Airlines Are Leaving Money on the Table


  • Research shows lack of cash-flow transparency means airlines are being too cautious

Zug, Switzerland | July 18, 2016– Over ninety percent of airlines know cash-flow forecasting and working capital optimization are priorities for their organization, according to recent research by Sapphire Innovation. Despite that, over 70 percent don’t have an effective cash-flow forecasting solution in place.

Paul Smith Eldridge, General Manager and President of Sapphire Innovation, said, “This survey shows the huge disconnect between airlines recognising that predictive cash-flow forecasting is a business enabler, and actually having an effective solution in place.”

Sapphire Innovation’s survey, carried out among 39 global carriers, also identified that nearly half of airlines continue to rely almost entirely on spreadsheets to predict cash-flow, which is highly inefficient. Furthermore, over 70% percent do not simulate and predict when they could pay suppliers, or when they could and should collect cash from customers.

Smith Eldridge continued, “The survey confirms my suspicion that airlines have not yet taken advantage of predictive cash-flow forecasting technology. They don’t have absolute visibility of their business so they have to be cautious, leaving money on the table they could otherwise use to reduce the cost of capital, improve their profitability, or be re-invested back into the business.”

One survey respondent said, “The booking profile and forex are vital for a healthy cash-flow forecast.”

Another said, “Fluctuation has been pretty serious in the last six months, amounting to something like eight percent.”

Smith Eldridge continued, “Manual cash-flow forecasting is highly complex, error prone and very time consuming. External changes such as fuel costs, foreign exchange fluctuations, and even the weather, compound the challenge. Having the right tools in place gives you access to accurate, automated cash-flow forecasting across the entire business, irrespective of the data sources, at the click of a button.”

On the specific use of spread-sheets a third respondent said, “Our cash-flow management is more like compiling data in a spreadsheet, analysing and executing rather than predicting up to one year.”

Smith Eldridge concluded, “Sapphire Innovation is the dream of any finance team in the aviation industry. No more sweating it out over spreadsheets, multiple versions of the truth, and trying to identify points of failure when the numbers don’t tally.

“Instead the Sapphire Innovation solution, You Predict, is like an octopus, getting its tentacles into whatever finance systems the airline is using. It helps the airline get a clear and accurate picture of cash-flow data, and take decisive action – all at the click of a button. A real bonus is that it can be implemented in four to six weeks, not the year other solutions take.”

Air Berlin, part of the Etihad Group, is Europe’s sixth largest airline and Germany’s second largest. It is a You Predict customer, using the innovative solution to provide unified accurate cash-flow forecasting to ensure working capital control.

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