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Author Topic: Afraid to take the leap????  (Read 369 times)

MichaelHarbert

  • Former member
Afraid to take the leap????
« on: February 09, 2014, 03:18:05 PM »
So I went bankrupt once because I went too many planes at once. For a little start-up like me, how much cash should be on hand to be safe. I'm running the 600 000 - 700 000 range but can't expand too much. Do I lease a bigger aircraft and get on some longer routes. My fleet has 4 Convair 240s so I'm really a medium haul airline at best. Trying not to fall flat on my face again! :)

Offline Sanabas

  • Members
  • Posts: 2161
Re: Afraid to take the leap????
« Reply #1 on: February 09, 2014, 03:24:14 PM »
That's one of those questions that doesn't have a right answer.

You can keep too much cash, and bleed it all away before ever making a profit.

You can keep too little cash, and hit terminal problems quickly.

What you need to do is set it up so that you'll be making a profit as soon as RI climbs a little, if not before. My most recent start-up, I got 11 small-medium planes, got down to my last $1000 scheduling them, and then went into the red to pay staff. A little negative isn't an issue if you planned it in advance, it just stops you getting planes, getting slots, renewing leases.

If your start-up will be profitable in 2 months' time, you can go right down to zero or less. If your start-up won't be profitable in 2 months, then keeping cash on hand won't actually help.

 

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