We all know that LOAN in AS come with very high interest rate, so high that we will not consider taking loan, not to mention such small credit compared to your company asset. But could that high loan actually be profitable? Small profit is okay rather that nothing, for some hard working airlines collecting every dollar they can squeeze from passengers, isn't it?
So here are some number to support my hypothesis, that high interest loan could actually help make profits.
Gameworld: RIEM
Interest Rate: 2.34% for secured loan, 2.96% for unsecured loan
I have AS$ 3,300,000 emergency loan with 15.20% interest per week. Every week I have to pay $70,000 for principal and $501,000 for the interest rate only. I used it to procure a B737-900ER BGW @ AS$ 3,200,000 then add seating for AS$ 275,000 and deploy it on two of the high yield routes, flying 4 sectors a day and earn me $120,000 each day. That will gives me AS$ 840,000 every week, subtract with my cost of fund AS$ 571,000, that would be AS$ 269,000 per week, or AS$ 38,000 per day. My own investment is only AS$275,000 for the seating which almost paid back in one week.
Did I miss something on the calculation? otherwise I can applies for this emergency loan every two weeks and add a shiny brand new B737-900ER to my fleet. I realize the high yield route will one day decline when the market get saturated, but then I can always cancel the lease if the profit went red and payback the loan with the security deposits.
We all know that LOAN in AS come with very high interest rate, so high that we will not consider taking loan, not to mention such small credit compared to your company asset. But could that high loan actually be profitable? Small profit is okay rather that nothing, for some hard working airlines collecting every dollar they can squeeze from passengers, isn't it?
So here are some number to support my hypothesis, that high interest loan could actually help make profits.
Gameworld: RIEM
Interest Rate: 2.34% for secured loan, 2.96% for unsecured loan
I have AS$ 3,300,000 emergency loan with 15.20% interest per week. Every week I have to pay $70,000 for principal and $501,000 for the interest rate only. I used it to procure a B737-900ER BGW @ AS$ 3,200,000 then add seating for AS$ 275,000 and deploy it on two of the high yield routes, flying 4 sectors a day and earn me $120,000 each day. That will gives me AS$ 840,000 every week, subtract with my cost of fund AS$ 571,000, that would be AS$ 269,000 per week, or AS$ 38,000 per day. My own investment is only AS$275,000 for the seating which almost paid back in one week.
Did I miss something on the calculation? otherwise I can applies for this emergency loan every two weeks and add a shiny brand new B737-900ER to my fleet. I realize the high yield route will one day decline when the market get saturated, but then I can always cancel the lease if the profit went red and payback the loan with the security deposits.
I honestly don’t understand what you are calculating.
An emergency loan?
And where do you get the profits per flight from? From flight costing?
Produce a 739 for 3,200,000? Where do those 3.2m$ come from? I take it you leased one, right? For 3.1m$ deposit that would be.
Err, let's try it again. You know when you can't pay your employee salary, you will be granted a rescue loan. Well I actually have the money but I hide it on my subsidiary then I was granted the rescue loan and after the weekend closing I transfer the money back, so voila I have the money that I should have paid to employee.
Let's just say the number $3,300,000. So I used it to procure (from google: (verb) obtain something, especially with care or effort) or you can also say lease a Boeing 737-900ER BGW, $3,250,000 is for the security deposits. The aircraft need seats so I spend AS$275,000 for the seating, then I send it on flights. From the costing summary of the four flights it flown every day, I get $120,000.
To repay the $3,300,000, each week I have to pay $70,000 principal and $501,000 interest, so the loan cost me $571,000 per week. Flying 7 days a week, the aircraft gives me AS$840,000 per week, subtract the loan cost $571,000, I get AS$269,000 per week from making the loan.
So my conclusion, the loan despite charging very high interest rate, still get me some money. I just want to make sure I didn't miss anything in the calculation.
I guess you are aware of the fact, that you'll only get two rescue loans in a row. After that your company is declared bankcrupt and deleted. Without any options of "But...!!!".
So I wouldn't recommend this strategy at all! And I am afraid less experienced players might take this idea and give it a shot. So I already hear quite a few crying voices shouting sentences beginning with "But...". :P
And it might be a problem with the game rules as the rescue loan system is somewhat abused by this.
Lol, indeed I aware of that, that's why I said every two weeks, gotta pay your employee in between two rescue loans. And I would love so see some of my competitors suddenly gone because they forget whether this week is a rescue loan week or a salary payment week. :P
Wasn’t it so that the system doesn’t necesarily give you that loan, even though you only need it al two weeks?
If you have the money, then why at all?
I mean, get that 739 on lease with the money you have and it’ll save you those 571k per week - and you don’t risk bankrupting your company (incl. the sub!) on a twice weekly basis.
If you really wouldn’t have the money, but needed that aircraft, hmm, probably…
As I’m not familiar with rescue loans:
I thought you’d only get as much you need to pay those salaries. So how can there be an excess of 3+m$?
Why do you just not take a regualr unsecured loan whit a much lower intrest rate intrest rate ten suecurity loan and it is a much larger loan and you could lease 2 737-900 or even more.
Wasn't it so that the system doesn't necesarily give you that loan, even though you only need it al two weeks?
If you have the money, then why at all?
I mean, get that 739 on lease with the money you have and it’ll save you those 571k per week - and you don’t risk bankrupting your company (incl. the sub!) on a twice weekly basis.
If you really wouldn’t have the money, but needed that aircraft, hmm, probably…
As I’m not familiar with rescue loans:
I thought you’d only get as much you need to pay those salaries. So how can there be an excess of 3+m$?
I don't understand your first sentence.
If I have money, why I do it? so then I can do the same thing or do some other thing with the money I have. I can fund my sub, I can lease one more aircraft, I can upgrade my seating.
Yes you only get the amount you need to pay the salary. So if I have to provide AS$ 5,000,000 to pay my employee salary, if I left AS$2,000,000 then AS will grant me AS$3,000,000. If I left AS$0 on the cash, they will give me AS$5,000,000 right?
I think it's the same when you buy house, you borrow from the bank and you give the bank the house certificate for collateral. In this case the collateral is the security deposit.
Why do you just not take a regualr unsecured loan whit only 1,21 intrest rate and it is a much larger loan and you could lease 2 737-900 or even more.
How do you take regular unsecured loan? If your answer is through the Corporate Finance option, then at the moment I can't take that much loan. I remember they only offer me around AS$200,000 and AS$500,000 with my current balance sheet. So borrowing from rescue loan gives you more money.
If you can, try to not get any loan at all. Always leave some money to pay for your workers and for back up. You may not always get a rescue loan when you need it. Don't put the life your airline on AS bank's hand ;)
You could maybe do it once at second and third week after the server start to get some advantage against a competitor. If your airline is one month old I would never risk it. And who knows, maybe there is a routine that you cannot get more than two rescue loans in 3 months etc.
To repay the $3,300,000, each week I have to pay $70,000 principal and $501,000 interest, so the loan cost me $571,000 per week. Flying 7 days a week, the aircraft gives me AS$840,000 per week, subtract the loan cost $571,000, I get AS$269,000 per week from making the loan.
That’s wrong… let’s say: 70.000 principal and 501 interest, ok the loan costs you 571 per week, but you are not putting into account the $330,000 you pay for leasing the aircraft that’s 571+330 = 901.000… you are having 61,000 loss, or even so, your aircraft that profit a day already with the leasing in 6 weeks you already bought another one only with the interest, if you are looking for short term business ok, but in 3 monts that isn’t tha long on AS you are out of business…
I was trying to tell you that you NOT always will be granted a rescue loan.
Just check it out…
ah okay, got it.
If you can, try to not get any loan at all. Always leave some money to pay for your workers and for back up. You may not always get a rescue loan when you need it. Don't put the life your airline on AS bank's hand ;)
seems like the risk far greater than the potential reward.
You could maybe do it once at second and third week after the server start to get some advantage against a competitor. If your airline is one month old I would never risk it. And who knows, maybe there is a routine that you cannot get more than two rescue loans in 3 months etc.
i will try it on dummy airline in Ellinikon, Riem's airline is to precious lol
Guys you are losing the big picture here....
To repay the $3,300,000, each week I have to pay $70,000 principal and $501,000 interest, so the loan cost me $571,000 per week. Flying 7 days a week, the aircraft gives me AS$840,000 per week, subtract the loan cost $571,000, I get AS$269,000 per week from making the loan.
That’s wrong… let’s say: 70.000 principal and 501 interest, ok the loan costs you 571 per week, but you are not putting into account the $330,000 you pay for leasing the aircraft that’s 571+330 = 901.000… you are having 61,000 loss, or even so, your aircraft that profit a day already with the leasing in 6 weeks you already bought another one only with the interest, if you are looking for short term business ok, but in 3 monts that isn’t tha long on AS you are out of business…
OMG, I'm so lost! I'm going out of business! The sky is falling! :lol:
Still I have never taken a rescue loan and I never will whit these very high profits Asian on Stapleton is profiting 30,000,000 (48% profit margin) a week. Really impresive I have to say my self. Also looking very brightly into the future and looking to double our profits every month.
in the cost of capacity, the leasing cost is being distributed over the flights the aircraft flown in a week.
also the crew salary is distributed and being accounted for profit calculation.
I see like, In my progaming I was seeing 6.6m on weekend closing everything going fine this 30min before wekend closing when it closes they charged 12.6m the airlinesim got me a rescue loan and one of my aircrafts were returned.... so... the information was not that accurate this time big loss for me... I've had the luck to have 1 aircraft delivered and put on the route lost....
Still I have never taken a rescue loan and I never will whit these very high profits Asian on Stapleton is profiting 30,000,000 (48% profit margin) a week. Really impresive I have to say my self. Also looking very brightly into the future and looking to double our profits every month.
Looking good, really impresive number you got there. -_- if not because of a chinese IPO revealing his profit of AS$330,000,000 per week, I would have disclosed my number here. Also our South American brother here looking very good. ^_^
I see like, In my progaming I was seeing 6.6m on weekend closing everything going fine this 30min before wekend closing when it closes they charged 12.6m the airlinesim got me a rescue loan and one of my aircrafts were returned.... so... the information was not that accurate this time big loss for me... I've had the luck to have 1 aircraft delivered and put on the route lost....
since you might also have leasing payment due before and after weekend closing, gotta watch out for that and provide the money at the exact time.
In my case, I was having weekend closing at 19.15 and a lease payment on 19.50. Having transferred all my cash to a sub, I spared very little money on cash, so when the weekend closing came at 19.15 it took whatever cash I have left and turned it to 0. If I don't put enough money to cover the lease before 19.50, I would have my aircraft returned. So I transfer my money back from my sub, by the time lease payment came at 19.50, I already have enough money to cover it.
Well then, one aircraft is just a tiny pinch compared to your massive fleets of a dozen VLAs and hundreds wide-bodies.. -_-
@bcavalini's calculation essentially was correct. And yes, you can try to distribute your loss of ~61'000 across the entire fleet. That certainly is not an option for small airlines who can barely afford to lease one new aircraft per week.
OMG, I'm so lost! I'm going out of business! The sky is falling! :lol:
in the cost of capacity, the leasing cost is being distributed over the flights the aircraft flown in a week.
also the crew salary is distributed and being accounted for profit calculation.
If you can afford (due to your fleet size) a loss of ~61'000 (at least your reply comment suggests that you have no problem digesting burning money flying out of the window), then I wonder why you want to buy on an emergency loan at all? If your airline is that big and profitable, all you would have to do is to wait a couple of hours to collect enough money to lease the same aircraft?
@bcavalini's calculation essentially was correct. And yes, you can try to distribute your loss of ~61'000 across the entire fleet. That certainly is not an option for small airlines who can barely afford to lease one new aircraft per week.
If you can afford (due to your fleet size) a loss of ~61'000 (at least your reply comment suggests that you have no problem digesting burning money flying out of the window), then I wonder why you want to buy on an emergency loan at all? If your airline is that big and profitable, all you would have to do is to wait a couple of hours to collect enough money to lease the same aircraft?
did you aware that the lease cost was already accounted in the profit???
did you aware that the lease cost was already accounted in the profit???
Nope. Maybe I misunderstood.
"That will gives me AS$ 840,000 every week" - I misunderstood your statement as income before cost. If you're talking about a net profit of AS$ 840k, the calculation obviously is different. You are earning as much with one plane as I am earning with a whole fleet. lol... maybe I should also contact my bank to get emergency loans...
