Final presentation of strategic management of airline simulation

1. Royal Absolute
Airlines
EREN KONGU
PAMELA GUTIÉRREZ
PALOMA PÉREZ
TANGUY ROUSSEAUX
RAÚL MARKOS
GEOFFROY BESLIN
JAVIER SÁNCHEZ

2. Index
I) Overview
II) Operations
III) Marketing
IV) Sales
V) Human Resources
VI) Finance
VII) Recommendations

3. Organizational Chart

4. Vision: We believe that travellers deserve the best.
Mission: Providing the best flying experience to our
customers.
Strategy: Luxury Standard.
Slogan: An Absolute pleasure!

5. STRENGHTS WEAKNESSES
• Good organization.
• Relevant worksheets and records.
• Great team cohesion
• First in Quality.
• First in Reliability.
• Proper fare sales.
• Adequate routes positioning.
• More and more stable financial
statements.
• Double designation with a major
airline.
• No dividends paid yet.
• High cumulative net income.
• Low employees’ compensations.
• Three standard companies already in
the region.
OPPORTUNITIES THREATS
• We are they only standard-luxury
company.
• Market shows potential good
trends.
• Monopoly in market R.
• Royal Absolute Airlines in top 3.
• Phoenix and Blue Wings in markets D
and E.
• Skyline in routes 6F, 14F, 29F.
• Flash in route 16F.
• High prices pressure.
• Increase in fuel price, cost per mile,
insurance.
• Considerable marketing pressure.
• Volatile demand.

6. Recommendations
SHORT TERM LONG TERM
• Focus on advertising (Q9 & Q10)
& promotion (Q11) .
• Giving priority to internal
employees rather than external
people for new jobs positions.
• Keep the capital leasing.
• Maintaining our $0,39 ticket
price.
• Keep the trend of positive net
income.
• Considerably increase our Cash.
• Increase passenger load on
markets F & R.
• Reach break even point in 4D,
7E & 14F.
• Strengthen our brand
notoriety/awareness.
• Continue to be the best
employer of the industry.
• Maintain our 0% employee
turnover.
• Increase our total market share
to 25%.
• Be the leader in market F & R.
• Enter market A.
• Close markets D & E.
• Keep our Standard luxury
strategy.
• Get positive cumulative net
incomes
• Pay dividends.
• Reduce operating costs.
• Increase our stock price.

7. Operations:
Aircraft Schedule
Aircraft Type Quarter AircraftDaily Flights Total Miles max Miles
Embraer Brasilia 1 1 4 1 580 2000
2 2 7 3 020 4 000
3 2 9 3 780 4 000
Embraer ERJ135 4 2 12 4 800 4 800
5 2 12 4 780 4 800
6 2 11 4 780 4 800
7 2 10 4 400 4 800
8 2 11 4 820 4 800
0
1,000
2,000
3,000
4,000
5,000
6,000
1 2 3 4 5 6 7 8
Total Miles
max Miles

8. Fleet Decisions
Quarters Decisions taken
0  Sell 3 Beechcraft 1900
 Lease 1 Embraer Brasilia
1  Lease 1 Embraer Brasilia
2  Keep our 2 leasing Embraer Brasilia
3  Terminate to lease 2 Embraer Brasilia
 Capital Lease of 2 Embraer ERF 135
4  Keep our 2 capital lease Embraer ERJ 135
5  Keep our 2 capital lease Embraer ERJ 135
6  Keep our 2 capital lease Embraer ERJ 135
7  Keep our 2 capital lease Embraer ERJ 135
8  Keep our 2 capital lease Embraer ERJ 135

9. Maintenance
0
1
2
3
4
Maintenance Decisions (cost $ per aircraft
per quarter)
Maintenance Decisions
(cost $ per aircraft per
quarter)
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
Passenger Service
Costs ($)
Maintenance Costs
($)

10. Insurance
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
1 2 3 4 5 6 7 8 9
Insurance

11. Fuel
General Increase: 0,14 USD Average Increase: 0,02 USD Assumed Increase: 0,02 USD
0
0.2
0.4
0.6
0.8
1
1.2
1.4
Q 0 Q 1 Q 2 Q 3 Q 4 Q 5 Q 6 Q 7 Q 8
Fuel Spot Price
Fuel Contract

12. Operating Expense
-1,000,000
-500,000
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
1 2 3 4 5 6 7 8 9
Operating Expense
Operating Profit and
Loss
-80%
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
1 2 3 4 5 6 7 8 9
ROAD in %

13. Load Factor
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
1 2 3 4 5 6 7 8 9
Load Factor
Break Even

14. Marketing

15. Marketing Investment

16. ROM Evolution

17. Seats Sold

18. Sales
17%
4%
6%
7%
10%
17%
16%
15%
16%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Q0 Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8

19. Market Share
Absolute,
16.27%
Phoenix ,
16.21%
Blue Wings,
18%Skyline,
10.72%
UFC, 19.14%
Flash, 19.66%

20. 4D
Absolute
36%
Phoenix
31%
Blue Wings
33%
Absolute Phoenix Blue Wings

21. 7E
Absolute
41%
Phoenix
24%
Blue Wings
35%
Absolute Phoenix Blue Wings

22. 14F
Absolute
62%
Skyline
38%
Absolute Skyline

23. 26F
Absolute
62%
Skyline
38%
Absolute Skyline

24. 16F
Absolute
38%
Flash
62%
Absolute Flash

25. 6F
Absolute
61%
Skyline
39%
Absolute Skyline

26. 100% Market Share in
routes 19F, 17R and
20R

27. Market Flights
Available
seats
Seats sold
Passenger
Load
Breakeven Variation Fare
4D 2 74 41 55,40% 60,04% -4,64% One month
6F 1 37 23 62,20% 60,04% 2,16% One month
7E 2 74 42 56,80% 60,04% -3,24% One month
14F 1 37 21 56,80% 60,04% -3,24% One month
16F 1 37 23 62,20% 60,04% 2,16% One month
17R 1 37 28 75,70% 60,04% 15,66% One month
19F 1 37 25 67,60% 60,04% 7,56% One month
20R 1 37 28 75,70% 60,04% 15,66% One month
26F 1 37 24 64,90% 60,04% 4,86% One month

28. Human Resources:
Employee Turnover
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8

29. Training Budget
1000
2000
4333
10500
14750
16250
20167
23333
26333
1000
2000 2000
20000 20000
22000
24000 24000
27000
0
5000
10000
15000
20000
25000
30000
Q0 Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8
Average Industry Training Budget Absolute Budget

30. ROI of HR Budget
Q0 Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8
Average Industry ROI 21.23 -64.97 -27.54 -12.46 -10.21 -0.50 7.34 4.05 2.99
Absolute ROI 21.23 -185.47 -284.21 -28.08 -41.73 -5.75 14.38 7.04 6.31
-350.00
-300.00
-250.00
-200.00
-150.00
-100.00
-50.00
0.00
50.00
100.00
Absolute ROI Average Industry ROI

31. Finance:
Evolution of Net Income &
Gross Revenues
-1,500,000
-1,000,000
-500,000
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
Q0 Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8
Evolution
Gross Revenues Net Income

32. Finance ratios

33. Finance ratios

34. Finance ratios

35. CDs
0
200000
400000
600000
800000
1000000
1200000
1400000
1600000
1800000
Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8
Invested in CDs
Net cash of Quarter

36. Balance Sheet
Efectivo $85,785
Inversiones a corto plazo $0
cuentas por recibir $596,304
Activos Circulantes Totales $682,089
Coste Aeronave $2,500,000
Menos Depreciación -$800,000
Neto Aeronave $1,700,000
Instalaciones/Equipo-Neto $100,000
Total Activos Fijos $1,800,000
Total Activos $2,482,089
cuentas por pagar $344,070
Préstamos a Corto Plazo $150,000
Total actual de pasivos $494,070
Préstamos a Largo Plazo $300,000
Pasivo Total $794,070
acciones comunes $1,500,000
Beneficio Acumulado $188,019
Total Capital $1,688,019
Total Pasivo & Capital $2,482,089

37. P&L Ingresos Brutos $1,490,761 100.0%
− Comisiones $135,659 9.1%
− Reembolsos $119,260 8.0%
+ Ingresos por Intereses $0 0.0%
Ingresos Netos $1,235,842 82.9%
Operaciones de Vuelo $293,299 19.7%
Combustible $225,253 15.1%
Mantenimiento $254,192 17.1%
Servicio al Pasajero $195,532 13.1%
servicio de comida de
cabina
$0 0.0%
Seguro $10,260 0.7%
Gastos de Marketing $5,000 0.3%
añadir Compensación
Empleados
$0 0.0%
Calidad y Formación $1,000 0.1%
Contratación/costos de
entrenamiento
$24,000 1.6%
presupuesto de labor
social
$0 0.0%
Coste de Investigación de
Mercados
$31,000 2.1%
Gastos de Intereses $10,500 0.7%
Pago Alquiler $0 0.0%
Gastos Administrativos $100,000 6.7%
Depreciación $48,750 3.3%
Otros Gastos $0 0.0%
Gasto Total de
Operaciones
$1,198,786 80.4%
Pérdida/Ganancias
Operativa
$37,056 2.5%
Beneficios Netos Carga $0 0.0%
Otros Ingresos $0 0.0%
Beneficios Antes de
Impuestos
$37,056 2.5%
Menos Impuestos sobre la
renta (40%)
$14,822 1.0%
Beneficios Netos $22,234 1.5%
dividendos pagados $2,000 0.01/sh

38. Cash Flow Statement
efectivo a principio de periodo $93,521
redención de CD $0
ingresos brutos (60%) $894,457
cuentas por recibir $427,018
acciones vendidas $0
recursos de préstamo $0
otros ingresos $0
ingreso de efectivo totales (a) $1,414,996
comisiones + reembolsos $254,919
gastos operacionales (70%) $805,966
cuentas por pagar $245,504
impuestos sobre la renta $14,822
pago de préstamo $6,000
compra de CD $0
dividendos $2,000
compra de maquinaria $0
total de salida de efectivo (b) $1,329,211
efectivo neto (a)-(b) $85,785
préstamo de sobregiro $0
efectivo al final de periodo $85,785

39. Dividends
-2500000
-2000000
-1500000
-1000000
-500000
0
500000
Q0 Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8
Cummulative Net
Income

40. Stock Price
$-
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
$40.00
$45.00
$50.00
Q0 Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8
Stock price