Supersonic Jet

ProHub Comment

This case requires candidates to build a financial model calculating daily and annual revenue per jet, then derive the payback period by dividing total investment by annual profit. The key challenge is organizing the given data points (capacity, occupancy, trips, ticket price, profit margin) into a logical calculation sequence while being prepared to discuss the de facto 9-year payback when accounting for the 5-year delivery delay.

Estimated Time 15 minutes
Difficulty Medium
Source PeterK
50 / 100
Our client, one of the top-4 U.S. airlines, is considering purchasing 20 supersonic planes Overture, manufactured by Boom, with a delivery date set for 2029. United Airlines has already ordered 15 of these jets. What’s the payback period for the Overture Supersonic Jets?

Clarifying Information

  1. Exhibit 1. Comparison for the NYC-London Route, 2024
  2. The client plans to offer two round trips for each supersonic jet per day
  3. The Overture’s planned capacity is 78 seats
  4. Projected occupancy rate is 90%
  5. Consider 360 days per year
  6. Expected profit margin is 10%
  7. The list price of the Overture Supersonic Jet is $200M