Airline and Aviation Infrastructure Restructuring & Recovery
When an Airline (LCC, Regional, Charter, National) is in financial difficulty or is not reaching its potential then an independent analysis is the way forward before committing significant resources to restructure the airline.
IAG has teamed up with Grant Thornton (London) to provide quick and referenced reviews using IAG’s experienced team who have an intimate knowledge of airline and support operations and restructuring, combined with a global accountants input.
This MRO restructure/recovery review is similar to a feasibility study, with the addition of a review of the compliance management system to provides the board/investors with a range of qualified, and referenced options upon which to make decisions on the operational aspects of the MRO along with the financial (possible debt and refinancing) status. Compliance management is often paid lip-service to during corporate re-structuring, it is often seen as a hindrance to the business, where in fact it is keeping the business alive.
Whenever an organisation is considering restructuring or administration, we would strongly recommend that they establish a comprehensive communications plan, addressing both internal and external stakeholders. The message is the same for both groups, the means of delivery and emphasis will vary. Restructuring and uncertainty require the management team to be visible and open.
We propose a three stage cost effective process:
Step 1 – A short professional review to provide options for the board to consider – 4 to 6 weeks duration.
Step 2 – A full top to bottom airline restructure review (similar to a fresh feasibility study) – 10 to 12 weeks duration.
Step 3 – After board/investors approval, full implementation follows which is project managed by IAG
Decisions should be neither too low nor too high, both ambitious and demonstrably achievable – our Airline recovery programme will include the following:
- Start with a top-down/bottom -up complete assessment to set a challenge for what can be achieved, without focusing too early on exactly how it will be achieved, but with pragmatic recovery and restructuring targets.
- Base the assessment on all areas and drill down within each part of the operation. For example, review all:
- Leasing arrangements,
- MRO contracts,
- Scope of Work
- Support Contracts
- Staff contracts
- Routes, fares etc.
- Loadings etc.
- Boldly evaluate the business model:
- Airlines could choose to become a hybrid that combines full-service and low-cost models or to fly fewer long-haul routes. Such bold moves may not be necessary but should be among the options considered. Decisions here will, in turn, guide the more detailed assessment.
- Maintenance Repair and Overhaul service providers, to provide PBH solutions, change their Scope of Work
- Assume the mind-set of an activist investor or private-equity acquirer: be ambitious, disruptive, and unconcerned about maintaining the status quo – our team will ruthlessly and without emotion or other outside influences review and report.
The main departments covered in any review with respect an Airline restructure or recovery will be: Operations, Commercial, Maintenance, Repair & Overhaul (MRO), Human Resources, Finance, Support Services and Transformation. Airline organisational structures do not match with those of other industries, and many roles/appointments are required by the regulations under which airlines operate under, not the model that Administrators would be familiar with. The future of the airline could be compromised through the Administrators lack of experience of airline regulations. Not retaining the correct staff, can and has led to incorrect decisions being made, with respect to Regulations.
We can provide immediate Crisis Management, Cash Flow Improvement, a Restructuring Blueprint also Interim Airline Management – the most important element is to act fast and not try and trade out of a situation – unfortunately sometimes harsh and painful decisions need to be taken.
IAG Airline Recovery Team
The IAG Airline recovery team have all either operated airlines or have been senior management for service providers – so “poachers turned gamekeepers”! In addition to their diverse senior management roles, the Team have been involved with special projects and the establishment of EASA approved operations across the globe.
Our guidance is independent.
Problem Statement for Insolvency Agents – COVID-19 and Aviation/Airlines/ Aerospace
COVID-19 has changed and will continue to change the face of all industries for months and years to come, the “good old days” are no more. The effects do not discriminate between Flag Carriers, Low Cost Carriers, Executive Charter, Training Schools and General Aviation as everyone has been affected. These are the headline casualties; our industry is built on a huge number of supporting Airlines; aircraft and component overhaul facilities; continuing airworthiness management Airlines; modification design and production houses; pilot and crew training schools; engineering training schools and ground handling suppliers. There will be an increasing number of highly regulated and interdependent Airlines for whom the end of the road has come, abruptly!
Do you know your:
- TRTO from your TRE/TRI?
- AMP from MPD?
- DOA from POA?
- Part M from Part 145?
- Part 147 FROM Part 66?
- Nominated Person from a Board Member?
IAG can support you when you are appointed as we have defined above. Our Team have held senior regulatory vetted appointments, in some cases, in some of the biggest names across our industry.