Restructuring plan

Preparation and presentation of the full Restructuring Plan to the European Commission for approval of the State aid case. The presented Restructuring Plan has been successfully approved by the Commission and is currently being implemented. The Restructuring Plan in particular provides detailed analysis of the competitive environment, the issues affecting Air Malta, the path to recovery, the revenue and cost initiatives, the debt and equity recapitalisation plan and the 5 year financial and operational plan.

Recapitalisation

Successful negotiation of a bridge loan with a syndicate of international banks and of a commercial loan partly securitised through landing slots, amongst the first in Europe. Negotiation with Government for scheduling a number of equity issues to provide Commission approved state aid.

Maintenance renegotiation

As part of the implementation of the restructuring, provided commercial and financial advisory for the renegotiation of the heavy maintenance contract, resulting in substantial financial savings for the airline.

Network review

Conducted a review of the entire scheduled and charter network of the airline with the aim of establishing profitability by route. The analysis was used both for network improvement maximisation and for establishing suitable compensatory measures requested by the Commission as part of the state aid case.

Fleet reorganisation and sub-leasing

Reduced the operational fleet by negotiating sub-leasing of surplus aircraft, both long-term dry leasing and seasonal wet/dry leasing. Conducted financial analysis of the existing options and advised in the commercial and legal negotiations.

Subsidiaries divestments

Organised sale process for a number of subsidiaries as part of the Restructuring Plan, including the Malta inbound and outbound tour operators, a Maltese hotel and the captive insurance companies.

Clients:

• We are fortunate to count as our clients some of the leading UK and international companies, as well as private equity firms and infrastructure funds.  Most of these are long-standing clients, with deep rewarding relationships developed over the course of many years.  To name but a few:  National Express; Stagecoach; First Group; ICRRL/Eurostar; BA; BT and BT Openreach; Macquarie; PPM Capital; Hutchison 3G; Exponent PE; JP Morgan PE; Siemens; Bombardier; MTR Hong Kong; Avis Europe; Ryman; Paramount Restaurants; InBev/Interbrew; John Lewis Partnership; Jessops; DeBeers; and the Carbon Trust.  Our first ever client accounted for the vast majority of our revenue in the first two years, and remains a client. 
• We started out focusing on strategy and transactions work for transport, mainly service providers.  Now, our work has expanded to include equipment and infrastructure; travel and leisure (car rental, reservation systems, to pubs and restaurants); some telco/media and retail; and a significant practice in environment / climate change
• We have worked in over 20 countries and 4 continents including Europe, the Middle East, Africa, the US and recently China.

Staff:

• Tony first recruited two of his ex-L.E.K. colleagues, Richard Kendall and Ally Charlton to work on the first projects with National Express in 2001.
• Rebecca McPhee, now Director and Head of our Environmental Practice, joined a year later in 2002. Some her favourite memories at Maddox include:
  • Watching internationally ranked Gary/Mildred dance, and Grade 8 Susie sing, and realising that she was perhaps the least talented member of Maddox (outside work)
  • An autumnal drive across the Hudson Valley in a huge, unwieldy American car because the hedge fund with which we were trying to buy a US airport thought they all took priority on places on the corporate jet – leaving the young English lady new to town to fend for herself
  • For many years being able to boast a 100% winning record on rail franchise bids
• Many of our staff have joined us as an alternative to traditional consulting firms; others as a transition point after Business School or as a way to pursue other interests outside of work.  Notable alumni/staff have included:
  • World representative ballroom dancers Gary Crotaz (alum) and Mildred Yuan (current Senior Consultant).
  • Sailor Augusto Viansson Ponte (current Director and Head of our Aviation Practice) has been sailing competitively at international level for various teams and has successfully competed in high-profile events such as the Fastnet Race, the Giraglia Race and the Farr 40 and Melges 24 world championships.
  • World-ranked speed skier Ben Hedley, ranked 8^th in the world the last two seasons (current Associate and former staff member).

Some of our more bizarre memories reported by staff:

• Attaining a life-long dream of snorkelling in Lake Malawi which has the greatest diversity of fish water fish in the world (following an airline transaction project for an old colleague)
• Remembering while walking around town to observe the “keep off the grass” signs in post-war Sarajevo (when in Bosnia on railway and airline projects)
• Ben leaning out of a micro-light plane to get a better view of the French countryside (on a Maddox corporate retreat) and then realising his seat belt restraints were unbuckled
• Tony working out how to tell his wife on her 50^th birthday at the beginning of a week’s holiday overseas, that he was leaving at 6am the next morning as a private equity client was demanding his presence back in London
• A group of us drinking a bottle  of whiskey on the floor in the lobby of a basic B&B after dinner at Le Manoir aux Quat’ Saisons for our company annual dinner – testing both ends of culinary experiences
• Becca being trapped in a hotel room bathroom by “vicious” baby monkeys at Lake Malawi while they plundered the fruit bowl and remains of breakfast
• Susie being told by six South African (male) cyclists in a race that she “girly” should get out of the way, as it was affecting their drafting technique, and Susie then passing them an hour later on the 50km hilly course

Other stories in this newsletter:

Maddox Turns 10!
Maddox at Home
Piecing Together Southeast England’s Airport Puzzle
Looking Forward

Augusto successfully completed the Edinburgh Marathon in May, with a time of 3.59, achieving his target of being ‘sub-4 hours.’  A ‘second marathon’ started at 1800 that evening when a baggage pallet blown across the apron by a raging storm hit the belly of his aircraft and damaged it. After an intriguing night at the Holiday Inn at the Edinburgh Zoo, Augusto was finally able to board the repaired aircraft, landing at LHR only 21 hrs late.  Looks like the head of our aviation practice should offer his expertise on preventing delays to the folks at Edinburgh Airport!

Take a low, slow flight over the southeast of England and it’s easy to spot the straight lines of past or present runways littering a countryside that has largely taken shape without a care for rulers.

Many of the airfields grouped around London were created before or during the Second World War, when the emphasis was on spreading assets – runways and aircraft – thinly to minimise the effect of armed attack, rather than on concentrating them together to maximise the transport and logistics benefits.

Now, the UK’s south-eastern corner has a patchwork of airfields that have blossomed or withered mainly according to local pressure and political whim rather than long-term, national interests.

In this context, the strategic thinking about airports unveiled in January by Boris Johnson, mayor of London, is to be welcomed. And, though it is narrowly focused on airlines, its author does offer business aviation the possibility of some spin-offs.

Mr Johnson commissioned a report from Daniel Moylan, deputy chairman of Transport for London, to inform the debate as the central government reviews the options for aviation policy – already limited by the axing of Heathrow’s planned third runway.

The report, unveiled on a perfect flying day in January, put the case for a new four-runway hub airport designed to compete with mainland European cities. “We risk losing jobs to Frankfurt, Amsterdam, Madrid or other European cities if we fail to act,” Mr Johnson said.

There are other examples: the UK’s unfriendly policies are already driving away biomedical research, shoppers and students. At the launch, business leaders lined up to agree that industry, commerce and financial services also risked being located in Paris rather than London because airlines flying from Charles de Gaulle airport link directly to 224 cities, while Heathrow directly accesses only 157.

Apart from ruling out an expansion of Heathrow, the report does not say where all the airline traffic should go. The alternatives include expanding another London airport, a man-made “Boris Island” in the Thames estuary and a north Kent site near Cliffe. Mr Moylan does stress, though, that any option’s ground transport links must be considered right from the start.

The Moylan report fails, however, to consider business aviation. But private jets and turboprops have stepped into the gap, just as they have whenever overstressed or poorly administered airport, traffic control and airline systems trip up – for example, during the recent snow storms in Europe and the US, and the volcanic dust cloud last year. More business is being done at longer range, and it is no coincidence that the market for larger, longer-range business jets is doing better than that for smaller aircraft.

Mr Moylan also offers business aviation the possibility of freeing up Heathrow for general aviation, which has been almost completely excluded from the west London airport.

“Heathrow has a fantastic future,” he says. “There are huge business and freight opportunities at Heathrow that don’t get taken care of at the moment.” He adds that the rich swathes of London’s west and beyond would welcome premium leisure aviation.

Maddox Consulting, the transport specialist, is cautious. “If airlines deserted Heathrow, this could possibly create fresh demand for business aviation from affluent south-west London travellers who don’t want to fly from across town,” says Augusto Viansson Ponte, its aviation practice head. “Low-cost business aviation providers such as air taxi firms could perhaps find an opening as a result.”

And private aviation companies are wary. “If Luton suddenly reached capacity, then there could be an argument for more business aircraft using Heathrow,” says Patrick Margetson-Rushmore, chief executive of London Executive Aviation. “However, this shift would require significant changes to Heathrow’s pricing structure and prioritisation of business jet traffic.”

According to Mr Viansson Ponte, a new hub airport in the region “could prove detrimental to business aviation if the airport delivered significant improvements in efficiency, convenience and value for passengers. Travellers might simply opt to fly scheduled instead of by business jet. However, there are many hurdles to creating such an ideal hub, not least ground transportation constraints.”

And, of course, decades of policymaking that is even less joined-up than Heathrow.

As this is the anniversary edition, we look forward to another 10 years for Maddox.  There is currently much on the horizon with airports and ports and rail franchises, the private equity sector is picking up albeit primarily with secondary and tertiary sales, and climate change and renewables remain on the agenda as a now maturing sector, subject to at times inconsistent policy.  Travel & leisure and retail are both exposed to declining consumer spending and need a degree of restructuring, but are also buoyed by “stay in the UK” holidays…and novel business concepts usually find a way.

Other stories in this newsletter:

Maddox Turns 10!
Maddox at Home
Piecing Together Southeast England’s Airport Puzzle
Looking Forward

Chinese low-altitude airspace has historically been closed, and as a consequence the aviation market in China has lagged the markets in other countries worldwide and not reached its massive potential domestically.

Progressively the market is being opened-up and aviation operators worldwide have strongly welcomed the recent announcement of the liberalisation of low-altitude airspace. This will create opportunities for rapid growth in private aviation, especially for helicopters which operate exclusively within low-altitude airspace.

We have led a team of advisors in the preparation of the initial business plan for new helicopter services to operate in the Shanghai and Tianjin areas, with operations due to commence in the summer of 2011. We are excited to remain involved as the main strategy/commercial advisor in the establishment of the business over the coming few months.

Other stories in this Newsletter:
Maddox Goes “Up and Away” with Helicopters in China
A Smarter Approach to Surface Access?
Looking Forward
New Director Augusto Viansson Ponte to Head Up Maddox’s Aviation Practice
Collaborations
Maddox at Home, Competing on the Slopes and Dance Floor

The recession has been arduous for airlines and airports. Air carriers have responded by reducing capacity, cutting costs and increasing ticket prices, which has enabled many to weather the storm, as BA and Ryanair’s recent financial results demonstrate. Airports, in contrast, have generally fared less well, being saddled with high fixed costs and falling passenger numbers (and a market which in certain regions is nearing saturation). As a result, many airport operators need to rethink their propositions if they are to reverse this decline in the overall market and increase market share.

Part of the solution for airports involves improving on-site services and facilities: reduced queue lengths, improved on-time performance and enhanced retail offerings can all play their part. However, to overcome the current challenges, airports need to see the bigger picture and focus on improving the ‘end-to-end’ journey experience, from the passenger’s front door at home through to the boarding gate.

The idea that road and rail connections are important will not be news to airport operators. Most major airports have detailed surface access strategies, designed to make terminals easy to reach while promoting public transport. Airports have supported these plans by investing in the capital cost of ground transport (even in the current climate, as evidenced by BAA’s financial commitment to Crossrail), and, in some instances, have contributed towards the operating costs of ’start-up’ surface schemes as part of their encouragement of public transport.

However, on a day-to-day basis, airports still see surface access as a revenue stream: for example, BAA levies a departure charge on each coach and black cab leaving its London airports. Meanwhile, the cost to passengers of getting to the airport continues to rise: for a family of four, ‘airport express’ rail travel from London to Gatwick now costs over £85 (US$137), while a week’s parking at Heathrow can easily exceed £50 (US$80), even at the remotest long-stay car park. In either case, the cost of reaching the airport could amount to 20% or more of a short haul air fare, making getting to the airport substantially more expensive than the much publicised increases to air passenger duty.

These cost increases are not exclusive to the UK and contradict an overall downward trend in the price of air travel. For example, in the US, average domestic air fares fell by 9% between Q3 2000 and Q3 2009, thanks to competition and more sophisticated revenue management by airlines. However, during this period, access costs increased considerably – for example, cab fares in Chicago rose by 16% in 2000 and 11.7% in 2005.

Given this situation, airports need to adopt a fresh approach to surface access, not only to improve the customer’s travel experience, but also to help reduce the total cost of air travel. Rather than regard these services exclusively as sources of revenue, airports should consider subsidising passengers’ trips to the airport.

To that end, airports should make a priority of investing in all forms of ground transportation – not only supporting rail services (such as Southend Airport’s new railway station), but also bus, coach and even taxi services, and introducing special offers to subsidise fares.

At the same time, airports would benefit from reviewing car park charges, as, at certain airports, high fees are causing revenues to be lost to local hotels, which offer drivers better value parking coupled to a night’s accommodation before or after flying.

Other stories in this Newsletter:
Maddox Goes “Up and Away” with Helicopters in China
A Smarter Approach to Surface Access?
Looking Forward
New Director Augusto Viansson Ponte to Head Up Maddox’s Aviation Practice
Collaborations
Maddox at Home, Competing on the Slopes and Dance Floor

• thetrainline.com prospectively coming on the market for sale – Maddox conducted the commercial due diligence  for the current owners, Exponent PE, in a 2006 transaction worth £163m.  UK rail continues to grow, as does the penetration of on-line bookings, which bodes well for thetrainline.com.

.

• The re-letting of passenger rail franchises for Greater Anglia and Intercity West Coast
  • Maddox developed the demand and revenue forecasts for the current Greater Anglia franchise, as part of National Express’ winning bid; as well as related analyses such as development plans for Stansted Express.  With only an eighteen month contract up for bid currently, those who know the patch well or this type of railway operation will be most competitive.  However, the franchise may become the test bed for greater vertical integration in the future, thus increasing the attractiveness of bidding now.
  • Maddox’s MD Tony Davis oversaw the Intercity West Coast franchise when he served as an interim Franchise Director at the Strategic Rail Authority (SRA); which has been in Virgin’s hands for over a decade.   The next step for Intercity West Coast will be to deliver the fuller benefits made possible by the c. £9bn upgrade of the West Coast mainline, and towards the end of the next franchise period may need to contend with the start-up of High Speed 2.  In the interim, leveraging yield management systems to the maximum and competing with air travel will be key issues.

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• Airports sales in the UK. Macquarie’s 49% stake in Newcastle airport is expected to be for sale this year, with the other 51% remaining with the South Tyneside Council.  The BAA divestment will also see the sale of Stansted and either Glasgow or Edinburgh.

Other stories in this Newsletter:
Maddox Goes “Up and Away” with Helicopters in China
A Smarter Approach to Surface Access?
Looking Forward
New Director Augusto Viansson Ponte to Head Up Maddox’s Aviation Practice
Collaborations
Maddox at Home, Competing on the Slopes and Dance Floor

]]> http://www.maddoxconsulting.com/looking-forward/feed 0 http://www.maddoxconsulting.com/new-director-augusto-viansson-ponte-to-head-up-maddox%e2%80%99s-aviation-practice http://www.maddoxconsulting.com/new-director-augusto-viansson-ponte-to-head-up-maddox%e2%80%99s-aviation-practice#comments Tue, 15 Feb 2011 12:27:01 +0000 mildred.yuan http://www.maddoxconsulting.com/?p=844 READ MORE]]> Maddox Consulting is expanding its aviation expertise with the appointment of Augusto Viansson Ponte as aviation practice leader and its newest Director.

Founder and managing director Tony Davis says: “Maddox Consulting has built a strong reputation in the aviation sector, providing business strategy consulting and transaction support to airlines, airports, infrastructure investors and governmental bodies. The coming years will see the aviation industry grapple with yet more fundamental issues, such as airline consolidation, new infrastructure investments and the integration of air and ground transportation networks. With the addition of Augusto, Maddox Consulting is better placed than ever to provide expert advice on these issues, based upon a deep understanding of the sector.”

Augusto brings Maddox extensive experience of providing business strategy and transaction advice to airlines, airports, business aviation operators and investors. Before joining Maddox, he was Managing Director of executive aviation broker Big Air, which built a strong franchise serving charter customers in London’s financial services sector. Previously, he spent nine years with premier strategic management consultancies L.E.K. Consulting and Catalise, working on a range of aviation assignments in the UK, continental Europe, the Caribbean and Middle East. Augusto’s early career was spent in investment banking with Deutsche Bank.

Augusto’s experience includes advising on the expansion and ultimate sale of airline Go, the restructurings of Brussels Airlines and BWIA West Indies Airways/Caribbean Airlines, the development of Sharm El Sheikh International Airport and the acquisition of Aeroporti di Roma by Macquarie.

Maddox Consulting’s aviation and aviation-related client experience takes in a large range of geographies and cuts across the transport sector.  Maddox staff have worked with large commercial airlines such as British Airways and Qantas, as well as smaller regional operators such as Air Southwest and the likes of Air Malawi.  Airport projects have ranged from small regional airports such as Exeter Airport to Abu Dhabi International Airport, one of the fastest-growing international hubs in world. Maddox has a deep understanding of the complementary rail market, both in terms of surface access with clients such as Stansted Express and familiarity with other long-distance operations like Eurostar.  Maddox staff have also been involved in important transport markets which impact the broader aviation industry and aviation governmental bodies, with clients such as the UK’s Department of Transport, British Aerospace, and large infrastructure investor groups such as Macquarie and private equity funds such as JP Morgan Private Equity.

Other stories in this Newsletter:
Maddox Goes “Up and Away” with Helicopters in China
A Smarter Approach to Surface Access?
Looking Forward
New Director Augusto Viansson Ponte to Head Up Maddox’s Aviation Practice
Collaborations
Maddox at Home, Competing on the Slopes and Dance Floor

]]> http://www.maddoxconsulting.com/new-director-augusto-viansson-ponte-to-head-up-maddox%e2%80%99s-aviation-practice/feed 0 http://www.maddoxconsulting.com/collaborations http://www.maddoxconsulting.com/collaborations#comments Tue, 15 Feb 2011 12:25:32 +0000 mildred.yuan http://www.maddoxconsulting.com/?p=901 READ MORE]]> Maddox has worked for many years with its strategic partner firm, 7days, specialists in organisational design.  We recently assisted on projects for the John Lewis Partnership and for the National Trust; we are currently assisting 7days with projects for two leading media firms and a major leisure sector company.

As part of a 7days team, Maddox staff apply their commercial quantitative skills to support effective cost base restructuring and decision making.  Our analysis links the design process to financial implications through opportunity sizing and providing robust business cases for change.

Other stories in this Newsletter:
Maddox Goes “Up and Away” with Helicopters in China
A Smarter Approach to Surface Access?
Looking Forward
New Director Augusto Viansson Ponte to Head Up Maddox’s Aviation Practice
Collaborations
Maddox at Home, Competing on the Slopes and Dance Floor

]]> http://www.maddoxconsulting.com/collaborations/feed 0