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Medium Profitability Post-Acquisition Integration M&A

Rubicon Co.

#Airlines #Transportation
ProHub Comment

This case requires candidates to conduct a detailed financial analysis of pre- and post-acquisition performance, identify cost synergy opportunities, and develop operational recommendations. The case tests both quantitative skills (financial modeling, route profitability analysis) and qualitative thinking (competitive positioning, strategic trade-offs like route discontinuation versus cost reduction).

Estimated Time 15 minutes
Difficulty Medium
Source ROSS
50 / 100
Your client is Rubicon Co, a low-cost airline operating in the US. A couple of years ago, Rubicon Co completed the acquisition of Scarlet Air, an airline based primarily on the West Coast. The post acquisition profits do not meet the executive committee’s expectations, and the CEO of Rubicon Co has brought you in to understand the causes and improve profitability.

Clarifying Information

  1. The CEO wants to increase profit by $100M
  2. Assume Rubicon Co operates a single aircraft type across their fleet with similar seat layouts
  3. Rubicon Co is an all economy airline, not looking to change the business model
  4. At this point Rubicon Co is not looking to expand operations internationally
  5. The industry has remained relatively stable, with single digit profit % growth YoY