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We areWe are

Name MBA ID

Barna Paul 17-563

Sifat Sadia 17-564Saima Sultana 17-565

Group: 12

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  ase Overview

Low Cost Carriers

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Analysis of Airline Industry

Porter's Five Forces Model

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Analysis of Airline Industry ont’d

PESTEL Analysis

Political

Economy is in stable situation now 

Environmental regulation is very strict

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Analysis of Airline Industry ont’d

SWOT Analysis

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Analysis of Airline Industry ont’d

is! Analysis "#usiness is!$

Particulars 2003 2004 2005

Deree !f !"eratin

le#erae

 

4.06 17.56

$e#enue %aria&ilit' ()%*

0.17

 

%aria&ilit' in +BI,()%*

4.13

 

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Pro/le' State'ent

• Should the management of Air Berlin delay

the initial public offering (IPO)?

•Would it be better to delay the offer by a ee!or more? If so" hat ould potentially

happen?

• Would it be most sensible to loer the range

of the offer price? If so" to hat price range?

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 Alternative ourses of

Action

Base case valuaRelative valuation

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Analysis of Alternatives

Assu'0tions for valuation of /ase case

Assum"ti.ns

$e#enues r.t rate 150

).st .f ..ds s.ld 70

 ,a $ate 20

Sales and maretin 500$esearc andde#el."ment

500

De"reciati.n 150

Net 8.rin ca"ital 200

)a"+ 6 ,erminal r.t $ate 0048A)) 22Banru"tc' ).st 25Pr.&a&ilit' .f Distress 9

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Analysis of Alternatives

ont’d

1aluation of #ase ase

%alue .f +nter"rise 712:01454

Add; )as and )as +

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Analysis of Alternatives

ont’d

1aluation of #ase ase "Si'ulation$

/.recast; %alue Per Sare

Statistic/.recast#alues

 ,rials 1:000:000Base )ase 4=02Mean 5106Median 4935M.de >---

StandardDe#iati.n

25203

%ariance 63:51=95

Seness 00939?urt.sis 362

).e@ .f%ariati.n

4=4

Minimum -1:73946

Maimum 1:=6901Mean Std +rr.r 025

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Analysis of Alternatives

ont’d

1aluation of #ase ase "Sensitivity$

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Analysis of Alternatives ont’d

1aluation of #est and worst ase

8.rst case%alue .f

+nter"rise 641124

Add; )as and)as +

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%ou are wit&

Sifat Sadia

I() M#A *+,-.2

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Analysis of Alternatives

ont’d

Assumptions for #aluation of Pri$ate Placement

Assumptions

Revenues Growth rate 20%

Cost of Servie 62%

!peratin" #$pense 20%

a$ Rate 2&%'epreiation 5%

 (et )or*in" apita+ 3%

Cap#$,%

ermina+ Growth Rate 0.04)ACC

16.44%-an*rupt Cost 30%/roai+it of 'istress 10%

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Analysis of Alternatives

ont’d

#aluation of Pri$ate Placement

 %alue .f +nter"rise1:535:016=0

ess; /l.atati.n ).sts (7*10:50000

Add; )as and )as +

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Analysis of Alternatives

ont’d

1aluation of Private Place'ent "Sensitivity$

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Analysis of Alternatives

ont’d

Assu'0tions for 1aluation of O0eratin3 Lease

Assum"ti.ns

$e#enues r.t rate 200

).st .f ..ds s.ld 70

 ,a $ate 20Sales and maretin 500$esearc andde#el."ment

1500

De"reciati.n 150

Net 8.rin ca"ital 200

)a"+ 6 ,erminal r.t $ate 48A)) 25Banru"tc' ).st 25Pr.&a&ilit' .f Distress

2

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Analysis of Alternatives

ont’d

1aluation of O0eratin3 Lease

%alue .f +nter"rise 3:500

Add; )as and )as+

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Analysis of Alternatives

ont’d

1aluation of O0eratin3 Lease "Si'ulation$

/.recast; %alue Per Sare

Statistic/.recast#alues

 ,rials 1:000:000Base )ase 543=

Mean 5714Median 5365M.de >---

StandardDe#iati.n 31067%ariance =6:51432

Seness 00764?urt.sis 366

).e@ .f%ariati.n 544Minimum -2:16627

Maimum 2:45163

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Analysis of Alternatives

ont’d

1aluation of O0eratin3 Lease "Sensitivity$

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Analysis of Alternatives

ont’d

Assu'0tions for 1aluation of IPO

Assum"ti.ns

$e#enues r.t rate 20

).st .f Ser#ice 62

!"eratin +"ense 19

 ,a $ate 29De"reciati.n 5

Net 8.rin ca"ital 3

)a"+ = ,erminal r.t $ate

0048A)) (2006-09* 16448A)) (200=-15* 1661Banru"tc' ).st 25Pr.&a&ilit' .f Distress 9

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Analysis of Alternatives

ont’d

1aluation of IPO

""er $ane

 %alue .f +nter"rise 2:623:54757

ess; /l.atati.n

).sts 44:50000Add; )as and )as+

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%ou are wit&

#arna Paul

I() M#A *+,-.4

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Analysis of Alternatives

ont’d

+elative Valuation

%alue "er sare Sales "ersare 040

%alue)as C. 26

%alue+BID,A96

NA% "er sare 1=72

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eco''endations

Value ,ershare &-.

/e0t to e1uity

2ase case Valuation 49!" **3 543

Private Placement #$%! #"34%3

O,erating Lease #459 **3543

6PO &"!!9. at theo'er ,rice o( )#

**!) 4)3 #93

6PO &"!!9. at theo'er ,rice o( )%

$"$% 4)3 #93

i i0 i ( h

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/istri0ution o( Share

Pri#ate Placement

r.ss "r.ceed  150:00000

/l.tati.n c.st 

10:50000

Net "r.ceeds 

13=:50000

!@er Price 1200ne sare issued 125007tili8ation o(Fund

 

"urcase .f air &us

(50*

 

6=:75000De&t re"a'ment(10*

 13:=5000

fundin .ranicr.t (40*

 55:90000

Net "r.ceeds

 

13=:50000

IP! (200=*

r.ss "r.ceed 200:00000

/l.tati.n c.st 34:00000

Net "r.ceeds 166:00000

""erPrice

.erPrice

!@er Price 2000 1500

ne sareissued

 10:000:000

13:333:333

N. .fSares

32:500:000

35:933:333

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han: ;ou

Any