Lavan Financial Group

An aviation services company facing receivership flies to new heights

Fly-Port, an aviation services company in business for 8 years was failing and moving towards receivership. Scaling abruptly, and grappling with operational controls cash-flow had fallen to untenable levels. Remedial measures were needed to ensure survival while evaluating operations and any future strategy. Fly-Port were referred to Lavan by their corporate attorney. A business assessment with recommendations rapidly emerged to a dual plan of attack. A short-term plan was created including: a capital solution structured to lock in liquidity, executing highest priority quickest wins, closure of unprofitable stations, equipment redeployment to core ports, outsourcing administrative tasks, PEO engagement for improved benefits, cost reductions and various red flag risk mitigating projects carried out - All with an eye towards more extensive, progressive strategic plans.

An experienced consultant helped Fly-Port view, and work on the business with a renewed clarity, and remain myopically focused on essential tasks for the highest impact. With support a more cohesive leadership team evolved, collectively accountable and unified. As focused work was carried out, control was systematically gained back, and a disciplined progress drove net margins to increase above the Industry mean within 2 years. A framework and way of operating through ROSE, was instilled improving organizational health for a more predictable future.

Challenge

Fly-Port had experienced rapid growth operating at 10 airports from 1 in just a few years. Costs associated with the comprehensive ground airline services, and hindered by a long cash cycle, and inadequate credit facilities resulted in critical liquidity hurdles. Operations were laboring as rapid expansion into multiple new ports and startup costs exposed projected cash-flow flaws, exacerbated by additional capital equipment expenses, a deficiency in manpower due to employee licensing drag, hiring friction along with increasing staff turnover, elevated training costs, and the challenges associated with seasonality - LFG was initially engaged to undertake an organizational assessment, check operational status quo and provide remedial recommendations. The engagement rapidly developed to a broader advisory partnership extended over 3 years.

Primary Challenges

Liquidity - untenable cash-flow
High operational costs
Seasonality
Un-checked unprofitable growth
Operational control
Leadership cohesion and limited accountability
Limited metrics, goals, quotas or forecast
Poor operating reports - behavior to outcomes
High staff turnover
Poor financial modeling, projections and budgeting

Findings

Our analysis revealed holes in key operational drivers all very symptomatic of a company not ready to grow and scaling out of control:

Strategy: The strategic plan was haphazard, and largely centered on expansion without the strict financial modeling, forecasting and operational discipline to ensure the organizational health necessary for business success. Growth didn’t appear to be an issue, a rainmaker on the leadership team with strong industry relationships was winning new opportunities, but the leadership team did not have the experience across Finance and or depth of resources in Operations to scale in control or know to say no – Consequently, growth was mostly superficial and damaging. There was a vague plan to grow and get somewhere just not well- conceived or thoroughly considered. The leadership team would need to focus on remedial work to remain in business, and evolve to cohesively develop business strategy and execution of a longer-term vision.
People: who’s executing what part of the plan, with accountability. Having the right people in the right seats with capacity to execute. People represented up to 70% of overall business costs and had to be managed for an acceptable margin. Much of the initial tactical project work centered on people, process and location realignment to meet cost containment goals and expected margin hurdles.
Operations: quality delivery of sales’ promises to customers was a fundamental issue as they were inadequately resourced starting with the leadership team.
Financial: The traditional financial reports were not reliable and symptomatic of the broader people issues.

Solution

Fly-Port had not effectively connected data integrity to the company’s cash lifeblood, which funds all work towards the business strategic goal. To reach its goals the firm needed to effectively execute short term thematic goals to move the business back into liquidity; Downsizing, cost containment, redeploying people and equipment to service more effectively. Focus on core ports, and client profitability where new business was incremental. A focus on the right people (HR) doing the right things (Process) for the right (Results) meant some significant changes, and work on some thematic people projects including leadership.
‍
To achieve the short-term goals an asset-based financing structure was implemented to sure up cashflow, fund necessary closures, various risk mitigating projects and cost cutting exercises. Airplane towing services and heavy vehicle use was minimized across the entire organization and outsourced where contractually obliged. Dramatic insurance savings were achieved, payroll brought inline and people trained and concentrated in core ports. As the company emerged able to meet operational demands and a healthier cashflow established the work to operationalize the business began in earnest.
‍
Consistency was developed through the ROSE℠ operating system. Implementing operating reports were a catalyst for change tracking mechanics on activities with the right metrics on a dashboard connecting behavior and daily process to results. KPIs Costs, Quality, Timeliness, Customer satisfaction and Staff motivation, measured metrics linking people and process to results ensuring the right things were being done well and performance levels maintained.

results

"Lavan went above and beyond to work for our company, saving nearly 1300 jobs nationwide."

Fly-Port gained greater control, generating above industry net revenue within two years, plus a way of operating that delivers organizational health and a more predictable future as they continue to scale.
‍
"Trustworthy, professional, reliable and hard working. A true advocate for our organization. Lavan went above and beyond to work for our company and saved nearly 1300+ jobs nationwide. They have a true understanding of business and financial operations. The best consultant that we have ever worked with. The challenges seemed insurmountable at times however LFG was a solid rock to count on”

- CEO, Fly-Port

RESULTS

Institutionalized ROSE℠ driving overall organizational health and performance

- Established a strong leadership framework with cohesion, clarity, commitment and accountability

Turnaround - Failing company close to receivership, downsized and repositioned
‍
- Margin management 45% cost and expenses reduction driving profitability - tangible and intangible value (see KPIs)
‍
- High performing business - shifted to 10% net revenue within 2 years, and a way of operating to sustain organizational health and a predictable future.
‍
- Closed 5 unprofitable stations, concentrating operating in profitable ports. Managed out less attractive client contracts, renewed and extended attractive contracts. Established higher levels of recurring revenue and capacity to fulfill greater volume for higher margin

- Payroll managed from 70% to 55% of overall operating costs

Outsourced non-core roles

- PEO engagement freeing up valuable leadership time
- De -risked eliminating heavy equipment handling from core service
- > $600,000 annual saving insurance WC/GL savings
- less costly training
- Redeployed personnel
- Reduced turnover
- Refinance savings > $750,000 annual cost of carry

KPIs and performance metrics
- Customer satisfaction improved to above industry standards
- Timeliness of handling metrics
- Overall quality metrics with customers, vendors, funding, and risk mitigation
- Staff retention/turnover reduced by 8%

*We take our clients' confidentiality seriously. While we've changed their names, the results are real.

view other client stories

Fly-Port

An aviation services company facing receivership flies to new heights

Challenge

Findings

Solution

"Lavan went above and beyond to work for our company, saving nearly 1300 jobs nationwide."

Innovation Manufacturing

West UA Transport

Eventmedia Group