Pluna | commercial plan

Pluna Líneas Aéreas Uruguayas S.A.

Review of commercial plan & bankruptcy exit strategy

With bankruptcy on the horizon and as a condition for financing, the initial task was to evaluate the robustness of the Pluna business plan post bankruptcy emergence. However, despite assurances to restore the airline to profitability post-bankruptcy, our independant review & vetting of the commercial details of the plan suggested otherwise. Subsequently, we were tasked with re-working the commercial plan to determine if revenues could be improved enough to support re-investment into the airline.

Project requirements & Project undertakings:

Prepare a review of the existing Pluna business/commercial plan, including a detailed evaluation of assumptions & the probability of meeting forecasted revenue (and cost savings) targets, specific to:

Network Optimization
Schedule
Alliance Strategy
Hub Connectivity
Product Design Review
Advertising & Promotion
Frequent Flyer Program

Stage 2 required a re-working of the commercial plan, including new revenue (and cost savings) forecasts. This exercise was undertaken in light of heavy cash burn and a greater operating deficit than reported (due in part to recent fleet additions, and hidden losses in previous years due to non-payment of some fuel expenses).
The severity of the financial situation required an extensive audit; which culminated in numerous recommendations & changes to the plan that would make Pluna a more viable company going forward.

Select project findings / outcomes:

Competitive actions by subsidized airlines resulted in losses on various routes that formerly were profitable.
Lack of alliances, or airline partners, meant key International routes could not gain share and remained unprofitable.
The fleet plan resulted in the wrong equipment flying on key routes, (driving profitability downwards).
Their obsession on ancillary revenue led to poor service and ignoring their brand decline in the small country of Uruguay. Mismanagement of their pricing and yield management cost them revenues and fixes were too late to reverse.
The final conclusion was the airline needed a surge in investment and a total change in its commercial and customer plan if it was to survive
Without a government aid or investor refinancing the airline ran out of cash and shut down two months later.
The message? A US style LCC approach doesn’t work in all markets