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Context / Scope of project
Our client, an Australian private equity firm with over $1billion in funds wanted to invest in a charter FIFO airline serving the fast growing mining sector, however they were unfamiliar with the sector. The PIP team undertook a rapid review of the specific market including current contract and growth potential, competitor analysis, plane types & benefits and client purchasing criteria. PIP also reviewed the target’s performance, new contract potential and other business opportunities. Based on this work PIP formed a view on the forecast target and markets revenue growth.
Key Insights:
- Target well positioned against competitors in terms of existing client relationships and aircraft fleet’s optimum flight distance to growth locations
- Target’s existing revenue secure and set to grow earnings profile faster than the market given large client growth outlook however ,limited other opportunities
- Instability in the market with competitors seeking alliances with other very large airlines.
Outcome:
- Client did not pursue deal
- Able to reach decision in less than 4 weeks of PIP due diligence
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What we did:
- Provided focused insight into FIFO market including its growth prospects by geography
- Reviewed target and competitors’ market position from a contract, revenue, fleet perspective and plane type
- Identified which tasks were better suited by which plane type. Forecast the expected market for each plane type. Determined which competitor had which plane types and therefore exposure to the high growth areas
- Provided a detailed commercial review of target’s existing contract profitability, renewal dates and likelihood of growth
- Analysed customers purchasing habits, criteria and risks
- Reviewed new contract opportunities including drilling down on each expected contract to pressure test target’s revenue pipeline
- Evaluated forecast capacity utilisation, future CAPX and employment considerations
- Evaluated other market opportunities such as charter and wet lease.
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