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  • #001178

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going negative on the cash flow every 14 to 15 days

Posted by Jet-A Marinade on 10 April 2012 - 06:03 AM

Been going negative on the cash flow every 14 to 15 days of every month...

It's kinda hard leasing planes, paying employees wages let alone trying to give them a raise without going in the "crappers" halfway through the month.

I only operate 3 763ER's, 1 B712 and a mixed fleet of B73G/738/739/739ER's not to mention I STILL have a single B736 on the order sheet that hasn't been delivered yet.

I've gone bankrupt and restarted over 15 times cause of this and i'm getting a bit frustrated trying to keep a single profit every month without going deep into the red.

I think this is a situation that needs to be looked at and solved, cause no one wants to run a profitable airline and then catch a badrap and going bk because their profits are siphoned out every 15 days!!!

Mahalo Nui Loa!!!

Keone

Most monthly costs (gate leases, aircraft maintenance, taxes, etc) are paid at the end of every month (after the 24th day). Payroll is paid on the 15th of every month. That's why your cash decreases twice a month.

The reason you're constantly going bankrupt is a strategy problem. I have 3 main tips for new airlines:

1) fewer aircraft types (keep to 1-2 families in the beginning) - each additional family adds huge maintenance costs that are uneconomical if you only have 1-2 aircraft in the family
2) more flight hours / higher aircraft utilization (especially in the startup phase)
3) spend money on leasing more aircraft, don't waste it on IFE/IFS

You're operating 1 717, a few 737s, and 3 767s. This will increase your maintenance costs dramatically and from what I can tell is the primary culprit responsible for your cash drain. If you follow tip #1 above, your growth will stabilize much more quickly and you're much less likely to go bankrupt. Once you have a steady stream of aircraft joining the fleet (in the same families), it's actually quite easy to make profit hand over fist. ;)

changed status to: Not a Bug

Yuxi is always correct..........it is very good advice. You really have to stay with no more than 3 familes of a/c until you hit the 10-15 mil a day and then add another family if you must.

If you lease a very expensive gate, use every slot of that thing when starting off. Make full use of it. Once you hit the 25 mil a day profit, it will be a really rare day when you go red.

Money is really easy to make. Too easy really.

Thanks for the reply...

My biggest mistake was grabbing that one sole B712 and that B739 (non-ER). The rest of the fleet made great profits even when going up against others that are operating widebodies.

As they say, you learn the hard way, no? lol

Mahalo again :)

One trick to remember, when still young airline.........you can only spend money on the 5-6 and the 18-19 of the month.........that gives you time to get back out of the red and time to save for those big costs you are about to incur.

15-20 mil a day profit are your magic numbers when you can pretty much not worry about going in the red.

Thank you for the insight and advice :)

Just seen your airline

Flying 4 hours a day on a single 717 will be costing a fortune, plus at 26 years old the maintenance will be high too - get rid of that plane. You also have a lot of gates at 6% usage or below - perhaps you could move planes to fly between fewer gates?

Maybe try to avoid the competition as much as possible. I nearly bankrupted my first airline and that was with no competition on my routes at all to start with.

Just seen your airlineFlying 4 hours a day on a single 717 will be costing a fortune, plus at 26 years old the maintenance will be high too - get rid of that plane. You also have a lot of gates at 6% usage or below - perhaps you could move planes to fly between fewer gates?Maybe try to avoid the competition as much as possible. I nearly bankrupted my first airline and that was with no competition on my routes at all to start with.


Thanks, I got rid of the single B717 and shuffled some planes around. Some, not all routes are up and up with some competition, but it isn't that bad. I still do have some routes to either cut of shift around to reach max profit with the birds I have now. Most of the routes I have now are done by trial and error and so far the routes with the least amount of frequencies are doing fairly well.

I'm just gonna sit back and watch to see which ones need to be axed or have more frequencies added. **shrugs**

Thanks again :)





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