Puddle Jumpers Airline
Financial Plan
Adequate financing is essential for a start-up airline. Our strategy remains a “seed” to “bridge” to “IPO” progression. This has served as a successful model for airline starts in the past. Because of the amount of capital required to start an airline management feels it is restricted to this funding path. Once four to six airplanes are up and flying the company can continue to operate profitably for an indefinite period of time in the event additional capital becomes unavailable on attractive terms.
7.1 Important Assumptions
The financial plan depends on important assumptions, most of which are shown in the following table. They key underlying assumptions are:
- We assume a slow-growth economy, without major recession.
- We assume of course that there are no unforeseen changes in technology to make products immediately obsolete.
- We assume access to equity capital and financing sufficient to maintain our financial plan as shown in the tables.
General Assumptions | |||
Year 1 | Year 2 | Year 3 | |
Plan Month | 1 | 2 | 3 |
Current Interest Rate | 10.00% | 10.00% | 10.00% |
Long-term Interest Rate | 10.00% | 10.00% | 10.00% |
Tax Rate | 0.00% | 0.00% | 0.00% |
Other | 0 | 0 | 0 |
7.2 Key Financial Indicators
In the airline business the most important measurements are cost per Available Seat Mile and the System Utilization Factor. If seat costs are kept below 7 cents and utilization is at 50% or better, the airline will operate profitably.

7.3 Break-even Analysis
When we take out all operational costs for flying aircraft and include only fixed overhead and aircraft leases the company can break even on the first six airplanes by maintaining sales just over $2 million per month or approximately $24 million in year one. This is less than 25% of our expected sales forecast but it indicates that the company could survive without adding planes and routes for an indeterminate period with load factors of less than 15%.
NOTE: For display purposes in this sample plan, numerical values in tables and charts are shown in thousands (000’s).

Break-even Analysis | |
Monthly Revenue Break-even | $28 |
Assumptions: | |
Average Percent Variable Cost | 0% |
Estimated Monthly Fixed Cost | $28 |
7.4 Projected Profit and Loss
Our profits improve from a low percent of sales in year one to a modest percent of sales in year two and are expected to peak at a respectable percentage in year three and thereafter. In gross numbers, we create healthy profit in the second operational year.
NOTE: For display purposes in this sample plan, numerical values in tables and charts are shown in thousands (000’s).




Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $0 | $110,000 | $216,925 |
Direct Cost of Sales | $0 | $0 | $0 |
Other Costs of Sales | $0 | $0 | $0 |
Total Cost of Sales | $0 | $0 | $0 |
Gross Margin | $0 | $110,000 | $216,925 |
Gross Margin % | 0.00% | 100.00% | 100.00% |
Expenses | |||
Payroll | $332 | $8,511 | $11,138 |
Marketing/Promotion | $0 | $0 | $0 |
Depreciation | $0 | $0 | $0 |
Rent | $0 | $0 | $0 |
Utilities | $0 | $0 | $0 |
Insurance | $0 | $0 | $0 |
Payroll Taxes | $0 | $0 | $0 |
Other | $0 | $0 | $0 |
Total Operating Expenses | $332 | $8,511 | $11,138 |
Profit Before Interest and Taxes | ($332) | $101,489 | $205,787 |
EBITDA | ($332) | $101,489 | $205,787 |
Interest Expense | $0 | $0 | $0 |
Taxes Incurred | $0 | $0 | $0 |
Net Profit | ($332) | $101,489 | $205,787 |
Net Profit/Sales | 0.00% | 92.26% | 94.87% |
7.5 Projected Cash Flow
This business plan cash flows positively from the initial infusion of investment forward. It will continue to produce cash as long as sales targets are met. Borrowing may only be required if seasonal fluctuations occur or if expansion plans are further accelerated.
The chart below illustrates the accumulation of first year cash during formative stage.
NOTE: For display purposes in this sample plan, numerical values in tables and charts are shown in thousands (000’s).

Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $0 | $110,000 | $216,925 |
Subtotal Cash from Operations | $0 | $110,000 | $216,925 |
Additional Cash Received | |||
Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
New Current Borrowing | $0 | $0 | $0 |
New Other Liabilities (interest-free) | $0 | $0 | $0 |
New Long-term Liabilities | $0 | $0 | $0 |
Sales of Other Current Assets | $0 | $0 | $0 |
Sales of Long-term Assets | $0 | $0 | $0 |
New Investment Received | $13,850 | $0 | $0 |
Subtotal Cash Received | $13,850 | $110,000 | $216,925 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $332 | $8,511 | $11,138 |
Bill Payments | $0 | $0 | $0 |
Subtotal Spent on Operations | $332 | $8,511 | $11,138 |
Additional Cash Spent | |||
Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
Principal Repayment of Current Borrowing | $0 | $0 | $0 |
Other Liabilities Principal Repayment | $0 | $0 | $0 |
Long-term Liabilities Principal Repayment | $0 | $0 | $0 |
Purchase Other Current Assets | $0 | $0 | $0 |
Purchase Long-term Assets | $0 | $0 | $0 |
Dividends | $0 | $0 | $0 |
Subtotal Cash Spent | $332 | $8,511 | $11,138 |
Net Cash Flow | $13,518 | $101,489 | $205,787 |
Cash Balance | $13,558 | $115,047 | $320,834 |
7.6 Projected Balance Sheet
The projected balance sheet illustrates the growth of the net worth of the business and may also be utilized to estimate future stock values based upon industry multiples.
NOTE: For display purposes in this sample plan, numerical values in tables and charts are shown in thousands (000’s).
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | $13,558 | $115,047 | $320,834 |
Other Current Assets | $0 | $0 | $0 |
Total Current Assets | $13,558 | $115,047 | $320,834 |
Long-term Assets | |||
Long-term Assets | $22 | $22 | $22 |
Accumulated Depreciation | $0 | $0 | $0 |
Total Long-term Assets | $22 | $22 | $22 |
Total Assets | $13,580 | $115,069 | $320,856 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $0 | $0 | $0 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $0 | $0 | $0 |
Long-term Liabilities | $0 | $0 | $0 |
Total Liabilities | $0 | $0 | $0 |
Paid-in Capital | $14,200 | $14,200 | $14,200 |
Retained Earnings | ($288) | ($620) | $100,869 |
Earnings | ($332) | $101,489 | $205,787 |
Total Capital | $13,580 | $115,069 | $320,856 |
Total Liabilities and Capital | $13,580 | $115,069 | $320,856 |
Net Worth | $13,580 | $115,069 | $320,856 |
7.7 Business Ratios
The important business measurement ratios are presented here based upon projections for Puddle Jumpers. Business ratios for the years of this plan are shown below. Industry profile ratios based on the NAICS code 481111, Scheduled Passenger Air Transportation, are shown for comparison.
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | 0.00% | 0.00% | 97.20% | 11.52% |
Percent of Total Assets | ||||
Other Current Assets | 0.00% | 0.00% | 0.00% | 43.73% |
Total Current Assets | 99.84% | 99.98% | 99.99% | 65.07% |
Long-term Assets | 0.16% | 0.02% | 0.01% | 34.93% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 0.00% | 0.00% | 0.00% | 32.81% |
Long-term Liabilities | 0.00% | 0.00% | 0.00% | 25.84% |
Total Liabilities | 0.00% | 0.00% | 0.00% | 58.65% |
Net Worth | 100.00% | 100.00% | 100.00% | 41.35% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 0.00% | 100.00% | 100.00% | 55.90% |
Selling, General & Administrative Expenses | 0.00% | 85.78% | 76.98% | 31.28% |
Advertising Expenses | 0.00% | 62.07% | 52.09% | 0.66% |
Profit Before Interest and Taxes | 0.00% | 92.26% | 94.87% | 0.16% |
Main Ratios | ||||
Current | 0.00 | 0.00 | 0.00 | 1.65 |
Quick | 0.00 | 0.00 | 0.00 | 0.92 |
Total Debt to Total Assets | 0.00% | 0.00% | 0.00% | 65.97% |
Pre-tax Return on Net Worth | -2.44% | 88.20% | 64.14% | 0.20% |
Pre-tax Return on Assets | -2.44% | 88.20% | 64.14% | 0.60% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | 0.00% | 92.26% | 94.87% | n.a |
Return on Equity | -2.44% | 88.20% | 64.14% | n.a |
Activity Ratios | ||||
Accounts Payable Turnover | 0.00 | 0.00 | 0.00 | n.a |
Payment Days | 0 | 0 | 0 | n.a |
Total Asset Turnover | 0.00 | 0.96 | 0.68 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 0.00 | 0.00 | 0.00 | n.a |
Current Liab. to Liab. | 0.00 | 0.00 | 0.00 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $13,558 | $115,047 | $320,834 | n.a |
Interest Coverage | 0.00 | 0.00 | 0.00 | n.a |
Additional Ratios | ||||
Assets to Sales | n.a. | 1.05 | 1.48 | n.a |
Current Debt/Total Assets | 0% | 0% | 0% | n.a |
Acid Test | 0.00 | 0.00 | 0.00 | n.a |
Sales/Net Worth | 0.00 | 0.96 | 0.68 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |