eds and the eds logo are registered trademarks of electronic data systems corporation. eds is an...

EDS and the EDS logo are registered trademarks of Electronic Data Systems Corporation. EDS is an equal opportunity EDS and the EDS logo are registered trademarks of Electronic Data Systems Corporation. EDS is an equal opportunity employer and values the diversity of its people. © 2004 Electronic Data Systems Corporation. All rights reserved. employer and values the diversity of its people. © 2004 Electronic Data Systems Corporation. All rights reserved.

Driving Agility: In a Rapidly Changing Industry Jim DullumVice President, US Transportation Industry

Driving Agility: In a Rapidly Changing Industry Jim DullumVice President, US Transportation Industry

© 2004 Electronic Data Systems Corporation. All rights reserved. © 2004 Electronic Data Systems Corporation. All rights reserved.

AgendaAgenda

• EDS Transportation Presence

• Airline Industry Trends and Directions

• Creating the Agile Airline

• The Challenge


EDS Transportation PresenceEDS Transportation Presence


EDS: A Global CompanyEDS: A Global Company

• Leading global services company

• More than 130,000 employees in 60 countries

• Revenues of $21.5 billion

• 45% of revenue from outside U.S.

• Ranked 87th on the Fortune 500


Deep Knowledge of Global IndustriesDeep Knowledge of Global Industries

GovernmentGovernment TransportationTransportation

Consumer Consumer Industries Industries & Retail& Retail

CommunicationsCommunications

EnergyEnergy

Financial Financial ServicesServices

ManufacturingManufacturingHealthcareHealthcare

EDS brings solutions to clients in each industry


EDS US Transportation Market SegmentsEDS US Transportation Market Segments

Air Services

Freight,Logistics &Rail

Travel& Hospitality

• Hotel• Cruise• Vehicle Rental• Gaming• Tour Operator

300+ Clients in 60+ Countries

• Airlines• Air Cargo• Airports• Air Service Suppliers

• Rail• Trucking• Ocean• Container• Courier• Third Party Logistics (3PL)• Distribution (CRS, GDS, TA)• Passenger Rail/Mass Transit


EDS US Air Services EnvironmentEDS US Air Services Environment

435 million passenger transactions per year

Res Systems, Departure Control, Fare Pricing, Flight Ops

30 year old, dual use, expert-user core systems

150M messages/day9 processors1,328 MIPS

3.2 Terabytes

330M messages/day24 processors20,211 MIPS45 Terabytes

TulsaCharlotte

Sabre Multi-Host Clients (52)

Other SHARES B Clients (8)


Airline Industry Trends and DirectionsAirline Industry Trends and Directions


Key Airline ChallengesKey Airline Challenges

Air Services Sector OverviewAir Services Sector Overview

• Cash flow and liquidity

• Asset utilization and total cost of operations

• Regulation on passenger, staff and facility security

• Yield erosion

• Distribution effectiveness

• Alliance synergies

• Recovery is fragile

• Growth of LCC’s; share from Network and other LCC’s

• Permanent yield shift, despite business travel recovery

• Cost reduction and cash flow emphasis

• Fleet rationalization; Regional jets

• Growth of Alliances

Air Service TrendsAir Service Trends


US Airline Industry Earnings Since 1960US Airline Industry Earnings Since 1960

Source: Eclat Consulting; Arlington, Virginia


Industry Yield has Declined at an Unprecedented RateIndustry Yield has Declined at an Unprecedented Rate

Source: Air Transportation AssociationEclat Consulting; Arlington, Virginia


The Rise of Low Cost CarriersThe Rise of Low Cost Carriers



Brief Review of Industry Changes 2000-2003Brief Review of Industry Changes 2000-2003



Unprofitable Network Carriers versus Profitable LCCsUnprofitable Network Carriers versus Profitable LCCs



The Network Carrier Costs Remain Substantially Higher Than Those of the LCCsThe Network Carrier Costs Remain Substantially Higher Than Those of the LCCs



Network Carrier Costs Remain Substantially Higher Than Those of the LCCsNetwork Carrier Costs Remain Substantially Higher Than Those of the LCCs



Worldwide RJ DeparturesWorldwide RJ Departures

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

An

nu

al R

J D

ep

art

ure

s

1995 1996 1997 1998 1999 2000 2001 2002 2003

USA Canada Europe Latin America Asia/Oceania Africa/ME



RJ % of Fleet Operations – The AmericasRJ % of Fleet Operations – The Americas

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Delta

Contin

enta

l

Unite

d

Amer

ican

Mid

west

North

west

Amer

ica W

est

US Airw

ays

Front

ier

Air Can

ada

AirTra

n

Varig

S.A

.

Alask

a

Departures ASMsSource: Eclat Consulting; Arlington, Virginia


Great Pressure to Perform, Compete, GrowGreat Pressure to Perform, Compete, Grow

Source: BTS Form 41 (Traffic), T-100 (Market)

Consequence: Reduce Complexity- Industry moves from TPF environment?Consequence: Reduce Complexity- Industry moves from TPF environment?

Airline Industry Trends

-20

0

20

40

60

80

100

120

1999 2000 2001 2002

Rev

enu

e $

(Tri

llio

ns)

0

50

100

150

200

250

Pas

sen

ger

s (T

rill

ion

s)

Passenger Service Operating Revenues Operating Profit Passengers


Creating the Agile AirlineCreating the Agile Airline


What is Agility?What is Agility?


What is Agility?What is Agility?

Visibility

Velocity

Flexibility

QualityEfficiency


Focus on Recovery FundamentalsFocus on Recovery Fundamentals

Today’s extraordinary times place a dominant focus on Cash and Customers, reshaping airline priorities…

CXO Agenda

Cash Growth Margins Velocity ROI Customers

• Scale operating costs to revenue

• Maintain liquidity

• Manage working capital

• “Re-stimulate” traffic, create and fulfill demand

• Restore public confidence

• Provide safe operating environment


Reshaping Airline PrioritiesReshaping Airline Priorities

StabilizeStabilizeTheThe

BusinessBusiness

SecureSecureTheThe

BusinessBusiness

RebuildRebuildTheThe

BusinessBusiness

• Financial restructuring and aggressive cash management

• Operational effectiveness, network rationalization and improving operating performance

• Designing and implementing new passenger security measures

• Market responsiveness with network strategy, alliances, fleet planning

• Position key recovery Position key recovery technologies with technologies with reservations, CRM, reservations, CRM, flight operations and flight operations and MROMRO

• Position mid/long-term deployment of comprehensive biometric-based security solutions

The future can be in enabling the Agile Airline with TPF


Driving Down Costs Through Re-platformingDriving Down Costs Through Re-platforming

Steady-State Platform Comparison

Mainframe NSK Hybrid

Environment

Per

Mes

sag

e C

ost

Data Processing Costs

• Variable cost per simple pricing message

• NSK represents an > 80% improvement over mainframe

• Hybrid represents a > 90% improvement over mainframe

Midrange

Source: Craig Murphy, Senior VP and Chief Technology Officer, Sabre Holdings2003 Sabre Holdings Corporation. All right reserved.


Most Global 2000 companies have a journey to make as the IT profession maturesMost Global 2000 companies have a journey to make as the IT profession matures

EV

EN

TS

Sen

se

Re

spo

ns

e

EV

EN

TS

Sen

se

Re

spo

ns

e

EVENTS

Sense

Response

Mfg/Dist/Sales

Back Office

Pro

cure

me

nt

Ma

rketin

g

EVENTS

Sense

Response

Lev

erag

e

• Centralized data management

• Simplified end-to-end business processes

• Highly scalable, secure network

• Application renewal skills

• Surge capable capacity

• Enabling integration platform

• IT program and process management skills

Building an Agile Enterprise

MULTI-YEAR

JOURNEY

H

HLSpeed

Demand Event Supply Event


Agile AirlineAgile Airline

Global Secure NetworkGlobal Secure Network

Services

Tool

sHardware

Carriers

Secur

ity

Agile Infrastructure

Edge

Compute & Storage

NetworkSecur

ity

Tool

s

Agile Infrastructure

Edge

Compute

StorageSecur

ity

Tool

s

Agile Applications

Composite Solutions

Business Applications

Application Capabilities Devel

opm

ent

Inte

gratio

n

Global Secure NetworkAirline Business Processes

Finance/Admin

New S

ervi

ces

Flight/Tech Ops

Passenger Services

Allian

ces


Funding the InvestmentFunding the Investment

CXO/CIO challenge — reduce fixed costs in order to fund higher value activities

Fixed

Variable Development

Development

Maintenance

Maintenance

MaintenanceInfrastructure

Infrastructure

Infrastructure

100%

Cost Reductions

Cost Reductions

Development


The ChallengeThe Challenge


Your ChallengeYour Challenge

How is this community going to extend TPF to speed up the transformation

and create the Agile Airline?

EDS Confidential – Do Not DistributeEDS and the EDS logo are registered trademarks of Electronic Data Systems EDS and the EDS logo are registered trademarks of Electronic Data Systems Corporation. EDS is an equal opportunity employer and values the diversity ofCorporation. EDS is an equal opportunity employer and values the diversity ofits people. © 2004 Electronic Data Systems Corporation. All rights reserved. its people. © 2004 Electronic Data Systems Corporation. All rights reserved. EDS Confidential – Do Not Distribute

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