IPO

Hi,

in a previous post I mentioned already that going public can seriously inflate the value of an airline, and that "smart" players use the system to their advantage.

The idea of this game is that you start an airline with 10 million dollar, and then play/compete with the other players. The game also allows to take your airline to the stock market… In theory, going public (IPO) adds 25% to an airline. If your airline is worth 10 million, you get 100.000 shares and 25.000 shares are sold to the public. If the general public invests 2.5 million dollar, the airline "earns" 2.5 million and every subscriber gets 1 share for every 100 dollar he invested. So far so good.

But if the general public invests 5 million, the airline "earns" 5 million dollar. However, there are still only 25.000 shares, so every investor only gets 1/2 share for every 100 dollar he invested. And if the general public invests 7.5 million, the airline gets a whopping 7.5 million dollar, and the investors end up paying 300 dollar for a share that is worth much less.

On the Tempelhof server, a Chinese airline with an equity of 18 million (plus 7.6 millions in loans) went public. The day after the the IPO, that airline operates a fleet that is worth around 40 million dollar (38 million in leasing deposit plus an estimated 2 millions in seats). That means going public doubled the value of this airline.

And who is so stupid to pay 300 dollar for shares that are only worth 100 dollar ? Strangely enough a new player who registered when the Chinese airline did it’s IPO. So there is this guy who discovers AS and thinks “nice game, I shall join and give all my money to this airline”. Who else invests a lot of money ? Another brand new player, who also registered on Tempelhof the same day that the Chines airline went public.

I am sorry guys… I may be naïve, but I am not stupid :P

Jan

I saw something similar in terms of two new airlines starting at the same time and one providing handling to the other, they both had the same hubs and Fokker 50’s as far as I’m concerned it was too much of a coincidence and reported it. I’m sure the AS team can check and see if there’s any wrong doing and penalize appropriately.

Coincidentally however I ran an IPO on my subsidiary company, mostly because due to a calculation error I needed funds and fast. A new player invested in my IPO and a few days later went bankrupt (probably because he spent all his starting capital on shares) allowing me to buy my shares back at discount prices. In my case this was really just a fortunate coincidence so we can make presumptions it’s up to the AS team to investigate any possible wrongdoing before we draw our own conclusions.