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Airline Restructuring, Commercial Airliners, Low Cost Airlines, UPDATES

UPDATE: India’s LCC Spicejet was grounded today, due to fuel now being COD (cash on delivery), the writing has been on the wall for 5 quarters, action was taken too late, and yet the airline still ordered $US 4.2 billion worth of 42 Boeing B737-8MAX aircraft in March ! The Indian market is high risk for any local airline and off course for any lessor or OEM planning to deliver aircraft into the market and why troubled companies need to acknowledge there is a problem as soon as possible, then diagnose the problems and deal with them right away, do not ignore them, or pay the price of failure.

As expected LCC Spicejet is grounded, its fate is unknown at this time, but very doubtful it will fly again, surely all lessors of the B737-800/900ER’s and Q400’s are there now, looking to get their assets out.

spicejet-2

There are 15 x Bombardier Q400’s with Spicejet, and up to 39 Boeing B737-800/900ER’s scattered around the country, another repo nightmare in India.

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While it has potential, India is a very risky place to have an airline or aircraft, there will be more casualties to come, joining a long list of failed airlines covered in my blog of December 5th.

In previous discussions on my blog, I have always said that the first step to solving a problem is to acknowledge there is a problem. My years spent helping operators restructure/turnaround their business have shown me that the biggest problem is for executives to acknowledge problems within their companies. Without that acknowledgement, you cannot get to determining what is causing the problems, be they symptoms or causes of decline.

My Blog is called Aviation Doctor for a reason, it is how I have seen my work over the past 25+ years, diagnosing a company looking at symptoms of decline and determining the appropriate ‘medicine’ to deal with symptoms and causes of decline. Companies need to create a culture that encourages employees to speak out and raise red flags, instead of ignoring problems. I recently worked with a company well positioned in its market for years, yet as the outsider I could see the symptoms of future decline, the company was blind to its standing in the market, myopia settled in and it believed all was good within, time will show decline, but for now it is ignored by owners and management while competitors grow stronger.

Look, we all wish everything was perfect in our lives, but rarely is that so, the same applies in business and you need to deal with problems right away as problems do not take care of themselves, all problems are a priority and they are signs of something broken, ignore the problems and you risk your business’s future. A business can go from being the king in its market to bankruptcy real fast, I have seen it too many times.

Some points to think about:

1. Every business has problems, its just the severity of the problems that differs.

2. We live in a fast changing market, what worked at one time, may not work in the future, you need to constantly adapt and change your strategy, business model, marketing and offering.

3. When problems are identified, most companies just ignore them or do some ‘bandage’ solution that works for a short while and then hell breaks loose.

4. It takes time for a company to get into trouble and it takes even more time to get out of trouble, the sooner you start to fix the problems the easier and quicker you will fix the problems.

5. You need a corporate culture of encouraging employees, customers and suppliers to speak up, and see your business from different perspectives not just seeing what you want to see.

In Spicejet’s situation it took 5 Quarters of loses before major changes to capacity and network were introduced, to order $4.2 billion worth of aircraft and not deal with the current problems was foolish, again seen it all before, too many executives in this business are not capable of making change, day to day operations are fine, but to change direction of a company takes skills, boldness and energy that many do not have.

Thanks again for your interest.

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About Aviation Doctor - Helping aviation companies to transform the present into a more profitable tomorrow

I am a Canadian and EU national with an MBA and 33+ years experience in aviation business development with 20 years overseas and work in 25+ countries. A former investment/merchant banker (mergers and acquisitions to corporate turnarounds). airline and OEM senior executive and past owner of 6 successful aviation companies in 3 countries (executive jet charter/management companies, aircraft sales, aircraft broker, airline/aerospace consulting to aircraft insurance). I have a very diverse aviation background with 75+ aviation companies (45+ airlines of all sizes, OEM's, airports, lessors, MRO to service providers) as consultant, executive management, business analyst and business development adviser. Excellent success track record in International Business Development. Most work with airlines is with new start-ups and restructuring of troubled carriers. I sold new business jets, turboprops and helicopters for Cessna, Raytheon, Gulfstream to Eurocopter as an ASR as well as undertaking sales and marketing of commercial aircraft for Boeing, de Havilland, Dornier, Saab and Beechcraft. Brokered everything from LET-410's to B747's and from piston PA31 to G550 business jets. I look beyond the headlines of the aviation news and analyze what the meaning and consequences of the new information really means. There is a story behind each headline that few go beyond. Picked the name Aviation Doctor, as much of my work has been with troubled companies or those that want and need to grow profitably. I fix problems be in the business, and help with restructuring for a better tomorrow. You can reach me with comments or suggestions at: Tomas.Aviation@gmail.com and I comment a lot on Google+, my Facebook and LinkedIN.

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