Intro Aviation Management Tut Week 5 PDF

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answerings of basic questions of running an airline, these are from simulation that was done...

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Ou Week 5 Group posting 4 Group 51875 A Name: Gigi Telford, Ishita Keswani, Cheng Hang Yin, Plato Tsoi, Victor Rai, Emma Ewing

1. For your airline, what are the benefits and challenges of aircraft leasing? Benefits: -

Financial liquidity Capacity flexibility, Rapid expansion Fleet consistency (reduced maintenance cost)

Challenges: -

Less control over the quality of the aircraft Does not guarantee an airline sufficient supply for the demand it need Short term cost are more expensive

2. What kind of leasing might you consider for your airline? Currently we are dry leasing aircrafts allowing us to operate the aircraft ourselves and not adding any extra costs since we are only leasing the aircraft effectively. The type of lease we have done is short-term operating lease, since we have just started the company and not wanting to commit to longer leases. Further on we are considering financial leasing. With this type of leasing the financial effect is the same as a loan except that title to the asset remains with the lessor until all lease payments have been made. Under a financial lease our airline will gain ownership of the aircraft after the end of the leasing period in exchange for a pre agreed-upon sum. By doing a financial lease there will be no market risk on the value of the asset bourne by the lessor unless there is a default. In the future we might also consider doing a wet lease where the leasing company is effectively operating the airline. This type of leasing would be ideal if for example one of our planes get grounded. 3. Identify and describe your primary internal and external sources of funding. Internal source of fundings -

Ticket sale - Net earnings

We do not have external sources of funding. Though we have also gone through the stock market and shares on sale but due to no profits seen, we didn’t buy any yet. Also, we have put up some of our shares on the stock market and are looking forward for the buyers.

4. Describe your current financial position. Refer back to the course information and reading to answer this. Our airline online is currently making a profit. The most income is mainly from the tickets sales (~$100 million cash), the most expenditure is into operating costs (~$27.5 million). total income: ~$100 million Total expense: ~$53 million Net profit: ~$37 million...