2010 / 2011
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 had resulted in losses on various routes that formerly were profitable.
- Lack of alliance strategy had resulted in poor market inroads on new services to Brazil.
- Poor fleet planning had led to the wrong equipment flying on key routes, (driving profitability further downwards).
- The steadfast focus on ancillary revenue had led to poor customer service, mismanagement of yield management, and pricing disciplines that were almost too late to reverse.
- Unfortunately, the final conclusion was it was too late to turn the airline around (without government support), and therefore no potential debtor in possession financing would be made available.
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