Nyras then supported the implementation of fleet-related matters, which included the initial evaluation of a competitive tender process between Airbus, Boeing and Bombardier. We also provided sounding board advice on commercial and financial issues directly to the CEO and CFO during the development of a long-term turnaround plan. Nyras then carried out an in-depth network evaluation that was incorporated into the business plan.
The initial diagnostic enabled the CEO to focus on some quick wins in revenue management, finalising a revamped summer schedule and completing negotiations on various lease extensions and lessor returns in a cost-effective way. Ultimately, the network restructuring recommendations were implemented and resulted in improved efficiency, higher aircraft utilisation, increased connectivity and an immediate US$12m improvement to the bottom line. airBaltic has since implemented its business plan and turned an approximate S$110m loss in 2012 into a profitable business that attracted private investment in November 2015. An order for 20 CS300 aircraft was made, and the first one entered the fleet in December 2016.