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Cash is king


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#1
TarquinShrapnel-Carruthers

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There is a saying in business: “revenue is vanity, profit is sanity, cash is reality”. 

 

Businesses fail for many reasons but what usually triggers the end is running out of cash. High sales with good margins are great, but if you cannot pay the bills then you have a major problem.

AE is no different. If you want a highly ranked airline, managing your cash flow, especially in the early years, is vital. 

 

Obviously running out/short of cash will prevent you ordering new aircraft, but that is not all. Missing a lease payment incurs a 20% penalty on the next payment and reduces your credit rating. The worse your credit rating the higher the interest rate on new bonds, and the fewer aircraft you can lease. To reduce gate lease costs, you need to build terminals. In short, cash matters.

 

There are two components to managing cash well: forecasting cash available in the coming month, particularly in the early years, and cash-improving actions throughout the game.

I do the former using a simple spreadsheet (yes, sad) for the first year or so, thereafter it’s an even rougher calculation in my head.

 

There are two key days to watch: the 15th of each month, when payroll is due, and the 24th, when maintenance is paid. The converse is that the day after each are the ones when you can be most certain about how much you can safely spend.

 

Cash-positive actions include:

·       Maximise the use of aircraft (doh)

·       Maximise the use of gates (doh)

·       Choose routes with lower gate costs

·       Minimise the number of aircraft types you operate

·       Buy/lease multiple aircraft of the same type & configuration at the same time

·       Build terminals

 

If you get it wrong, it is not necessarily a disaster. In my current game, less than two years’ in, I have missed several lease payments but still enjoy a triple-A rating. But, if you do it repeatedly, then recovering to a game-leading position is tough. You might as well pull the pin: cease operations, start again, or join the next game.



#2
lightattheendofthetunnel

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yes



#3
RubberDuckGaming

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CA$H!!!

I will say that watching the 15th is unnecessary if you operate a strategy which earns you more profit per day than an entire month of wages for all employees.


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#4
TarquinShrapnel-Carruthers

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CA$H!!!

I will say that watching the 15th is unnecessary if you operate a strategy which earns you more profit per day than an entire month of wages for all employees.

 

Well, yes. But that looks like a pretty extreme case and I am not sure how you would achieve that position. How do you do it?



#5
Erion

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Well, yes. But that looks like a pretty extreme case and I am not sure how you would achieve that position. How do you do it?

Well, whoever does it obviously does it by way of spamlining. I dont think there's another way






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