The Fullbridge Program - Consulting Project Presentation

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American Express: Becoming a force in the AirTeam Jaguar

- Alex Goldenberg- Asif Khan- Kevin Lee- Sean Penso- Ananya Sahay

AmEx Premium Jets

“Express Travel. Across America.”

Downside Base Upside

($100,000,000.00)

$0.00

$100,000,000.00

$200,000,000.00

$300,000,000.00

$400,000,000.00

$500,000,000.00

$600,000,000.00

$700,000,000.00

$800,000,000.00

Projected NPV of Build vs. Buy Options (By 2018)

Build Buy

American Express Has

the Resources

and Opportunity to Build this

Service

Innovative Strategy

Advantageous Financial Position

Favorable Industry Environment

Strong Brand Recognition & Loyalty

It is the Right Time to Enter the Air-Taxi Industry

2013 air-taxi industry estimated market size: $2.06 billion

Projected growth by end of 2018: $4.02 billion

The top 12 US markets currently account for 78.5% of the industry.

10 out of 12 markets provide a very low entry barrier for new companies

Average of 600 miles per flight, 3 – 4 passengers

AmEx Will Cater to Wealthy Businessmen and Service the

Major Metropolitan Areas

Target Market Frequent Travel

Disposable Income

Desire for professionalism & luxury

Need for flexibility & efficiency

AmEx Will Cater to Wealthy Businessmen and Service the

Major Metropolitan Areas

Northeast West Southwest Midwest 0

50,000

100,000

150,000

200,000

250,000

243,512

99,386 102,684 102,170

Market Size by Region

Market Size

The Premium HondaJet

Efficient Workspace

Free Wi-Fi

Newest Jet Technology

Highest Safety Features

Entertainment Options

High Quality Food & Drinks

Ability to Make Phone Calls

Our Jets Will Provide the Highest Quality Service &

Safety

The American Express Brand Translates Well to “Premium

Jets”

Prestige

Tier-Syste

m

Quality

Service

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Financials

2014 2015 2016 2017 2018 $-

$50,000,000

$100,000,000

$150,000,000

$200,000,000

$250,000,000

$300,000,000

$47,427,530

$99,561,084

$164,536,624

$206,198,884

$252,041,810

Revenue

Revenue by Year

Net Cash Flow by Year

2014 2015 2016 2017 2018

$(20,000,000)

$(10,000,000)

$-

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$(17,570,969)

$(6,304,622)

$5,065,649

$23,695,402

$30,441,117

Net Cash Flow

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Key Assumptions

Pricing Strategy

Market Share

American Express Will Charge a Premium Price

$10,000 Avg. Price

High Quality Planes = High

Costs

Increase in SG&A Expenses

Premium Service & Amenities

Strong Brand Name

AmEx Will Obtain Optimal

Market Share by 2018

Express Travel. Across America.

Increase SG&A Expenses from base 20% of revenue to 27%

Intensive Training Programs for flight crew

Jet Blue comparative selling and marketing expenses

Our Strategy Projects a Significant Increase in Market

Share

Premium Jets

Loss of Partner Sales

Membership Benefits

Increase in Partner Sales

Effect of AmEx Premium Jets on Partners

Conclusion

Questions?

Appendix: Key inputs for our Sensitivity Analysis

Inputs Downside Case Base Case Upside Case

Fuel Costs

Build Input $1.56 $1.42 $1.28

Buy Input $1.79 $1.63 $1.47

Pricing

Build Input $8,000.00 $10,000.00 $12,000.00

Buy Input: Texas $8,500.00 $9,500.00 $10,500.00

Oklahoma $8,000.00 $8,750.00 $9,500.00

Market Share

Build Input Substract 2% Add 2%

Buy Input: Texas 47.00% 50.00% 53.00%

Oklahoma 22.00% 26.00% 30.00%

Terminal Growth Rate

Build Input 1% 2% 3%

Buy Input 1% 2% 3%