After completing the transformation of UK carrier Astraeus into a purely aircraft provision and leasing business, airline president and CEO Mario Fulgoni is now eyeing cautious growth ahead.
The carrier has just completed its first summer of business after switching to wholly providing dry, damp and wet-lease aircraft, dropping its charter and scheduled operations from the start of May.
"When I came back we discussed the strategy," explains Fulgoni, who rejoined the company first as chief operations officer last year before leading the new strategy as CEO from the start of 2008. Fulgoni had moved with Astraeus’ training division Bond Aviation Solutions, when it was sold in 2005.
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"We had to get the complexity out and get back to what we are good at. And what we are good at is operations."Mario Fulgoni |
"We had to get the complexity out and get back to what we are good at. And what we are good at is operations."
The carrier was initially set up to specialise as a niche charter operator in the 150-seat segment, looking to serve the tour operators.
"There was a market for it, but it was a shrinking market," says Fulgoni, pointing to consolidation in the tour operator sector. As a result the carrier branched into further activities, such as scheduled routes and ACMI work.
"It was jumping into bits of the market, looking to find a niche," says Fulgoni. "It made it a very complex business. That drives a lot of people in what was a shrinking market."
Consequently it opted to focus its nine aircraft on the operational side of its business and quit the scheduled and charter market, stripping out the overheads associated with running these businesses.
"We lost 96 people and still operate the same number of aircraft, which gives some idea of the complexity of the business [at the time]," he says. "Our business is not selling tickets to the public, it is operating the units."
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© Astraeus |
Under the new strategy Astraeus - which operates a mix of nine Boeing 737-700s and 757-200s - had aircraft operating over the summer with BMI, Ghana International, Iceland Express and Sterling Airlines. The aircraft for the latter had already come off lease prior to the Danish carrier’s collapse last month, and the airline says it is operating profitably and has much of its fleet committed until the end of 2010.
"All the work we do is contract based. I have visibility for 12 months going forward," says Fulgoni, though he notes the downturn might impact the rate at which the carrier looks to grow. The carrier says it is still being approached to support new start-up projects, even during the difficult conditions.
"We could expand, there is enough opportunity to expand today. We have chosen not to do it. It’s about de-risking the business," he says. "As the market thins out, new opportunities arise, whether that’s next year or the year after, and when they do, that’s exactly the market we are in, to support the new start-ups."
Part of that growth includes a move to secure its first Airbus narrowbodies - giving it greater flexibility to meet customer needs - and discussions on supporting a long-haul project.
Fulgoni stresses the company’s operations are not affected by the failure of Sterling Airlines - the two companies together with Icelandic Express have common Icelandic shareholders. The company says legally there is no connection between Astraeus and Sterling as the ultimate shareholders hold the two investments in separate legal entities. "We’ve had complete support from them," adds Fulgoni of its shareholders.
Source: Airline Business
