MBA 620 Company B Information

Location, Size, and Age of the Firm

• Name: • Location: Orlando, FL • Size: 98 employees • Age: began operations in 1988

Customer Segment and Target Market

• Market: Florida and nearby destinations

• Destinations: eight (the Bahama Islands; Savannah, Georgia; Atlanta, Georgia; Tampa, Florida; Fort Myers, Florida; Miami, Florida; Tallahassee, Florida; and New Orleans, Louisiana)

• Market segment: tourists and business

• Aircraft capacities: 12–50 seats

• Customer segment: vacationers, tourists, business travelers

• Retention: 40% repeat customers

• Seat occupancy average: 62% (middle of industry benchmark data)

• Average customer fare: $249 USD

Major Competitors

• Delta Connection

• American Eagle

• Sun Country

• Frontier

Company Leadership

Privately held, with a board, president, VP admin, CFO, COO, VP sales

Company Strategy and Direction

As a smaller player, the company is more of a follower than a leader; however, the new president has a desire to shake things up. The image of the company as cheap transportation is no longer sufficient, and the leadership team seeks to demonstrate that even a small company can be an innovation leader. They hope to do this by emphasizing the potential benefits of agile problem solving and a lean and clean working environment. These 10-year goals were adopted in 2015; they were reaffirmed in 2019 shortly before the arrival of the new president:

• Demonstrate adaptability, flexibility, and speed in decision making and innovation

• Build the best workforce; be a winning team

• Do the right thing; provide excellence in customer service

• Enjoy the short run; invest in the long run

Current Financial Highlights

• Annual revenues: $26-27 million

• Annual growth YoY: 3%

• Gross profit margin: 33%

• Net profit margin: 0.2%

• Aircraft in fleet: 40

• Average age of aircraft: 18 years (25 years of useful life is typical)

• See financial statements for more information

Background

• The company is known as a value leader.

• In 2016, the company sold its ownership in a regional hotel chain, resulting in substantial cash holdings.

• The company has strong business relationships with area employers in the theme park industry.

• The company president is new this year; prior experience has been heavily influenced by organizational transformation initiatives.

• Turnover among employees is higher than many airline companies, but average for the central Florida economy; maintenance employees are increasingly more difficult to find and retain; overtime is common in the maintenance department.

• Wage levels in the Orlando area are growing, resulting in upward pressure in compensation.

• Customer feedback received that is at or above industry benchmarks (at industry benchmarks 60th percentile or higher; positive feedback):

o Short wait times at counter o Ease of modifying reservations o Cost o Overall value

• Customer feedback received below industry midpoint (negative feedback): o Airplane cleanliness o Amenities o Food and beverages o In-flight noise

Internal Process Highlights

• Within the last 30 days, an investment and joint venture was established with SITA Horizon software system, including an industry-standard customer portal and a hospitality industry interface functionality.

• Bookkeeping is integrated with the new SITA system; an external accounting firm will still be used for audits.

• HR function is provided by a consortium partner in the local area (outsourced).

• On-ground operations teams rated fair against industry-wide efficiency standards.

Human Resource Highlights

• Employees with a high school diploma or higher: 95%

• Employees with a post-secondary degree or diploma: 60%

• Average turnover rate: 18% annually

• Internal training offered: o Regulatory refresher courses (as needed, with supervisor approval) o Quality and Customer Service Principles (self-study)