REFERENCES

Turning Malmö Aviation around

By Knut Solberg, president and chief executive officer, Malmö Aviation.

Our owner Per Braathen was not prepared to invest more money in Malmö Aviation unless the airline became profitable. Something had to be done to avoid the closure of the company.

We decided to make use of external help to get an independent view of the airline and to bring up problems in the organisation that might have been obvious but were nonetheless not seen or understood. The intention was to minimise the resources we used to operate the airline and to make an extensive cost reduction.

We selected Fredheim International to do the work because we know the company and because the firm provides airline experts with much experience in all areas of interest to us.

The “turnaround” was performed in different stages. Initially Fredheim International made an assessment of the whole airline organisation through in-depth interviews with the top and middle management. Each manager was interviewed several times and asked to come up with suggestions for organisational improvements and cost reduction.

We then received an extensive assessment report from Fredheim International. The report proposed changes for the airline as a whole including management changes. Detailed proposals were presented for each department including adjustments to the organisation and extensive staff reductions.

Did the report give us what we expected? The answer is both yes and no. Some of the proposals were in fact quite obvious although the organisation, for different reasons, had not discovered all of them. Other proposals were rather unexpected. The importance of a change in the corporate culture and the introduction of a “low-cost mentality” in the organisation were factors we did not see ourselves.

The second step was a project which identified and prioritised all possible cost-saving opportunities in the airline, both small and large. Even here we used external help and all employees were involved. Going through every activity and process in each department was very demanding for the organisation but revealed a lot of opportunities which we would not have discovered in full without support from our consultants.

The third step was an extensive benchmarking process. We were able to perform a detailed benchmarking study together with another regional carrier. The benchmarking compared use of resources rather than costs and helped us to verify the proposals made in the assessment report and the cost-saving project and to identify possibilities for further improvements. We were very pleased with the benchmarking study and we believe the work was also useful for the other carrier.

As a fourth step Fredheim was hired to support us in performing the proposed changes. Except for two large projects that are still running, most of the internal work has now been dealt with and we can already see some cost improvement.

The “turnaround” process was absolutely necessary for us and we are very pleased with the results. Without external support, we would not have achieved all the cost reductions and the efficiency improvements we are now enjoying. Another important factor is the time required to handle such activities. Without someone managing the process and putting pressure on both the management and the organisation, there is a great risk of delay and a loss of direction and confidence in the project.

In my view a process like the one we have just been through is necessary at regular intervals – every four or five years – to keep the organisation competitive.