How This Senior Manager Overcame Resistance to Slash $45 Million in Costs

OK. Um All right, let me give you the the situation there. Um. I'm in charge of a bunch of uh coastlines. One of the coastlines that I'm in charge uh in uh Lacam is contingency and compensations. This is all the money that you spend when you have a passenger that. You did not fly according to what he bought. So you, you, you have to give him an, a hotel, an overnight stay or you delay his flight or you damage his luggage. So this is the kind of money that we spend with affected pets, um. Last year pre-pandemia Laan used to fly 75 million packs and 1.8 million were what we call affected bags, so this kind of passengers that, uh, for some reason or another, and you did not fly the way you sold him the

bags, the passengers, passengers 11.8 million. 1.8 million people are affected from the 75 million people annually that we use to, to, to transport. Uh, this is a line that, uh, for, for it's around $110 million is spent just on it, OK? And one of the targets that I have for this year, so this is a major problem. What we want to reduce this line, we want to affect less passengers, we I want to do something about it. Uh, so this year, uh, last year I had a target to, although I have this 1 $110 million to spend with these, these people, I had a target of finding savings of, uh, $45 million and reduce those costs, uh, $45 million so half of it. I, I kind of have almost half of the money that I was previously assigned. I, I had to look for, for savings. And so I set out to see uh how I would be, you know, looking for these savings. And one of the things that I, I had to do Uh, was to go back and search for root causes of that. So, uh, I had to work with this, uh, operation, um, director, who was the one that on a daily basis decided which flights to cancel, where, which flights to postpone, which, which group of passengers to, uh, to affect. Uh, and of course, it, it's like, it's an old guy, you know, 20 plus years in aviation. I don't know how much time in Latan, so quite resistant, and I, and I was, and I've been in Latan though I know I have some uh airlines. And experience for, you know, over I don't know 10 years around that. I've been in Latin for 1.5 years only. So I, I'm, I'm, I'm kind of a junior, uh, and I'm a general manager and he, he's a director, so all kinds of resistance I, I, I faced there, uh. Uh, but, uh, I knew we, we are, we are all on the chapter 11, so I knew although he was resistant, uh, he, he, he, he gotta have the same target that I had, which is cut down, cut, cut down on those, uh, costs. And that's, this is how I sold him. So I, my, my idea was to approach him, you know, look, you, you have this target. I also have this target because we all have targets of saving costs because of Chapter 11. So we might as well work together and Analyzing the first set of data that I, that I put, I approached him with more with questions than with uh final data. So I would say, you know, I found out we affect 1.8, we affected 1.8 million passengers in, in 2019. How, how was your feeling about that? Do you think we did a great job here or we could have affected less passengers? So I would go on data with this uh kind of approach, try to, to, to win him over, uh, the, the subject, and we eventually, uh, came up with a together plan, uh. Uh, to look, uh, to look and see, uh, and, and have a, a, uh action plan and put up a, a group of work to see where we could, uh, have opportunities to, uh, deep, deep, deep dive and, and, and try to come up with idea initiatives, uh, for, for cost savings. Uh, my, my learning was, uh. Sometimes it's easier said than done, so I have some preconceived, uh, things that I thought he would be able to do and I understood why he wouldn't. At the same time, I, I, I think, uh, I proposed stuff that he uses and, uh, eventually, uh, for the 45 million, uh, saving targets that I had, uh, he had a, a Uh, he, he came on board with me on the same, uh, not on the same official, not on the same target, but, uh, he helped me out and we, we eventually closed the, the year with, uh, 43.5 million savings, uh, identified. And I, I did not stop there. Uh, when, when it was October, November last year, we were building budget for this year, we're building it up for this year, and I build it together with them. So all the saving initiatives that we came up with ideas, uh. I was able to to include them in this year's budget, so this year instead of the $110 million to spend or $110 plus the $45 that I had to to uh look for savings, uh, I have a real budget of $82 million to spend with these affected passengers and uh. And, and that's it. So we, we were, we, I managed not to do this stuff last year with him, but also this year's budget with input from operations and, and work together for a more real budget.

I There is no, there, there is no formal process the way he does it, you know. So, for example, there is, I'll give you an example. There is one thing that we call bike. And I know you're gonna like it because I think you like bicycles. Uh, a bicycle, to do a bicycle is like, uh, you have a flight and it's canceled. What do you do? Do you put these people in the next flight and put, put the people in the next flight in the other flight and go like that, like something rolling down deep on flights available, next flight available, or do you You, this flight is canceled, do you put these people, uh, not all of them on the next flight, but let's say you cancel 100 seats and you have available 10 seats for the next flight. So you put 10 people and the other 900, you put in another flight, in another flight, in another flight. And one big question that we had was, which was less expensive? Should I affect a bigger group of people? Uh, because I go moving people like that from 5 to 5, or should I, uh, affect one group of people but in a bigger length of time, and this kind of decision, uh, he used to make by himself. Nobody was there questioning him, you know, you should do this, you should do that. And what I proposed was like that, let, let's, and he liked the, the bicycle. He used it to do. Doing this, you know, moving people around and affecting like 300 people instead of, instead of 100 because he, he, he, I think operationally it's easier for him. So what I proposed was let's make the calculations and let's see what is less costly, you know, I don't need to know what costs more if it's to move people like that or to move the same group of people to, to, uh, you know, a, a lengthier period of, of time. This is one of the things he, he, he, he had somebody, you know, question him on, on costs, on procedures that he used to make, uh, and he's been made for a long time.

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