Tallink

Abstract

Tallink was founded in 1989 with one vessel and one route but has grown to a fleet of 19 vessels, allowing the company to offer a wide range of services and frequent departures. The company needs assistance with three changes it is considering. The first change is the purchase of a new ship at a cost of 150 million euros. The second is whether to retrofit an older ship and establish a new route to / from St Petersburg, being the first company to do so. Lastly, the company wants to optimize its current fleet. The first two changes where analyzed using Excel. Based on the projected cash flow from the investments and using a discount rate of 12%, the net present values (“NPV”) of the investments were calculated. Both investments have a positive NPV as such the company should purchase a new ship and establish the new route to St Petersburg. The last change required the use of the Solver tool in Excel, to determine which routes justified resource allocation. Using Solver to optimize the allocation of Tallink resources revealed the routes that were most profitable and thus deserving of the highest resource allocation. The proposed route from Tallin to St. Petersburg proved the least profitable in terms of passenger revenue per one-way trip but we still recommend establishing the route given the positive NPV.

Tallink Group Case Study

Tallink Background

Tallink was founded in 1989, offering one route of 80 kilometers between Helsinki and Tallinn on the charter vessel M/S Tallink. Today the company has over 9 million passengers and 19 vessels. With the vision of the CEO Enn Pant is a leading provider of high-quality mini-cruise and passenger transport services in the Baltic Sea region, as well as a leading provider of cargo services on selected routes. Tallink’s fleet of 19 vessels allows the company to offer a wide range of services and frequent departures.

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