Lintern32:
Hi theGodfather, will be having an interview for the Paris office and would appreciate any insights from your experience. Thanks for your help!

Classic PE:

How to estimate Revenue and EBITDA of an airline company

3 scenarios: Prices up = 10% increase in Revenues More flights= 10% increase in Rev. More passengers= 10% increase in Rev.

Which scenario is less impactful on ebitda

 

I'm trying to think through this one. I guess what the question is asking is which scenario has the biggest impact on costs. You would have to take into account the fact that airlines have high operating leverage and the nature of which costs are fixed and which are variable etc.

Prices up = 10% increase in revenues: would have no impact on costs and drop straight through to EBITDA, making it the most impactful

More passengers = 10% increase in revenue: assuming no change in the number of flights (i.e. more passengers purely = higher seat capacity utilisation), this scenario would lead to slightly higher fuel costs (due to the higher takeoff weight of the aircraft). Fuel costs are a variable cost. This would likely have middle degree of impact on EBITDA

More flights = 10% increase in revenue: this would lead to higher fuel costs per above (but likely have an even greater effect, since you are adding whole new flights rather than making pre-existing ones heavier) but also increase the airline's proportion of fixed costs in the form of landing slot/parking costs. This would likely have the last impact on EBITDA

Is this correct? Could someone please opine/let me know if I am thinking about this correctly? Would be much appreciated!

 
Most Helpful

I'm sorry to say that I'm not actually contributing anything super valuable to this thread, I only dropped in to say that seeing the words Rothschild Merchant Banking in writing is just such an incredibly fucking imperial string of words. They convey an implication of dominance and power that transcends capital. I want these words attached to my name.

“Millionaires don't use astrology, billionaires do”
 

FAPI is Rothschild's European PE Arm. FACP is their new American PE arm (halfway through fund 1). LMM. Healthcare / Software and web enabled services. Pretty sure FACP only takes associates though. Growing. Cross-border deals as well. Rothschild Merchant Bank is full of ex-DLJers.

 

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