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Medium Profitability

Sardine Airlines

#Transportation
ProHub Comment

This case teaches candidates to identify the root causes of profitability decline by analyzing financial statements and expense breakdowns systematically. The interviewer deliberately constrains certain solutions (marketing and maintenance) to test whether candidates can synthesize multiple perspectives and trade-offs. The case emphasizes the importance of focusing on quantifiable cost drivers rather than pursuing high-impact but restricted options.

Estimated Time 15 minutes
Difficulty Medium
Source Duke
50 / 100
Sardine Airlines is an ultra low-cost carrier with flights throughout the continental United States. They have hub airports in Oakland, California; Tulsa, Oklahoma, and Hartford, Connecticut. Sardine Airlines is facing increased pressure from other low-cost carriers such as Cattle Car Air and Soul Airlines. Sardine Airlines has faced declining profit for the past year. Sardine’s CEO, Penny McPincher, has asked your team for advice on how to reverse the profitability trend.

Clarifying Information

  1. Sardine Airlines competes primarily on having the lowest cost fares and offering minimal service
  2. Due to its business model Sardine Airlines has a culture of cost savings that can be passed to the customer
  3. Sardine Airlines is trying to grow profit margin to 20% (profit margin is net income/total revenue)
  4. If the interviewee asks about revenues/costs, give them Exhibit 1, Statement of Operations