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BCG Hard Merger & Acquisition Growth Strategy Financial Analysis

GREEN AIRLINES

#Transportation

Practice this advanced merger & acquisition case interview question from BCG in the Transportation sector. Includes detailed problem prompt, clarifying questions, structured framework, and expert recommendation. Part of ProHub's 835+ consulting case library.

ProHub Comment

This is a sophisticated case requiring candidates to move beyond surface-level financial analysis. While the revenue calculations appear favorable ($10M/month), the real strategic challenge lies in understanding why a small regional airline should enter a highly competitive market dominated by larger carriers, and how to create value through a buy-operate-sell strategy rather than long-term operations.

Estimated Time 36 minutes
Difficulty Hard
Source IESE
52 / 100
Due to the recent bankruptcy of a major airline, the aviation authority from Brazil recently opened an auction for landing and takeoff slots in one of the country’s biggest airports. A slot is the right to land and depart from an airport during a given period of time. Green Airlines, a small, regional airline operating in the North part of the country, was offered 10 slots, for the total price of $100M. If Green accepts to buy the slots, it would have to operate them for at least 5 years. The owner and CEO of Green Airlines approached your firm looking for an advice on whether they should buy the slots or not.

Clarifying Information

  1. An airport slot is a permission granted by the owner of an airport designated, which allows the grantee to schedule a landing or departure at that airport during a specific time period.
  2. Green airlines currently does not operate in that particular airport
  3. Green airlines currently only does regional flights and has no plans to include international flights in its offerings
  4. Green airline currently does not have the necessary planes to operate the slot. Management will need to lease 5 airplanes to operate the 10 slots.
  5. The $100M that Green Airlines would have to pay is a one-off payment due before operations start
  6. The main objective of the owner/CEO is financial gain
  7. Green Airlines can sell the slots, but only after five years of operation
  8. If Green Airlines does not buy the slots, they will be sold to another airline
Mock Interview
Interviewer

Due to the recent bankruptcy of a major airline, the aviation authority from Brazil recently opened an auction for landing and takeoff slots in one of the country's biggest airports. A slot is the right to land and depart from an airport during a given period of time. Green Airlines, a small, regional airline operating in the North part of the country, was offered 10 slots, for the total price of $100M. If Green accepts to buy the slots, it would have to operate them for at least 5 years. The owner and CEO of Green Airlines approached your firm looking for an advice on whether they should buy the slots or not.

You

Thanks. Before analyzing, I'd like to clarify a few key questions...

Interviewer

Good question. Let me provide some background information...

You

Based on this, I suggest analyzing from these dimensions...

AI Score
Structure Analysis Communication Business Sense Quantitative
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Practice this case with AI Mock Interview

Green Airlines, a small regional carrier, must decide whether to invest $100M to purchase 10 airport slots at a major Brazilian hub, requiring 5-year mandatory operation. The case tests candidates’ ability to evaluate market entry feasibility, operational capabilities, competitive positioning, and financial returns through a time-bound arbitrage play rather than organic expansion.

Key Insights:

  1. The case solution requires recognizing that buying-to-operate-and-resell creates more value than operating the slots directly, given Green Airlines’ competitive disadvantages
  2. Candidates must analyze the strategic fit between Green’s regional operations and a major metropolitan airport dominated by larger carriers with better economies of scale
  3. Financial modeling should incorporate both revenue potential ($120M annually) and the constraint that slots can only be resold after 5 years, creating an implicit valuation opportunity
  4. The case highlights the importance of exploring alternative value creation mechanisms when direct business models don’t align with core competencies

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