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McKinsey Medium Profitability

Alpha Aviation

#Aviation
ProHub Comment

This case focuses on the profitability of an airline and requires candidates to brainstorm areas of investigation, analyze potential new routes, and evaluate their financial viability. The framework guidance provided offers a good structure, and the focus on calculating CM/ASM is a key element for profitability analysis.

Estimated Time 15 minutes
Difficulty Medium
Source Darden
50 / 100
Your client is a large US - based commercial airline that has lost profitability and market share. The company is under pressure to regain its foothold in the industry and grow its balance sheet. Can you brainstorm some areas you would like to investigate on behalf of the airline?

Clarifying Information

  1. What is the timeline for the project? ASAP – financial investments for the airline typically warrant a payback period of 3 years.
  2. How is the rest of the airline industry performing? Our client’s profitability is declining slightly faster than the industry – but is in line with other airlines within its class of service.
  3. Any specific goals? Take operating margin positive.