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Financially Sustainable Airlines Reasons for Optimism ICAO/McGill Conference September 26, 2010

Financially Sustainable Airlines Reasons for Optimism ICAO/McGill Conference September 26, 2010. Donald P. Schenk President ACA Associates, Inc. 545 Fifth Ave, Ste 640 New York, NY 10017 +1-212-808-4420 dpschenk@aca-assoc.com www.aca-assoc.com. About ACA.

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Financially Sustainable Airlines Reasons for Optimism ICAO/McGill Conference September 26, 2010

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  1. Financially Sustainable AirlinesReasons for OptimismICAO/McGill ConferenceSeptember 26, 2010 Donald P. Schenk President ACA Associates, Inc. 545 Fifth Ave, Ste 640 New York, NY 10017 +1-212-808-4420 dpschenk@aca-assoc.com www.aca-assoc.com

  2. About ACA ACA is a consulting and financial advisory firm, founded in 1989, specializing in the commercial aviation industry including manufacturers, airlines, airports, after-market support, and ground service companies. ACA combines the expertise and talent of experienced aviation industry executives from a wide variety of disciplines with those of financial executives with a background in corporate finance. This enables them to deliver value-added strategic, financial, and operational analysis and advice to clients based on an understanding of the wide range of implications that a client's decisions can have on its overall business.

  3. History of Limited Profits US Pre Deregulation 1960 – 1978 Net Income ~$ 5 billion Margin 2.6% Net Income $ Net Margin % US Post Deregulation 1979 – 2009 Net Income ~ ($33) billion Margin ~ 1.2%

  4. Sustainable Airlines • Identify your market • Recognize that the product is the brand • Use IT as a friend not an enemy • Create brand equity • Eliminate all unnecessary costs

  5. Costs (1)

  6. Costs (2)

  7. Conclusions Focus is Critical • Serve your unique customers • Let customers design product • Restrict services and costs • Use IT as a friend not an enemy • Measure success in profits not market size

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