business consulting projects

asset management and negotiation support

mba has supported numerous financial clients to restructure their investments in airline fleets. These projects all revolved around converting debt to operating leases. The results of our advice allowed the clients to restructure their investments and, further, allowed us to gain valuable insight into financial institution requirements for financing.

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business plan creation

mba's Business Consulting Group recently designed and wrote a $1.38 billion business plan and offering memorandum for the United States Air Force.  The business plan was designed to test the feasibility of financing the commercialization of certain US Air Force aircraft.  The plan was presented to members of the financial community on Wall Street and was well received, with commitments of support from the majority of firms visited.  The business plan is the culmination of more than two years of analytical work performed on behalf of the US Air Force spanning such topics as organization structure development, analysis of competition, market analysis, and financing structures.

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economic due diligence

Nature of Work: A global financial institution had reached tentative agreement to place debt into a Russian airline. However, it required clarity on long-term risks and the sustainability of any competitive advantages its airline client possessed.

We were engaged to conduct a top-down risk analysis that included a technical, safety, and business review of the airline’s operations. In doing so, we physically inspected facilities, interviewed management, and analyzed operational and financial data to determine the extent of the business risks in the operation. Finally, we constructed financial models to conduct scenario analysis on various possibilities that included a new fleet, a change in tax laws, a competitive response, and changing traveler trends. The results assisted our client in clearly understanding where the short- and long-term risks resided in its client’s business model.

Results: Our client was able to incorporate its results with its internal review to generate directives to their client on risk mitigation programs that were needed as a precondition for a loan. This in turn, improved the airline’s operations as it allowed it to enhance its competitiveness and gain access to foreign capital.

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due diligence and enterprise valuation

Nature of Work: mba was requested by a financial institution to conduct due diligence and enterprise valuation of an airline debtor as a pre-cursor to a debt for equity transaction.

mba conducted a thorough review of management, operations, and financial records to determine viability of the organization as a going concern. Specifically, we interviewed management, inspected facilities and equipment, and analyzed financials and associated forecasts. Furthermore, we reviewed key management systems within the company to assess overall operational risks.

Once the reviews were completed we conducted a valuation of the airline based on our observations and our opinion of the management forecasts.

Results: mba combined the above activities to determine a holistic enterprise valuation based on discounted cash flow analysis. This valuation was utilized as the basis for the debt for equity transaction that ensued.

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financial and technical due diligence

Nature of Work: mba has been under contract by the United States Export-Import to provide aircraft technical and regulatory due diligence, along with providing airline operational due diligence and financial/operational assessment.

As required by law, The Export-Import Bank must thoroughly review the collateralized exposure that it has with airlines around the world. Tasks include on-site technical inspection and valuation of aircraft fleets, and operational review analysis. These tasks were mandated to determine the operational and technical stability of borrowing airlines.

Final reports included technical review of physical asset and associated records, valuation of asset based on findings and current market analysis. This assessment also covered any current safety or regulatory violations that could impair or undermine asset value.

Results: mba’s final reports provided insight and intelligence for The Export-Import Bank to make the necessary decisions with regards to their fleet and financial exposure around the globe.

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aircraft lease due diligence

mba's Business Consulting Group recently completed a comprehensive program review of an international aircraft lease between a German charter carrier and a US operator. The review included analysis of the operative documents, contracts and and financial statements generated during a two-year pass through cost contract relationship, as well as interviews with key management personnel at both parties to the lease. mba identified more than $4.0 million in unjustified withholdings and accruals relating to the pass through cost contract.

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financial projects

due diligence and enterprise valuation of an airline debtor

mba was requested by a financial institution to conduct due diligence and enterprise valuation of an airline debtor as a pre-cursor to a debt for equity transaction. mba conducted a thorough review of management, operations, and financial records to determine viability of the organization as a going concern. Specifically, we interviewed management, inspected facilities and equipment, and analyzed financials and associated forecasts. Furthermore, we reviewed key management systems within the company to assess overall operational risks. Once the reviews were completed we conducted a valuation of the airline based on our observations and our opinion of the management forecasts. mba combined the above activities to determine a holistic enterprise valuation based on discounted cash flow analysis. This valuation was utilized as the basis for the debt for equity transaction that ensued.

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identification of long-term risks and competitive advantages

mba was engaged by a global financial institution, which had reached tentative agreement to place debt into a Russian airline. However, it required clarity on long-term risks and the sustainability of any competitive advantages its airline client possessed. We were engaged to conduct a top-down risk analysis that included a technical, safety, and business review of the airline’s operations. In doing so, we physically inspected facilities, interviewed management, and analyzed operational and financial data to determine the extent of the business risks in the operation. Finally, we constructed financial models to conduct scenario analysis on various possibilities that included a new fleet, a change in tax laws, a competitive response, and changing traveler trends. The results assisted our client in clearly understanding where the short- and long-term risks resided in its clients business model. Our client was able to incorporate its results with its internal review to generate directives to their client on risk mitigation programs that were needed as a precondition for a loan. This in turn, improved the airline’s operations as it allowed it to enhance its competitiveness and gain access to foreign capital.

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asset management projects

asset management and negotiation support

mba has supported numerous financial clients to restructure their investments in airline fleets. These projects all revolved around converting debt to operating leases. The results of our advice allowed the clients to restructure their investments and, further, allowed us to gain valuable insight into financial institution requirements for financing.

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valuation / appraisal projects

Aero Flight
Aero Lloyd
Air France
Airtrails GMbH
American Airlines
ArkRoyal Int'l Airways
Atlas Air Worldwide Holdings
Continental Airlines
CS Aviation
Delta Air Lines
Far Eastern Air Transport
Gemini Air Cargo
Iberia
Kuwait Airways
Northwest Airlines
Onur Air
Shorouk Air
TranAsia Airways

 

aircraft damage inspection for legal support

Performed inspection and due diligence research on aircraft that incurred damage as a result of operations or acts of god.

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aircraft engine appraisals

Performed numerous appraisals of transport category aircraft engines of every generation in support of sales, leases and securitizations.

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aircraft records audit for faa compliance

Performed numerous audits of aircraft technical records in support of sales, leases and securitizations.

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airline route appraisals

Performed numerous appraisals of transport category aircraft and engine spare parts of every aircraft generation in support of sales, leases and securitizations.

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appraisal of aircraft spare parts, ground support equipment and airline shop tooling

Performed numerous appraisals of transport category aircraft and engine spare parts of every aircraft generation in support of sales, leases and securitizations.

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etc & eetc appraisals

Performed numerous appraisals of transport category aircraft and engine spare parts of every aircraft generation in support of securitizations.

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safety / regulations projects

aircraft technical and regulatory due diligence

mba has been under contract by the United States Export-Import to provide aircraft technical and regulatory due diligence, along with providing airline operational due diligence and financial/operational assessment. As required by law, The Export-Import Bank must thoroughly review the collateralized exposure that it has with airlines around the world. Tasks include on-site technical inspection and valuation of aircraft fleets, and operational review analysis. These tasks were mandated to determine the operational and technical stability of borrowing airlines. Final reports included technical review of physical asset and associated records, valuation of asset based on findings and current market analysis. This assessment also covered any current safety or regulatory violations that could impair or undermine asset value. mba’s final reports provided insight and intelligence for The Export-Import Bank to make the necessary decisions with regards to their fleet and financial exposure around the globe.

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insurance projects

technical due diligence

mba has provided technical due diligence by an airline wishing to claim for damage done to an aircraft by a ground operating company. mba was able to successfully assist the airline in assessing damage costs and provided the technical expertise to be awarded the necessary claim amount to sufficiently repair the aircraft.

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portfolio assessment for debt exposure

mba provided financial assistance to an insurance company that held a debt position on a portfolio of aircraft. mba assessed the portfolio and its aggregate value along with modeling out the correct debt exposure based on a triggering event of the waterfall. mba was able to assist the company in realizing its current position allowed it plan accordingly.

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legal projects

on-site inspection of the damage and provided deposition support

mba was mandated to provide expert witness support for an aircraft destroyed during a catastrophic event during storage. mba assessed the aircraft through an on-site inspection of the damage and provided deposition support as to the cost of damage and required repair, and loss of economic value.

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airline projects

technical due diligence (airline support)

mba has provided technical due diligence by an airline wishing to claim for damage done to an aircraft by a ground operating company. mba was able to successfully assist the airline in assessing damage costs and provided the technical expertise to be awarded the necessary claim amount to sufficiently repair the aircraft.

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strategy analysis for fleet disposition

mba was mandated by a major U.S. airline to provide a strategy analysis for fleet disposition. This particular airline was concerned about how to orderly remove a specific fleet type from their regional carriers. mba provided a complete fleet review for this particular aircraft type and advised on multiple scenarios and potential purchasers of this aircraft type. The fleet analysis allowed the airline to forecast an appropriate removal schedule and prepare the aircraft for remarketing.

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start-up carrier business plan review

mba was mandated by a large European carrier for a business plan review of a new start-up outside their current area of operations. mba advised the carrier on strategies and ownership regulations and requirements for this new airline and provided a viability analysis and an operational and financial forecast for the envisioned new airline.

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maintenance cost analysis

mba was mandated by a European airline to understand why their maintenance costs were significantly higher than those of their chief competitors. Especially significant to our client was that their competitors both used the same vendor for the bulk of their heavy airframe maintenance. Members of our team were contracted to provide analysis and benchmarking of our client’s maintenance costs. The benchmarking study highlighted that significant portion of the differences between the client and their competitor’s maintenance costs were attributed to reporting practices. The source of the remaining differences were addressed by restructuring their maintenance department and implementing new cost saving initiatives.

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review and analysis of airline loyalty program

mba was engaged to assess a client’s loyalty program which had just completed three years of operations. Management of the loyalty program felt it critical to begin to understand customer behavior, segments, and values as they had amassed significant data on the travel patterns. A study of the above would form the basis of customer retention and acquisition efforts. Furthermore, it would help define entry strategies for new markets. During this process we identified specific markets and segments that had previously been neglected. Our findings validated existing conceptions of traveler habits that allowed management to continue and scale existing initiatives appropriately. Additionally, the results allowed our client to either initiate or change some marketing tactics to better fit the needs of their customers. Our client has accepted our recommendations, prioritized the initiatives and is in the process of implementation.

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airport projects

traffic assessment and market strategy (airport support)

mba was engaged by a state airport authority to assess current potential traffic and provide strategy as to how to market its airports in light of airlines shifting away from regional airports. mba provided a report detailing historical developments of smaller, non-hub, cities airports and a strategy on how to move forward. mba was also invited to speak at a symposium to discuss its findings and results of its analysis.

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government projects

airline operational due diligence and financial/operational assessment

mba has been under contract by the United States Export-Import to provide aircraft technical and regulatory due diligence, along with providing airline operational due diligence and financial/operational assessment. As required by law, The Export-Import Bank must thoroughly review the collateralized exposure that it has with airlines around the world. Tasks include on-site technical inspection and valuation of aircraft fleets, and operational review analysis. These tasks were mandated to determine the operational and technical stability of borrowing airlines. Final reports included technical review of physical asset and associated records, valuation of asset based on findings and current market analysis. This assessment also covered any current safety or regulatory violations that could impair or undermine asset value. mba’s final reports provided insight and intelligence for The Export-Import Bank to make the necessary decisions with regards to their fleet and financial exposure around the globe.

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military projects

US airline industry in support of national defense

mba lead a Department of Defense Integrated Product Team consisting of government and industry professionals tasked to develop Civil Reserve Air Fleet (CRAF) participation incentives. CRAF is a critical program for the nation’s defense, providing the military with 50 percent of its international air cargo capability and over 90 percent of its troop air transport capability. In the first phase of a project mba identified the challenges confronting the US airline industry and the impact on national defense capability and readiness. The project team developed options for the Secretary of Defense under a wide range of future scenarios, using a decision support model to identify the most effective and feasible solutions verified through a model of airline economics. Focus groups and various independent analyses were used to ensure that the project was the results of a collaborative effort between DoD and the US airline industry.

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federal government - scheduled air travel

For the Department of Defense, mba lead a comprehensive review of the General Services Administration’s government wide purchase of scheduled airline tickets and how this program impacts on the military and airline industry. Concerns affecting the airline industry included an assessment the government’s procurement practices on the profitability of the airlines, the impact of the government’s requirements on the industry’s current method of managing seat sales and pricing. Both Government and industry had a stake in a review of last-seat availability policies and group travel cancellation policies. Important to DoD was the program’s role in establishing eligibility for Civil Reserve Air Fleet (CRAF) participation and the service level of service provided for DoD travelers. The result of the study presented findings and recommendations to the DoD.

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foreign investment in US airlines

The U.S. aviation industry’s desire to access global sources of capital has continued to trigger the assessment of current government policies that limit the amount of foreign investment in U.S. airlines. Growth in international airline alliances and code-share agreements has accelerated the globalization of the airline industry. mba was contracted by DoD to develop strategies to mitigate the impact on national defense should U.S. airlines come under increased foreign ownership and control regimes. mba lead a study team composed of DoD, DOT and outside experts in international aviation matters. The strategies developed by the team addressed a spectrum of foreign investment regimes from status quo to the removal of all restrictions.

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mba | morten beyer & agnew

 

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