Brazilian airline Gol teams up with KLM-BCG partnership

15 April 2019 Consultancy.lat

As part of its strategy to digitize its internal operations, Brazilian airline Gol has teamed up with Dutch national carrier KLM and management consulting firm Boston Consulting Group (BCG).

In June last year, KLM and BCG revealed that they had developed an offering that helps airlines leverage technology to streamline their operations “in an unprecedented manner”. The two companies have been working together for over a decade now across KLM’s business, in recent years also focusing on enhancing internal operations through emerging technologies.

Among the projects deployed successfully to date are using internet of things (IoT) and artificial intelligence (AI) to improve Maintenance Repair & Overhaul (MRO) delivery, utilizing digitization to bolster back-office processes (crew resourcing, ground services, supply chain, etc) and using AI to optimize inter-airline network planning with Sky Team partners such as Air France (Frane), Aeroflot (Russia), Delta (US) and Middle East Airlines (Lebanon). 

Flyers, meanwhile, are reaping the benefits of this back-office digitization. Baggage delays – which often have a domino effect and create major headaches for thousands of passengers – have been reduced, flight transfer routing has been optimized for cross-border passengers and information provided has been personalized and tailored to individual customer experience journeys using digital channels. 

Having deployed the offering – branded as ‘Digital Airline Operations’ – successfully within KLM, the airline and consulting firm last year formally launched their offering externally. “Sinds doing so at the IATA-conference we have received positive reactions on our proposition from all corners of the globe,” said René de Groot, chief operating officer at the Dutch carrier company.Brazilian airline Gol teams up with KLM-BCG partnership

Brazil’s Gol has now become the first Latin American client of KLM and BCG’s joint venture. Commenting on the decision, Gol chief operating officer Celso Ferrer said, “We are delighted that we can work together on ‘Digital Airline Operations’. This will allow us to improve our on time delivery to our customers, while keeping our cost per available seat mile among the lowest in the industry. KLM and BCG have developed solutions in the field of advanced artificial intelligence and optimization that we can adjust entirely to meet our specifics. All in all, it will enable Gol to develop a strong competitive advantage.” 

With a fleet size of around 130, Gol is Brazil’s largest international airline, ahead of local rival Azul, and one of South America’s largest players. The airline carries more than 33 million passengers annually and operates 750 flights daily to 73 destinations in Brazil and in South America, the Caribbean and the United States. In comparison, KLM has a fleet size of around 160 aircraft, carrying more than 40 million passengers. The firm is however part of the Air France-KLM Group, which has a total fleet size of over 500 aircraft. 

“Based on artificial intelligence, machine learning and advanced analytics, we help airlines grow, accelerate innovation and streamline operations,” said Nicolas Boutin, head of the global Airline practice of Boston Consulting Group. 

Asked how the KLM-BCG offering differentiates itself from the many digital-led solutions in the marketplace, Dirk-Maarten Molenaar, a partner at BCG said: “We distinguish ourselves from standard IT suppliers by our focus on integrated planning & management, data-driven decision-making in the event of disruptions, the use of our tools by frontline teams and the development of internal digital functions to help improve services.”

Related: KLM partners with BCG to bring artificial intelligence to the skies.

Avianca Brasil needs major restructuring effort to stay flying

18 February 2019 Consultancy.lat

Brazilian airline Avianca Brasil will need to sell 14 of its 50 aircraft and improve its operational efficiency, if it wants to continue flying while being able to repay its creditors, according to an analysis by Galeazzi & Associados. 

The São Paulo based management consultancy was hired by Avianca Brasil in December shortly after the airline filed for bankruptcy protection. Consultants of the firm have since assessed the financial performance of the company and crafted restructuring plans in a bid to turn Avianca’s fortunes. Galeazzi & Associados is also exploring future options for the airline, which include finding a partner, a buyer, or even filing for bankruptcy.

Following a number of payment defaults, Avianca’s main creditors, aircraft lessors Aircastle and General Electric Capital Aviation Services, sounded the alarm bells on the company’s financial position. The two creditors have in the meantime been seeking to repossess their planes, however, their attempts have so far been successfully fended off by Avianca, allowing the company to maintain its current flight schedule. According to Reuters, consultants from Galeazzi & Associados have visited the carrier’s creditors to discuss scenario’s and potential measures. Concrete results have though not materialised.Avianca Brasil needs restructuring effort to stay flying

In the background, Avianca is negotiating with Elliott Management, a hedge fund, about a 250 million real ($69 million) loan, sources close to the matter disclosed. As part of bankruptcy protection process, any investment would need to happen within the regulatory guidelines, likely in the form of debtor-in-possession financing. Brazil’s fourth-largest airline plans to ask the judge overseeing its bankruptcy for more time to reach a final deal, pointing at the progressive loan talks held with Elliott Management. 

In the analysis by Galeazzi & Associados, the advisors conclude that a major restructuring effort is required for Avianca Brasil to continue its operations. Around 14 of the 50 aircraft would need to be disposed, in order to optimise the capacity usage of the fleet. As per the plan, 36 aircraft would combined be capable of achieving 235 flights per day. The sale of the aircraft would provide a needed buffer to repay creditors.

On top of this, the airline will need to reduce its operational expenses and attract investments to the tune of $75 million to stay afloat.

Last year, another Latin American airline, Aerolíneas Argentina called in the help of an external consulting firm to reshape its loyalty program.