I want to create an enterprise with 2 subsidiaries. How much of the starting $10 million should I give each one? One subsidiary will be starting out with regional jets and the other one with 737-700's. I could give each one $5 million or I could give one with the regional jets $4 million (since regional jets are cheaper to lease) and the other one $6 million. For those of you that has had experience in starting an enterprise with subsidiaries I would like to hear your approach to this. Obviously I have no experience in a setup like this.
Hi Skyking,
Personally I think you might be over stretching creating 2 subs at the beginning. There is only a couple of reasons in my mind to create an extra sub…
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access to new market (a country that allows foreign investment)
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when you want to have more than 3 aircraft maintenance types
Personally I would stick to one sub running both 737s and regional jets however if you really want to start the two subs it really comes down to how much the aircraft cost…
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A new 737-700 I believe costs 2.235milion (please double check) so you could start up with 2 in your mainline operation. I would in that case recommend a minimum of 5.5 million to your mainline. This would cover aircraft config, crews, plus losses in the first week.
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leaving 4.5 million for your regional. Remember to save some (about 500000) for extra costs on top of leasing.
Hope that helps!
Ian
Hi Skyking,
I would take Ian's advice.
Once your airline is up and running (and makes a decent profit), you can always start a new subsidiary.
Jan