I cut the leasing cost too close this week and somehow miscalculated by less then 50k, so they repossed the plane. Very frustrating to be hit by 330k dollar penalty for a 50k mistake. You would think your managers would be smart enough to if you dont have enough in the bank to auto take a loan out for you of course had i calculated it better i wouldnt have this issue, yet here it seems now i am down 330k dollars. Really irritated now its rolling downhill and will cause me to go bankrupt. I added it up 3 times last night showed me having 100k in the bank after the leasing fee, yet somehow i couldnt afford it and when i added it again i was short less then 50k. Oh well bankrupt now and done good luck to you all, dont forget to give yourself more then a 100k cushion. 
Hi,
I agree that mistakes can be frustrating… but airlines don’t go bankrupt over 300.000 dollar. Airlines go bankrupt because they don’t make any profit.
If a 300k mistake occurs during your first week, you loose 3% of your capital. That is - however annoying - only a small setback. If your airline is profitable, you make a profit. That means that in a few days, at the latest when the lease deposit is paid back, you can lease a replacing plane.
Cheer up,
Jan
This is where your story still makes sense. Everything following the above line doesn’t anymore.
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You don’t get hit with a 330k penalty, it’s the leasing fee you would have paid either way. In AS, leasing is only paid at the END of each week, not at the start of each week. As such, you paid the 330k you were supposed to pay for the week lease you had on the plane.
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Your company should now have more money than it would have, since you got your deposit back. This means that, although you paid those 330k in the final leasing rate, you also got almost 3 million AS$ back from the deposit (leasing rate is 10% of your deposit)
As a rule of thumb, I always make sure to have enough cash on my account to survive the next few days, even if income would suddenly drop entirely. That means, the larger your airline grows, the bigger the buffer you need.
Since you don’t go bankrupt when you lose a plane (under normal circumstances you were either living above your means or you’ll be able to replace it within 24-48 hours), there is no emergency-loan like it exists for your business week closing.
As Jan said correctly, losing an airplane should never lead to your bankruptcy. Or rather, it should never be the primary reason for it, as there must be deeper faults that put you in the situation in the first place.
Tim you forget that the 330k might be lost because no refund is giving for the cabin configuration. I’ve made the same mistake a couple of times (I never learn) but you just have to suck it up and learn from it as I feel it’s unlikely anything will change that allows a grace period on leasing payments.
While that’s true, the rest of my post still holds true. If a 330k loss, regardless of what caused it, is bankrupting your airline, then there are deeper structural problems that caused that bankruptcy. Any airline that looses a plane worth 330k in cabin interior would also probably (as a general estimate) get about 7-8 million AS$ back from their lease deposit (at over 300k cabin config cost we’re talking about 777-size aircraft). Again, if that’s what leads to a bankruptcy, that airline was living well above its means.
So, while theoretically possible, I doubt that’s what was meant with the 330k penalty…
Hi,
sure he lost the cabin configuration. He also lost money due to cancelled flights. I actually thought he was referring to these costs when he talked about a penalty.
But even if it happened during is first week in business, 300k equals 3% of his capital. Even after a year I would still be annoyed if I made a mistake that costs me 300.000 dollar. But no airline goes bust because of a one-time 300.000 dollar mistake.
Have a nice weekend,
Jan
It caused a domino effect 1 plane turned into 2 planes turned into 3 planes. I lost a tad of 1.5 M due to the error I finally stopped the bleeding, had to stop all of the routes and redo my routes unfortunately every plane that went back was lines that were highly profitable. Sucks but oh well i have the routes running again and at could of been worse i guess dunno how but glad i was left with 3 planes. I wont make a profit this week which makes me sad since last week was my best week yet at 750k profit. I will hopefully get back to where i was in a month or two, but i will get there my business plan works just cant be greedy like i was.
I I almost went bankrupt but luckily I was spared due to a little bit of timing and good luck. Had my payroll hit i dont think i would of made it and not sure what the game would of done. I will never cut it that close ever ever again just was very bad math on my part I forget to deduct an entire column of expenses and burned myself badly due to it.