Originally Posted by
SWBKCB
But can they make money with this strategy?
Yes, BUT they'd need to dump the current aspirational growth strategy and accept they need to be a niche, relatively high cost operation. It's very tough to shrink to success as most managers only know "go for growth" but actually the most long lived businesses have "right sized" brutally when times get tough. Loganair for example, has grown and shrunk on a cycle over many years but just celebrated 60 years of operations. If SOU were to focus on ATRs and similar sized aircraft and a successful FBO on the side, they'd need to slash costs out of the business and that's before you get to the debt they're carrying in extending the runway and infrastructure. Could SOU do it? Depends on whether they could service the existing debt in shrinking to profitability, it's very hard to do. You can see why they're gambling on a push for high volume leisure. Worst case is that they never get volumes high enough to make money because of the competitive environment and growth at BOH.
Not having a go at anyone, it's not a great place to be in.
easyJet have to make a real base of this if SOU's strategy is to pay off.