Model answer

For interactive case interviewers only

DRAFT
Slide 1: Overview of Wright Airways

EXAMPLE

• Wright Airways is an established UK carrier operating

short-haul European flights for 10 years
-LHR to Paris
-LHR to Madrid
-MAN to Frankfurt
• The airline runs five different type of aircraft
• Revenue is £449M and operating profit margin is 5%
• The most profitable route is LHR-MAD with 7% margin

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Slide 2: Actions to reduce Wright Airways short-haul costs

EXAMPLE

Fleet Efficient Secondary Business

Fuel costs
management scheduling airports class

• Reduce fleet • Consider fuel • Reduce • Use • Reduce

complexity hedging to turnaround secondary number of
- Lower cost reduce time of airports with high cost
of parts / exposure to aircraft to lower landing business
tools fuel price maximise fees class seats
specific to fluctuations aircraft
aircraft utilisation
type
• Cut down on
• Switch to
number of
lower cost
flights for
aircraft fleet
unpopular /
• Greater fuel unprofitable
efficiency routes

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Workings sheet: Revenue and profitability per round trip
flight
Dallas New York Johannesburg Source
Route length (km) 15,260 11,000 18,000
Number of seats
Economy 250 250 250 Sl 16/17
Business 50 50 50 Sl 16/17
Load factor
Economy 60% 70% 70% Sl 18
Business 50% 70% 60% Sl 18
Ticket price (Round
trip)
Economy 550 500 650 Sl 19 (Average of data pts)
Business 3,600 3,100 3,800 Sl 19 (Average of data pts)
Economy revenue 82,500 87,500 113,750
Business revenue 90,000 108,500 114,000
Total revenue (£) 172,500 196,000 227,750
Leasing 30,000 30,000 30,000
Maintaining 20,000 20,000 20,000
Total fuel costs 68,670 49,500 81,000 Fuel cost / km from col 1 (Dallas) or sl 9
Landing fees 35,000 37,000 33,000
Crew 15,000 13,000 17,000
Total cost (£) 168,670 149,500 181,000
Profit 3,830 46,500 46,750
Margin (% of revenue) 2% 24% 21%
Key: Black – Provided; Red – Calculated; Green – Obtained from Factbase
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Slide 3: New York and Johannesburg are the most
profitable routes

Note: Profit is defined as revenue minus operating costs (all costs listed in this presentation); margin is profit as % of revenue
Source: Bain analysis

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Slide 4: Immediate priority and implications of analysis to
date
EXAMPLE

Immediate priority: Option 2 or 3 (performance improvement)

• What are the implications of Bain’s view on long-haul route profitability?

- Certain long-haul routes (E.g., NY/Jo’burg) are profitable adjacencies that Wright
Airways should pursue
• What impact could recommendations have on the business?
- Significant potential upside from cutting costs in short-haul business
- Top and bottom line growth from expansion into long-haul business
• What does Willy need to do when planning his next steps?
- Minimise distraction to management while expanding the business
• What is Willy going to do differently on Monday morning?
- Begin implementing cost reduction exercise
- Initiate roll-out of long-haul routes
 Check availability of landing slots, source for new fleet, assess the need to
upgrade existing systems

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