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This is our proposal to a mock board of directors for American Express. We crafted a business model for entering the air taxi industry.
Citation preview
S
American Express: Becoming a force in the AirTeam Jaguar
- Alex Goldenberg- Asif Khan- Kevin Lee- Sean Penso- Ananya Sahay
AmEx Premium Jets
“Express Travel. Across America.”
Downside Base Upside
($100,000,000.00)
$0.00
$100,000,000.00
$200,000,000.00
$300,000,000.00
$400,000,000.00
$500,000,000.00
$600,000,000.00
$700,000,000.00
$800,000,000.00
Projected NPV of Build vs. Buy Options (By 2018)
Build Buy
American Express Has
the Resources
and Opportunity to Build this
Service
Innovative Strategy
Advantageous Financial Position
Favorable Industry Environment
Strong Brand Recognition & Loyalty
It is the Right Time to Enter the Air-Taxi Industry
2013 air-taxi industry estimated market size: $2.06 billion
Projected growth by end of 2018: $4.02 billion
The top 12 US markets currently account for 78.5% of the industry.
10 out of 12 markets provide a very low entry barrier for new companies
Average of 600 miles per flight, 3 – 4 passengers
AmEx Will Cater to Wealthy Businessmen and Service the
Major Metropolitan Areas
Target Market Frequent Travel
Disposable Income
Desire for professionalism & luxury
Need for flexibility & efficiency
AmEx Will Cater to Wealthy Businessmen and Service the
Major Metropolitan Areas
Northeast West Southwest Midwest 0
50,000
100,000
150,000
200,000
250,000
243,512
99,386 102,684 102,170
Market Size by Region
Market Size
The Premium HondaJet
Efficient Workspace
Free Wi-Fi
Newest Jet Technology
Highest Safety Features
Entertainment Options
High Quality Food & Drinks
Ability to Make Phone Calls
Our Jets Will Provide the Highest Quality Service &
Safety
The American Express Brand Translates Well to “Premium
Jets”
Prestige
Tier-Syste
m
Quality
Service
S
Financials
2014 2015 2016 2017 2018 $-
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
$300,000,000
$47,427,530
$99,561,084
$164,536,624
$206,198,884
$252,041,810
Revenue
Revenue by Year
Net Cash Flow by Year
2014 2015 2016 2017 2018
$(20,000,000)
$(10,000,000)
$-
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$(17,570,969)
$(6,304,622)
$5,065,649
$23,695,402
$30,441,117
Net Cash Flow
S
Key Assumptions
Pricing Strategy
Market Share
American Express Will Charge a Premium Price
$10,000 Avg. Price
High Quality Planes = High
Costs
Increase in SG&A Expenses
Premium Service & Amenities
Strong Brand Name
AmEx Will Obtain Optimal
Market Share by 2018
Express Travel. Across America.
Increase SG&A Expenses from base 20% of revenue to 27%
Intensive Training Programs for flight crew
Jet Blue comparative selling and marketing expenses
Our Strategy Projects a Significant Increase in Market
Share
Premium Jets
Loss of Partner Sales
Membership Benefits
Increase in Partner Sales
Effect of AmEx Premium Jets on Partners
Conclusion
Questions?
Appendix: Key inputs for our Sensitivity Analysis
Inputs Downside Case Base Case Upside Case
Fuel Costs
Build Input $1.56 $1.42 $1.28
Buy Input $1.79 $1.63 $1.47
Pricing
Build Input $8,000.00 $10,000.00 $12,000.00
Buy Input: Texas $8,500.00 $9,500.00 $10,500.00
Oklahoma $8,000.00 $8,750.00 $9,500.00
Market Share
Build Input Substract 2% Add 2%
Buy Input: Texas 47.00% 50.00% 53.00%
Oklahoma 22.00% 26.00% 30.00%
Terminal Growth Rate
Build Input 1% 2% 3%
Buy Input 1% 2% 3%