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Business Plan Prepared by Thanassis Kokkotas June 2012

102, Vouliagmenis Ave. 167 77 Elliniko, Athens • Greece www.flyairomega.com


Important Notice The purpose of this confidential Business Plan is to provide information to those who have expressed interest in considering an investment in the Omega Airlines (“Omega Airlines�), in order to assist them in making their own evaluation of the investment. Omega Airlines will be the first low cost low fare airline in Southern Eastern Europe. This Business Plan analyses available information but does not purport to contain all of the information that a prospective investor may desire. In all cases interested parties should conduct their own investigation and analysis of the Omega Airlines Project and the data set forth in the Business Plan. This Business Plan does not constitute an offer to sell shares in any company, and no contract may be entered into on the basis of the information contained herein. This Business Plan has been prepared by Omega Airlines from information and opinions provided by its founders as well as from external consultants and sources. The projected Business Plan, as well as each projection of financial results, reflects various assumptions concerning anticipated results, which may or may not prove to be correct. Such projections are by way of illustration only and such projections or assumptions are by no means to be considered as a promise or guarantee as to future performance. The information herein is delivered to the addressee for information purposes only in order to assist the addressee in deciding whether to proceed with a further investigation of the Omega Airlines Project and upon the express understanding that each such addressee will use it only for this purpose. While the information contained herein is believed to be accurate as of the date above, Omega Airlines expressly disclaims any and all liability for representations and warranties, expressed or implied, contained in, or for omissions from, this Business Plan or any other written or oral communication transmitted or made available. Each recipient of this Business Plan is required to make an independent investigation and verification as he deems necessary and must assume full responsibility for any decisions he may make to invest in any part of the Omega Airlines Project. No responsibility or liability is or will be accepted by Omega Airlines or by any of their respective officers, employees, or agents, as to any matter, information or opinion contained in this Business Plan or for any omissions from this Business Plan. As should be well known to investors, the economy of Greece is in a period of transition. As a result, it is difficult to anticipate all future conditions which may have a significant impact on Omega Airline’s operations, including, but not limited to, the cost of labor, as well as future legal developments. By accepting the Business Plan, the recipient acknowledges and agrees that: a) all of the information contained herein is subject to a confidentiality agreement previously executed by the recipient; b) without limiting the generality of the foregoing, all the information contained herein is of a confidential nature and the recipient will keep all of such information and all other information made available to the recipient in connection with any further investigation confidential; c) without limiting the generality of the foregoing, none of such information will be used by the recipient or any of its employees or representatives in any manner whatsoever, in whole or in part, other than in connection with its evaluation of Omega Airlines for the purpose of considering its investment in the Omega Airlines Project on the specific basis proposed herein; d) without limiting the generality of the foregoing, the recipient will not reproduce the Business Plan, in whole or in part, and will not distribute all or any portion of the Business Plan to any persons other than a limited number of the recipients employees or representatives who have a clear need to know such information for the purpose set forth above in (c) and who are informed by the recipient of the confidential nature of the such information and agree to keep such information confidential; e) without limiting the generality of the foregoing, if the recipient does not wish to pursue this matter, it will return the Business Plan to Omega Airlines together with any other material which the recipient may have received from Omega Airlines, or its advisor, as soon as practicable; f) any proposed actions by the recipient that are inconsistent in any manner with the foregoing agreements will require the prior written consent of Omega Airlines. Omega Airlines reserves the right to negotiate with one or more prospective investors at any time, excluding all others, and to enter into a definitive agreement for investment into the Omega Airlines without prior notice to any other prospective investor. Omega Airlines reserves the right to terminate or vary, without assigning any reason therefore, procedures or negotiations with any party in respect of the Omega Airlines Project, or any transaction in relation thereto, at any time prior to the signing of a binding agreement for investment into the Project or any part thereof. Any disputes, claims, proceedings or any other legal rights or processes arising hereunder or connected herein in any way whatsoever will be governed by and construed in accordance to the laws of Greece. The distribution of the Business Plan and the acquisition of any part of the equity in Omega Airlines in certain jurisdictions may be restricted by law or require authorization, approval or consent. Recipients of the Business Plan are required by Omega Airlines to inform themselves about and to observe any such restrictions or obtain any such consent. All communications or inquiries relating to these materials and the proposed transaction should be directed to Omega Airlines.

Omega Airlines S.A. Thanassis Kokkotas Chairman & CEO


Table of Contents Overview First LCC dedicated to charters operations in SE Europe

7 9

Company profile Omega Airlines SA Founders and management Other Executive Officers

11 13 13 15

Marketing strategy Proposed sales and marketing strategy Market Segmentation Image Media/tactics

17 19 20 20 21

Operating Plan Operating Plan European Network North America Network 2013 The high cost structure of the incumbent carriers in Europe

25 27 28 28 29

Product definition Chartered Flights Auxiliary Revenue Website Aircraft fleet Potential lessors Wet Lease In Aog Cases Or Long Maintenance Work Insurance Airport operations Management Style Financial requirements Financial requirements Exit strategy Trade Sale

33 35 35 37 38 39 39 39 40 40

Appendices Projected Profit & Loss Statement Operating Data Cost Calculation Cash Flow Corporate ID Applications

49 51 53 53 54 55

43 45 45 47


Overview

Business Plan


Business Plan

Omega Airlines is based on the model of Southwest Airlines

First LCC dedicated to charters operations in SE Europe

Greece is among the top 20 tourist destinations worldwide. The majority (75%) of tourists visiting Greece are coming using various airline charter companies. Omega Airlines will be the first Greek carrier to use the low cost model and offer charter flights to the market; both domestic and international. The airline has already made agreements with major tour operators in Europe and the USA for a number of charter flights. That will be the core and the main occupation for the first three years. Due to today’s economical situation in Greece, the management of the company decided that although the country is an ideal destination for tourists, nevertheless all agreements/contracts concerning flights and revenues will originate from countries with a better financial situation. The countries that we dealt with were mainly Russia, Austria and North America. The dynamic of these markets is substantial. The simplified procedures for issuing visas from Russia and the professional relations with the tourism market in the above countries helped us to come into agreements and sign contracts. As mentioned above, the company has already agreed for the next season on a number of charter flights between Russia and Greece as also between Austria, Greece and Cyprus. All these contracts are not new. They have already existed in the market for more than 15 years. In addition, Omega has already agreed to connect Greece with USA and Canada all year round, using the same business model. The company has already agreed on a number of charter flights between, Chicago, New York, Montreal, Toronto and Athens. With those agreements Omega airlines will have revenue from day one, and the goals stated in Appendix 1 should be materialized.

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Company profile

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Business Plan

Omega Airlines SA Omega Airlines S.A. is a joint-stock company incorporated in Athens, Greece. It was founded from a team of entrepreneurs and individuals with a successful career in tourism and aviation industry. The purpose of the company is to become the leading low cost airline in South Eastern Europe, where many popular destinations are not serviced by any efficient low -cost airline. Our basic principles will be simplicity and value for the customer. Based on these principles and on a detailed three year plan which incorporates all the necessary steps, deals and milestones, we are confident that we will achieve our purpose. Initially Omega Airlines will offer charter services to Greece from USA and Europe, based on our plan, though we are confident that within three years we will be a successful low fare carrier which will serve many countries and destinations around Southeastern Europe.

Founders and management A team of highly experienced professionals founded the company in 2012 after a thorough analysis of market conditions. The team combines their experience and knowledge of the airline industry in Europe and in North America.

Thanassis Kokkotas Thanassis started at United Airlines (UAL), as an Account Executive, where he developed expertise in the airline sector for market strategies, public relations, interfacing with external agencies and developing business plans. Thanassis was Commercial Manager, for Superfast Ferries, where he was instrumental in developing a quality product making the company a market leader. Thanassis was a director in Sky Europe, the first low cost airline for Eastern Europe based in Vienna. Through these positions in all modes of transportation, he has acquired extensive experience with distribution networks not only of airlines but all competing modes. Thanassis is also a certified commercial pilot. He was educated both in the EU and the United States, receiving a Bachelor in Business Administration from Steward University in Georgia, USA, and a Masters in Business Administration from SGU in Oxford, England. Thanassis was also trained in Computer Sciences at Control Data, Inc., in USA

Fr. Nicholas Alexandris Father Nicholas is a Chairman of Government Affairs – Greek Archdiocese of Toronto Canada and Member of the Archdiocese Council and Member of the Consultative Committee of the Greater Toronto Airports Authority. He is a Host and Executive Producer of the Greek-Canadian Community current affairs television program “Personalities” on the Greek-Canadian Odyssey Television Network (viewed by over 50,000 homes across Canada). Father Nicholas Alexandris holds a Master is Psychology – Sociology from University of Ottawa and a Bachelor of Arts from University of Athens. In October 2009, he obtained an Airline Management Integration Diploma – IATA – Montreal, Quebec. Father Nicholas is also a member of Travel Industry Council of Ontario (TICO), and Liaison Officer between the Archdiocese and the Greek Board of Trade. 13


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Dionyssis Kalogerogiannis Dionyssis has worked as a sales executive in various Fashion companies when in 1984, he dynamically got into the clothing marketing business, where he founded Bizarre fashion Company. In 1989, along with his businesses in the ready wear market, he bought 2 luxury sailing yachts and started dealing with marine tourism till 1997, when he acquired Yacht Chartering Company Meandros. Meandros was initially active in the marine tourism. He increased Meandros Yachts ownership while managed and operated a large fleet of luxury yachts. In the following years, Meandros became Meandros New Concept S.A, one of the most successful companies in the yachting and the general tourism market by launching the products Loyalty Vacation Packages, one of the most successful, long-term B2B marketing programs that have never been conceived. Meandros New Concept has worked with many Greek and international most recognized companies who wanted to motivate and reward the people who make their business a success. F-FOKAS, DIXONS, GERMANOS – COSMOTE , MEDIA SATURN, CLUB HOTEL CASINO LOUTRAKI, NOKIA MOBILE PHONES are some of them. Nowadays, MEANDROS NEW CONCEPT offers high quality tourism services and expands its activities abroad.

Bill Alefantis Bill has held the position of CFO at HI Tours until just recently, a portion of which he acquired in 2004. From his beginnings at his father’s travel agency in 1984 to his immense success throughout the years, he has gained solid experience in the Travel Industry and has been making his mark on the travel market in Eastern Canada for the last 27 years. He holds a Diploma in Management from the Montreal Business School and looks forward to his new duties as CCO of Omega Airlines.

Peter Chilakos Peter started his travel career in 1986, working as a sales agent for his family travel agency. In 1991 he merged with another agency and later that same year, launched HI Tours, the leading Tour Operator in the Greek market across Canada. Peter holds a Bachelor Degree in Chemical Engineering from McGill University. Throughout his career he has acquired a wealth of information pertaining to marketing, distribution and product development. He looks forward to his new role as Vice president of Cargo Operations North America for Omega Airlines.

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Business Plan

Other Executive Officers Michael Neromyliotis, Technical Manager

Michael, has over 30 years experience in a/c maintenance related fields from various positions as airframe and power plant mechanic to technical director, from line maintenance up to heavy maintenance. With professional training at various a/c types and qualifications from H.C.A.A. , to EASA Part. 66.

George Siamos, Ground Operations Manager George, holds a Bachelor’s Degree in Political Studies and a Master’s Degree (M.Sc.) from the Institute of Regional Development. For 20 years, he worked at Olympic Airways mainly as an Economist, registered to the Economic Chamber. He occupied several positions at Olympic Airways in the Accountancy Department; he was responsible of Strategic and 5-year planning for the Corporate Planning Evaluation.

Vasileios Dorizas, Flight Operations Manager Vasileios, holds a UK Commercial Pilot’s License JAA –FCL ATPL (A) / Instrument rating from Oxford Air Training School. He has over 27 years of Flight and Training experience at Olympic Airlines, with more than 13.000 flight hours in public transport multi-engine aircraft. Since 1984, he’s filled the positions of Training Director, Type rating Instructor, as well as Chief Pilot B-737/200, and Commander of type A340-300, B 737-300/400 and A 300/B4.

Regarding the critical functions of operations and maintenance, we have reached agreement with some strategic trade partners to fill these positions with executives from their organizations who will bring required management expertise, and who will introduce critical systems and processes.

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Marketing strategy

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Business Plan

Proposed sales and marketing strategy Since Omega’s services will be fully booked for the first three years of operation there is not any substantial measurable threat or weakness for the relevant period (unless a major unpredictable event occur like a natural disaster). Omega will be concentrate in getting extra revenues from secondary resources, and in getting prepared for the swift into low cost airline by the end of the three year phase, according to the plan.

SWOT ANALYSIS Strengths Existing market demand – The flights that the firm needs so as to be sustainable are already booked! • Agreements with the largest Russian tour-operators for charter flights. • Agreements with the major Canadian tour-operators for the North America product. • Contacts with advertising agencies and newspaper publishing houses: obtained important discount and negotiated barter agreements. Proven Business Model Experienced Management Special agreements with the Greek airports Low labor and management cost

Weakness Economic recession

Opportunities To become a major, low cost airline in the whole southeastern Europe region. The touristic flow will increase because of the reduction of the cost of living in Greece In order to deal with recession government will support any kind of large investment in Greece Alliances with other airlines may bring even more passenger flow in the airline.

Threats If the company delay in starting to operate, another airliner may see the “window of opportunity”

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Business Plan

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Market Segmentation Omega’s consumer market is large and varied. The following segments describe it.

Groups • Schools • Sport clubs

Tour-operators and travel agencies • Charter flights • City trips

Corporate accounts and governmental organizations

Image Positioning Omega wants to position itself as the first “low-fare, high customer satisfaction” airline in SE Europe. Destinations, partners, and security will be the main promotional messages.

Themes And Slogans Themes for ads will include humor, freedom (to travel), and the concept of being a “bridge” across Europe and N. America. A slogan could be “Need some fresh air?” to describe the “freshness” of the Airline.

Corporate Identity Omega will develop a strong corporate identity, which will be visible on the aircraft as well as on the shuttle buses, the company cars and in all advertising campaigns. With a blue background, Omega’s aircraft will distinguish themselves from easyJet (orange) and Virgin Express (red). The golden element of the logo will represents the sense of stability, security and of the comfort that the passenger will experience when travelling with Omega Airlines.

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Business Plan

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Pricing During the operation as a charter company our price policy will be flexible, meeting the needs of the agencies that are hiring the airline’s services. It has been arranged a fixed basic service price with the agencies, but they will have the ability to add on extra services in competitive prices, if they want to. Omega will be the price leader in the market utilizing thus the benefits of the firm’s structure and development. Specific pricing strategies will be arranged concerning the secondary activities of the firm, too. (advertising placement)

Promotion Strategy The first three years Omega will operate in B2B bases, so a relevant strategy is adopted. During the end of this period Omega will prepare the communication strategy for the shifting to a B2C low cost airline. In this plan we will be focused on the actions regarding the B2B relations of the first operational period of the company. A B2B marketing has to do with building up strong relations with the customers. All the tools that will be selected will mostly be below the line. Since the company has already developed a “core” of key clients, there is not need for an expensive “boom” strategy in the company’s launching. There should be, however, some press releases and contacts with other agencies that could be interesting for Omega Airlines’ further development. Regarding the stage that Omega Airlines will shift to a low fair airline there will be of course a completely different strategy, which will be planned in detail a year before, in order to be relevant with the current circumstances. However it is almost certain that as the firm will be getting closer to the shift day, a buzz will have to be created into a greater audience. Generally Omega will be focused in keeping the marketing expenses low. However, even with a small budget the airline will try to make the most out of it. Buy using modern technology focused strategy and media exchange wherever this is possible. Our communication goal will be to build up a strong brand that will bring confidence and trust to our clients. Needless to state, that the marketing department, will be coordinated with the sales department in achieving the airline’s strategic goals.

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Media Print The creation of the company profile brochure that will represent theairline’s values and competitiveness. This brochure will provide info to potential customers and other stakeholders. It will also be a useful tool for the sales team.

PR • Omega plans to hold at least one event annually for its clients, aiming at reinforcing its relations with the company’s clientele. • Omega will participate in all major exhibitions worldwide, such as WTM, ITB etc. • Press releases. For any important development or new service that Omega will provide, there will be relevant press releases that will be published in the industry’s web portals and magazines.

Direct mail A monthly published electronic newsletter with company news, achievements and useful information for the company’s clients

Sales Promotion Specific extra discounts and rewards will be arranged for the agencies that show high performance in their collaboration with our firm.

Advertising Despite the fact that we are focused mostly on “below the line” strategies and tactics, some advertising in the industry’s magazines and portals could take place, mostly by banners and ad exchange through our in flight magazine and web site.

Internet/Social Media Omega Airlines develop a powerful website that will help the agents to have a trouble- free comunication with the firm; the agent will be able to work with Omega even using a smart phone! The overwhelming capabilities of Omega Airlines website can be seen in the relevant paragraphs in the operation Chapter. The company will hold a facebook page and a twitter account and presence in Linked in. It is also expected that the top management will have some presence which will support the firm through their personal accounts. The social media strategy initially at least will be focused on brand and relations building.

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Business Plan

Marketing SBUs In flight innovation Omega will create auxiliary revenues in order to maximize the profits. One activity will be the creation of an In-flight-magazine with interesting content that will be a good advertising medium. Using modern digital print technology we will be able to create issues customized for the customers’ destination. That will give the ability to Omega to sale focused advertising services in relation with the passengers’ destination. However the magazine will not be the only on board activity. There will be of course TV monitors onboard which will provide entertainment to the passengers. However there will alsobe commercials and sponsors to the tv program. Omega will create, in collaboration with post production firm, custom advertising films for products that will be sold on board! More ideas are to come, as samples distribution of FCMP, or sales promotion coupons. Or even on board small events!

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Operating Plan

Business Plan


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Business Plan

Operating Plan For the first three years of operation, Omega Airlines is fully covered regarding the demand for the airline’s services, since it has already reached agreements with major tour operators in Russia, Canada and Austria. Being booked for the first three years Omega will focus initially on keeping the costs low and on maximizing the profits through secondary activities (e.g on board advertisement, duty free shopping et al) .

Keeping The Cost Low The company has negotiated important discounts at the Greek airports on landing fees and handling charges.

Milestones - Omega Is Ready To Fly! Company • Omega s.a. is incorporated as a joint-stock company in Greece. • Launched advertising campaign in Greek and Russian media for the recruitment of pilots and other personnel. • Obtained more than 1.500 applications for all positions. • Pre-selected 6 crews per aircraft. • Found ideal office space close to the airport.

Operations

• Contacts already arranged with aircraft and engines manufacturers. • LOI in place for 2 Airbus 319 and 1 Airbus 340-300. • Important discounts obtained on landing fees and handling charges in Thessaloniki, Moscow and St. Petersburg, plus several other advantages, including free parking for passengers and a marketing budget to promote the airport in Greece. • We are in the screening process for selection for: aircraft maintenance, aircraft insurance and pilot training organizations, jet fuel companies.

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European Network

North America Network

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Business Plan

The high cost structure of the incumbent carriers in Europe The success of a low fare carrier is predicated on the maintenance of a low cost structure. We believe the key issues underpinning the cost advantage relative to the traditional airlines for focused low fare carriers include:

Simplicity The traditional airline attempts to service many different market segments on a single flight. This means that there is generally a business class service that adds significant costs. Furthermore, it provides other bundled services such as meals, frequent flyer programs and airport lounges. While these services are of some value to some customers, the low fare carriers do not attempt to compete in this market, preferring to offer a basic service, which ensures lower costs and high system reliability. However, since we are offering charter flights, we are ready to adapt to any request the customer should arise.(i.e. different meals on board, VIP service throughout the flight etc).

Higher aircraft utilization The operation of a streamlined fleet (easyJet only operates Airbus 320 family aircraft), offering a simple service to customers, and avoiding the very congested airports, ensures that low fare carriers have much higher aircraft utilization. This reduces unit costs and capital employed relative to the competition. Most of the time, charter flight operators are willing to use secondary airports in order to keep the costs low.

Lower distribution costs Traditionally, the sale of airline seats has been made through GDS (Amadeus,Worldspan, Galileo, Sabre). and currently this accounts for between 10-15% of the traditional airlines’ cost base. Our online reservation system will save the company of the above costs. The booking system will be developed in a way that it will give freedom and flexibility to our client so as to make as many changes as he likes even up to 2 hours before departure or just before the check-in opens at the airport.

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Low unit costs The key to cost advantage is maintaining high aircraft utilization and minimizing the sales intermediaries between the customer and the airline. While different accounting practices, levels of disclosure and network structures make the comparison of different cost bases an inexact science, the graph below highlights cost per passenger carried for different types of airlines. The low fare carriers have a huge advantage per passenger over the traditional carriers due to shorter stage length and higher asset utilization. Therefore, there is a strong argument that the traditional carriers should not even try to compete for the bulk of the customers travelling on the low fare carriers. Moreover, since we offer B2B services they give our company even a greater flexibility and cost advantages.

Omega Airlines - cost/ASM ($ cents-2008 Source: U.S. Department of Transportation)

Omega Airlines Destinations & Routes Tables Route overview Summer 2013 - Thessaloniki

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Route overview Summer 2013 - Rhodes Isl.

Destination

Country

Destination

Country

Moscow

Russia

Moscow

Russia

St. Petersburg

Russia

St. Petersburg

Russia

Ekaterineburg

Russia

Ekaterineburg

Russia

Prague

Czech Republic

Prague

Czech Republic

Frankfurt

Germany

Frankfurt

Germany

Vienna

Austria

Milan

Italy

Warsaw

Poland

Rome

Italy

Linz

Austria


Business Plan

Route overview Summer 2013 - Kos Isl.

Route overview Summer 2013 - Kalamata

Destination

Country

Destination

Country

Moscow

Russia

Moscow

Russia

St. Petersburg

Russia

St. Petersburg

Russia

Ekaterineburg

Russia

Ekaterineburg

Russia

Prague

Czech Republic

Prague

Czech Republic

Frankfurt

Germany

Frankfurt

Germany

Milan

Italy

Milan

Italy

Warsaw

Poland

Warsaw

Poland

Rome

Italy

Rome

Italy

Linz

Austria

Linz

Austria

Route overview Summer 2013 - Base Corfu Isl.

Route overview Summer 2013 - Santorini Isl.

Destination

Country

Destination

Country

Moscow

Russia

Prague

Czech Republic

St. Petersburg

Russia

Frankfurt

Germany

Ekaterineburg

Russia

Milan

Italy

Prague

Czech Republic

Warsaw

Poland

Frankfurt

Germany

Rome

Italy

Milan

Italy

Linz

Austria

Warsaw

Poland

Rome

Italy

Linz

Austria

Route overview 2013 - Athens

Route overview Summer 2013 - Santorini Isl.

Destination

Country

Destination

Country

New York

USA

New York via Athens

USA

Toronto

Canada

Toronto via Athens

Canada

Montreal

Canada

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Product definition

Business Plan


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Business Plan

Chartered Flights Omega Airlines will be the first low-cost, low-fare airline in South Eastern Europe. The airline will operate charter service to European destinations (not limited) and the flights will be characterized by:

• modern equipment operated according to European JAR regulations; • simplicity (one class product); • electronic ticketing (no classical coupon ticket); • distribution via internet, call centre and travel agencies.

Drinks and snacks Omega will be a no-frills airline. However, it will be up to the charterer what kind of meals he will offer on board. Tea, coffee and water will be available for free.

In-flight duty free Duty-free goods will be available onboard. Our client’s profile is already known and we are more than happy to find out that they belong to the middle and upper class. That gives us the opportunity to maximize our profit from the duty free sales, since we are able to tailor make their needs. Any client can use our web-site to pre-order any kind of goods that are available through our company.

Auxiliary Revenue Our business model is based on pre-agreed charter flights. Therefore, we already know the profile of our passengers. That gives us the opportunity to tailor make our products either on board or through our web site. In addition, the magazines that we are planning to launch will help us to achieve our goals. We estimate that a percentage between 12% and 16% of the total revenue will be generated from the above activities.

Electronic ticketing The printing, mailing and processing of tickets costs money. Instead, Omega’s passengers and their respective partners, the tour operators, will receive a confirmation number when calling for reservation or booking on the Internet. Upon request, this number can also be confirmed by an SMS message. By simply presenting this number at the airport desk, with the passenger’s passport, Omega will issue a boarding card. Passengers will never have to worry about forgetting their ticket again. In case they need a confirmation (e.g. a secretary for her boss), Omega will send them a fax.

Reservation centre Reservation agents will answer customers in their native language. Omega will use the reservation software Flight Speed from Open Skies. the Company was created by David Neeleman, whose extremely successful airline, Morris Air, was the first innovator of the e-ticket transaction. Open Skies and its hosted reservation solution is an innovative technology, providing solutions to the world’s leading low-cost and efficient airlines. The Flight Speed reservation system offers an appealing, intuitive graphical user interface that follows the optimal reservation call flow. This reservation system enables the user to focus on the sale and satisfaction of the customer, not the computer. Reservation agents learn to use Flight Speed and become productive significantly faster than with other systems. Dramatic increases in booking rates and strong sales conversions are the result of instant access to customer information, schedules, and fares.

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Internet booking The web site www.flyairomega.com will be instrumental in the airline’s communication strategy. It will provide information about destinations, timetables, fares and the company (press releases and job offers).

The online reservation system will also be based on a solution from Open Skies. The Omegalights e-suite includes an internet booking engine which allows customers to look up schedules, reserve flights, and purchase tickets from anywhere in the world, via the Internet. A clean and intuitive interface, complimented by strong encryption on a secure server ensures safe and customer-friendly transactions. The Omegalights e-suite provides a modular suite of advanced Internet solutions for optimal direct customer interaction: • OmegaSales: Foundational product for high volume Internet sales direct to airline consumers; • Omega Agent: An advanced Travel Agency module allowing registration and booking capability directly via the Internet. • OmegaTime: A real-time, graphically appealing flight information system for access by customers via the Internet. • OmegaSeats: Easy-to-use, seat assignment module for instant, online access to seat inventory.

The OmegaAgent function will allow corporate accounts and governmental organizations to book flights directly via their Intranet, at corporate rates agreed with the airline or use chartered flights instead. Omega’s web site will include the most modern features such as the Surf&Call and Call back options. With Surf&Call, potential customers can be connected to Omega’s call centre directly from the web page. The communication is established over the Internet, with a simple VoIP (Voice over IP) plug-in for the browser. The Call back option allows the customer to enter his name and telephone number, and a reservation agent will call him back within 5 minutes.

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Business Plan

www.flyairomega.com

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Aircraft fleet Omega will start operations with three aircraft. The fleet should increase to four aircraft after two years. The airline will operate with one single type of aircraft to keep maintenance and training costs low. Omega’s objective is to become a cost airline comparable to Southwest or Ryanair. In terms of fleet compatibility with these carriers, the Boeing 737NG / Airbus 320 Family are the norm among European low cost airlines. Given the size of the market and the potential development of the charter market, Omega will start operations with Airbus 319 and 340 aircraft. The A319 aircraft offers an ideal combination of low cost per trip and per seat, enabling thus the airline to offer low fares and stimulate the charter market. Furthermore, the addition of transatlantic routes to the network obliges us to include the Airbus 340 in our fleet to cover this market. We want to make our passengers feel the safety and the comfort that the Airbus 340 can offer.

Type of aircraft leasing – European network – Airbus 319 We have agreed on terms with Volito AB, for 2 units, both A319 type. Volito Aviation Services AB is part of the Volito Group, headquartered in Malmö, Sweden, with subsidiaries in Dublin and Singapore.

Type of aircraft leasing – North America network – Airbus 340-300

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Volito Aviation Services is jointly-owned by Volito Aviation AB (80%) and The Goldman Sachs Group, Inc. (20%). Volito Aviation AB was established in 2001 by the primary shareholders of Indigo Aviation AB and has since been active in acquiring and leasing commercial jet aircraft.


Business Plan

Potential lessors Omega will dry lease its aircraft. The airline has been in contact with the following major aircraft leasing companies: • Air Canada • Alafco • AMS Aircraft Limited • Apex Air • Babcock & Brown • DVB Bank • Eagle Aviation • GA • GE Capital Aviation Services (GECAS) • International Lease Finance Corporation (ILFC) Omega would prefer to lease its aircraft from a major leasing company, because thanks to their very large fleet of aircraft, they are able to offer more flexibility should the airline wish to upgrade its fleet to next generation aircraft. Negotiations are in place with different leasing companies. We are confident that we will finalize the selection of the aircrafts within the agreed timetable.

Wet Lease In Aog Cases Or Long Maintenance Work A typical reason for taking an aircraft on wet lease would be during AOG situations (Aircraft on Ground). In these scenarios Omega Airlines will sub-contract an aircraft from another airline and since they will already have all traffic rights in place for the route they want to operate, it makes more sense to just Wet Lease the aircraft.

Insurance There are basically four types of in insurance

1. Aircraft Hull Insurance

This is in order to protect the lessor against damage or loss of the aircraft itself.

2. Third Party Liability

This is to protect the airline against claims that may be made by other people - for example, if the undercarriage damaged the roof of a house when the aircraft is landing; or if it hits another aircraft whilst taxiing on the ground.

3. War Risk Insurance

This is applied by insurance underwriters if the aircraft intends to operate into countries or areas considered by them to be dangerous. If the airline operates into such areas without the additional war risk cover, then the hull and third party liability cover may become invalid. Most of the world’s ‘hot spots’ are well known, and it is therefore easy to guess where such cover may apply. This cover can be taken out for a specific period, or on a ‘per-flight’ basis.

4. Cargo Insurance

International regulations demand that airlines provide insurance cover for all passengers, baggage and cargo carried on their aircraft up to a specified limit. This limit is set by the Warsaw Convention, where the cargo liability currently stands at US$20 per kilo carried. It applies throughout the entire period the cargo is in the care of the airline, and covers theft, damage, loss or total destruction in the event of an accident. 39


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Airport operations Three handling agents are present in Greek airports, the Olympic Handling, the Swissport and the Goldair. The company is still under negotiations with handlers. Typical handling services include: • Passenger and baggage handling; Ramp handling; • Boarding passes and baggage labels; • Loading/unloading baggage, cargo and mail; • Lost and found; Surface transportation; • Load control and related documentation; • Lavatory service, water service, aircraft interior cleaning; Pushback;Ground power unit.

Management Style • Omega is an equal opportunity employer. • Development of a paperless communication culture, with the use of e-mail, voice mail and computerized fax distribution systems. • The management will favor the internal information flow using knowledge management techniques; incoming mail will be scanned, and all information will be made available to everybody (with the exception of payrolls).

Organizational Chart

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Business Plan

Management team will be composed of 9 people Human Resources Plan Management 1 1 1 1 7 1 1 18 18 56 16 1 1 1 1 1 2 1 1 1 1 1 2 1 1 1 1

Employees

1 1 1 1 1 1 1 1 1

Financial Department Chief Financial Officer Purchasing Manager Lawyer Revenue Accounting Manager Assistant Human Resources Department Human Resources Manager Payroll Officer Quality Department Quality Manager Information Technology Department IT Manager Webmaster

9

Total

139

Top Management Chairman /CEO Assistant Technical Department Technical Manager Technical Planning Supervisor Logistic Supervisor Assistant Flight Operations Department Flight Operations Manager Commanders Copilots Cabin Attendants Senior Cabin Attendants Senior Dispatcher Dispatcher Assistant Ground Operations Department Ground Operations Manager Operations Supervisors Customer service agents Assistant Commercial Department Chief Commercial Officer Marketing Manager Sales Manager Reservation centre supervisor Reservation agents Cargo & Charter coordinator Yield Management coordinator Catering manager Assistant

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Financial requirements

Business Plan


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Business Plan

Financial requirements The projected financial requirements cover the need for cash in the pre-operating phase. Omega’s cash flow projections show that $5,000,000 will be needed over the first two years, to cover mostly the deposits for the Airbus 340 and Airbus 319. In the investor’s kit there are two forms enclosed: The Investor Data Entry Application and the Purchase & Sale of Private Shares form. The prospective investor has to fill in these forms in order to invest in Omega Airlines. Omega Airlines can supply the investor with any additional financial or other information might be needed. In brief the use of funds will be as follows:

Use of funds:

1. FINANCING LAUNCHING AND INFRASTRUCTURE COSTS: • Deposit for the leasing of the Airbus aircraft; • Hardware equipment, call centre, reservation system; • Advertising campaign. That will be minimal, due to the fact that we have already agreed and sign contracts with the tour operators. Therefore, we will spend a small amount just to keep the customers and the market alert of our presence (see the relevant chapter). A detailed report about the expenses and the structure of the costs will be provided to the investor, annually.

2. FINANCING THE OPERATIONS OF THE AIRLINE UNTIL BREAK-EVEN IN THE FIRST YEAR OF OPERATION AND KEY FACTORS: • Low cost model • Charter operations for the first 3 years • Already made agreements with tour operators • Tour operators are among the stock holders of the company In addition of the above, the fact that in the airline industry everything can be leased or outsourced considerably reduces the downside risks of the venture.

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OMEGA AIRLINES

Exit strategy From the founders’ point of view, the two following exit strategies need to be carefully considered:

Initial Public Offering Several low cost airlines successfully went public in the last years: Ryanair, Virgin Express and most recently easyJet. • EuroBelgian Airlines founded in 1991 with BEF 50 million ($1,484,120), was bought by Richard Branson’s Virgin Group in 1996 for $68 million, before the company’s global IPO in November 1997 which valued Virgin Express at $225 million. • On November 15, 2000, easyJet joined the London Stock Exchange with a price tag of 777 million pounds ($1.11 billion). Reuters wrote: “EasyJet aims to follow in the slipstream of Ryanair, which trades at a prospective price/earnings multiple of 41, compared with easyJet’s historical PE multiple of around 27,” Ryanair is the European success story and is valued at around $3 billion now. In a report for Salomon Smith Barney, Andrew Light stated that: “The attraction of the low-cost airlines is their higher margin potential and greater growth potential relative to the rest of the airline sector”

Trade Sale Most existing low cost airlines started from scratch out of London or Brussels. But given the pace of their expansion, the next step is very often the acquisition of another small carrier. It was the case with Richard Branson and EuroBelgian Airlines which he renamed Virgin Express. Stelios Haji-Ioannou did the same with TEA before renaming it easyJet Switzerland. He also attempted to acquire Air Holland to establish a base in Amsterdam. Existing low cost airlines all pretend that they want to become the European low-cost airline, based on the model of Southwest Airlines in the United States. But they will soon discover that Europe does not stop in Munich or Rome! If they want to expand eastwards, Omega could be a good opportunity for them.

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Business Plan

Average Cost Vs Real Cost Avg. Cost / Passenger

Avg. ‘Real Cost’ / Passenger

(Flight Search Engine)

(including surcharges)

Air France

489,84

471,00

-4%

Lufthansa

365,81

367,38

0.2%

KLM

507,11

511,82

0.8%

Swiss

387,79

431,75

11.2%

British Airways

376,8

427,04

13.5%

Air Berlin

405,06

496,12

22.2%

Norwegian

538,51

665,68

23.5%

Germanwings

348,54

463,15

32.5%

EasyJet

216,66

416,05

91.8%

Ryanair

166,42

442,74

166.3%

Airline

% Difference

Source: Idealo.co.uk

700,00 600,00 500,00 Avg. Cos t / P as s enger (F light S earch E ngine) Avg. ‘R eal Cos t’ / P as s enger (including s urcharges )

400,00 300,00 200,00 100,00 Air F rance

S wis s

Norwegian

R yanair

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Appendices

Business Plan


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Business Plan

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Business Plan

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Cash Flow

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Business Plan

Corporate ID Applications

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Let’s Fly!



Omega Airlines