Air Leo
Financial Plan
Forecast
Key assumptions
In addition to the general financial and business assumptions presented in the following table, the key parameters presented on the next page also were included as Operating Assumptions in formulating the financial portions of this business plan.
Every effort was made to be realistic in these Assumptions, and if anything they were formulated conservatively, particularly in calculating initial load factors and revenue yields which, in practice, should be considerably higher than offered here. Additionally, passenger and cargo fares were considered to be flat over the entire period covered by this plan to compensate for the possibility that additional competition could force fares to remain relatively constant over the period. However, the objective of this exercise was to show that the proposed operation will be profitable even with much lower revenues than would normally be expected, and the numbers do in fact confirm a profitable outcome.
Additionally, expected net revenues from offering peak-demand special flights also are calculated. They are set apart separately from the scheduled-service revenues to show that both types of service – and particularly the more important scheduled service – are viable and the airline will be profitable even without these additional revenues.
The assumptions utilized here are based on dry leasing new Avro RJ100s at a high level of outfitting and with necessary spares included. A separate set of figures is provided following the Operating Assumptions section which gives a cost comparison should the decision be made to purchase the aircraft new, utilizing ECGD export financing for 85 percent of the purchase price of the aircraft.
Revenue by Month
Expenses by Month
Net Profit (or Loss) by Year
Financing
Use of funds
Start-up Expenses
Legal and consulting $200,000
Route and market study $100,000
Office supplies, stationery etc. $10,000
Brochures and marketing materials $30,000
Design consultants $60,000
Corporate insurance $20,000
Office rent $50,000
Software and systems development $100,000
Expensed equipment and off. furniture $150,000
Expensed vehicles (8) $100,000
Public relations and advertising $80,000
Crew, staff training and manuals $60,000
Other $30,000
TOTAL START-UP EXPENSES $990,000
Statements
Projected Profit and Loss
| 2018 | 2019 | 2020 | |
|---|---|---|---|
| Revenue | $41,527,300 | $95,102,400 | $149,146,500 |
| Direct Costs | $1,997,851 | $4,605,528 | $7,266,483 |
| Gross Margin | $39,529,449 | $90,496,872 | $141,880,017 |
| Gross Margin % | 95% | 95% | 95% |
| Operating Expenses | |||
| Total Operating Expenses | |||
| Operating Income | $39,529,449 | $90,496,872 | $141,880,017 |
| Interest Incurred | |||
| Depreciation and Amortization | |||
| Gain or Loss from Sale of Assets | |||
| Income Taxes | $0 | $0 | $0 |
| Total Expenses | $1,997,851 | $4,605,528 | $7,266,483 |
| Net Profit | $39,529,449 | $90,496,872 | $141,880,017 |
| Net Profit/Sales | 95% | 95% | 95% |
Projected Balance Sheet
| 2018 | 2019 | 2020 | |
|---|---|---|---|
| Cash | $39,529,449 | $130,026,321 | $271,906,338 |
| Accounts Receivable | $0 | $0 | $0 |
| Inventory | |||
| Other Current Assets | |||
| Total Current Assets | $39,529,449 | $130,026,321 | $271,906,338 |
| Long-Term Assets | |||
| Accumulated Depreciation | |||
| Total Long-Term Assets | |||
| Total Assets | $39,529,449 | $130,026,321 | $271,906,338 |
| Accounts Payable | $0 | $0 | $0 |
| Income Taxes Payable | $0 | $0 | $0 |
| Sales Taxes Payable | $0 | $0 | $0 |
| Short-Term Debt | |||
| Prepaid Revenue | |||
| Total Current Liabilities | $0 | $0 | $0 |
| Long-Term Debt | |||
| Long-Term Liabilities | |||
| Total Liabilities | $0 | $0 | $0 |
| Paid-In Capital | |||
| Retained Earnings | $39,529,449 | $130,026,321 | |
| Earnings | $39,529,449 | $90,496,872 | $141,880,017 |
| Total Owner’s Equity | $39,529,449 | $130,026,321 | $271,906,338 |
| Total Liabilities & Equity | $39,529,449 | $130,026,321 | $271,906,338 |
Projected Cash Flow Statement
| 2018 | 2019 | 2020 | |
|---|---|---|---|
| Net Cash Flow from Operations | |||
| Net Profit | $39,529,449 | $90,496,872 | $141,880,017 |
| Depreciation & Amortization | |||
| Change in Accounts Receivable | $0 | $0 | $0 |
| Change in Inventory | |||
| Change in Accounts Payable | $0 | $0 | $0 |
| Change in Income Tax Payable | $0 | $0 | $0 |
| Change in Sales Tax Payable | $0 | $0 | $0 |
| Change in Prepaid Revenue | |||
| Net Cash Flow from Operations | $39,529,449 | $90,496,872 | $141,880,017 |
| Investing & Financing | |||
| Assets Purchased or Sold | |||
| Net Cash from Investing | |||
| Investments Received | |||
| Dividends & Distributions | |||
| Change in Short-Term Debt | |||
| Change in Long-Term Debt | |||
| Net Cash from Financing | |||
| Cash at Beginning of Period | $0 | $39,529,449 | $130,026,321 |
| Net Change in Cash | $39,529,449 | $90,496,872 | $141,880,017 |
| Cash at End of Period | $39,529,449 | $130,026,321 | $271,906,338 |
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