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Business Planning needs to result in a "living" document, rather
than something that just sits on the shelf. In our view, any
Business Plan needs to be brought to life by: setting a profit
target based around the required rate of return on funds employed;
being specific about the size of the profit gap; and clearly
identifying, quantifying and establishing responsibility for the
strategies that are going to be employed to eliminate the gap. These
strategies are likely to focus on: productivity improvements
(aircraft, seat, fuel and labour); revenue management (market
positioning/customer focus, cabin mix, yield management); and cost
reduction (especially revenue generation, maintenance and
overheads).
For many airlines, a viable Business Plan is critical to the
re-financing of their business. Establishing the size of the profit
gap, and identifying the sources and timing of turnaround, will give
much greater confidence to creditors that the business will be able
to service its loans.
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