A passenger transport company reduced its operational risk and increased its valuation by USD 40 million by optimizing its business model

A passenger transportation company had been reporting losses for four consecutive years, putting the sustainability of its business at risk.

To reverse this situation, it was necessary to restructure its route network, mitigating operational risks related to accidents and reducing the loss of value associated with unprofitable routes.

The challenge involved developing a more efficient and safer model, aligned with the company’s strategic objectives.

Approach

In collaboration with the client’s team, at SummaPartners we established criteria to assess the operational and financial risk of each route, considering variables such as risk exposure, profitability, and demand. Based on these, we designed and analyzed multiple route closure scenarios and evaluated their financial and operational impact.

We updated the business model, focusing on optimizing the company’s value proposition and adjusting its service offerings to maximize profits in the new scenario. This process included valuing the company based on the optimized operating model and creating a detailed implementation plan to ensure an effective transition within six months.

Impact

The initiatives implemented made it possible to close 30% of the routes (the least profitable and highest-risk ones), resulting in a 0.5 percentage point improvement in the EBITDA margin. We also managed to reduce recurring CAPEX by 50%, which increased the company’s valuation by USD 40 million.

The company not only optimized its profitability but also achieved a safer and more sustainable operation over time.

This comprehensive approach addressed immediate financial needs and laid the foundation for long-term sustainable growth, ensuring greater resilience in the face of future challenges.

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