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Airtex Aviation

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Case Study: AirTex Aviation

Background:

AirTex Aviation was a fixed – base operation at San Miguel airport in Texas responsible for servicing the non-airline aviation market. The company was headed by Bill Dickerson and was close to bankruptcy. For the fiscal year of 1989 it made a loss of $500,000 on sales of $10M. Ted Richards and Frank Edwards purchased it on December 28, 1989 for $500,000. They knew each other from Harvard Business School and sought to find a business and turn it around using their expertise. Neither had any experience in the aviation market.

The Business:

The business that Frank and Ted purchased had several informal departments: 1. Fuel line activity – Headed by Will Leonard and consisting of 12 employees, operations generated revenue through retail fueling, wholesale fueling, fuel handling, rental cars and tie-downs (storage of air craft) 2. Service and Parts – Headed by Carl Green and consisting of 6 mechanics. Quality was high but department was inefficient. 3. Flight Training – Managed by Roy Douglas and consisting of 7 instructor pilots and three dispatchers, operations generated revenue through flight training and the pilot shop which sold flight supplies. 4. Avionics - Had a single employee, Leon Praxis, who repaired radios and electronic navigational equipment. 5. Aircraft Sales – AirTex had been a dealer of Piper Aircraft. AirTex became unable to finance the aircraft, fired the salespeople and closed the department. 6. Accounting – Sarah Arthur who had worked for the previous owner for 20 years managed the accounting department. Sarah effectively managed the company in the absence of the owner and formally had no accounting training.

The Challenges:

Frank and Ted sought out to implement new management and control systems so that AirTex could become financially stable. Ted assumed operational

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