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Author Topic: [-] New profit margin achievement unachievable.  (Read 628 times)

Online schro

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[-] New profit margin achievement unachievable.
« on: October 27, 2015, 01:16:45 AM »
So, for the new profit margin objectives, the levels in question are 25, 40 and 55%. On the surface, they don't seem that bad, until you realize how the profit margin number is actually calculated. In this post, I will use examples from Q2 1987 of my small regional airline in GW4. For those looking for the conclusion, it's simple - any country with income tax will prevent anyone from reaching the upper levels of this particular achievement (cliffs: DXB or GTFO).

So, from what I can gather, the "Profit margin, previous financial quarter" is being calculated as follows: (Net profit/loss (post tax)) divided by (Operating Revenues + Other revenues). My Excel spreadsheetery gives that a 30.59% margin (versus the 30.69% on the stats page in-game), which appears to be close enough for hand grenades. So that's fantastic. I earned the first level of the reward. However, when driving today, I was thinking about how I could possibly slap both 40% and 55% with a trout with my small regional airline, and I struggled for a good answer.

When you look at how businesses (including airlines), discuss their profit margins, they are virtually all pre-tax numbers. So, running the pretax numbers on my small regional airline, I get 44.83%, which should be enough to achieve the second level of my precious. Basically, taxes are reducing my in-game profit margin stat by over 30%. Now, what isn't fair to players is that the amount of tax nerfing that happens directly depends on the country that your airline operates its HQ from and NOT the skill level of the player. Thus, if I had my small regional airline in DXB with the same sorts of financials, I would have earned level 2 of this particular achievement based upon the results we're examining.

Given that this doesn't seem fair, I figured I'd run some numbers as for what it would actually take an airline with 1 billion in revenue to reach 25, 40 and 55% post tax margins in the US (at 30%). The results are as follows -

Pretax Profit margin needed to earn achievement with 1 billion in revenue -
25% - $357,142,857
40% - $571,428,571
55% - $785,714,286

Now, I have run a few modestly profitable small regional airlines in my years here in this game, but to see that it takes over a 57% and a 78.5% pretax margin to achieve the badges, I basically see that as impossible (ok, so maybe it is plausible that level 2 can be achieved if you create an airline which has its sole purpose of hitting that goal with the minimum number of planes and lots of cooking of the books) to actually reach those achievement levels without the assistance of beancounting shenanigans.

Therefore, I conclude that the more appropriate way to fairly measure profit margin across airlines is on a pre-tax basis rather than post-tax.



« Last Edit: October 30, 2015, 05:49:03 PM by sami »

Offline tise1983

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Re: New profit margin achievement unachievable.
« Reply #1 on: October 27, 2015, 02:31:14 AM »
Does the 10 A/C minimum rule apply to achievements?  Because I would have tend to agree with the small regional operator above.

I think level 1 should be 35%, Level 2 should be 42.5%, level 3 should be like 47.5%, and make a level 4 of say 51%. 

It seems like I saw a huge airline, named Moo Air hit above 55% one quarter on GW#4...That's for real too...I coulda sworn/mid to late 70's

Offline Sami

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Re: New profit margin achievement unachievable.
« Reply #2 on: October 27, 2015, 10:09:59 AM »
At this moment there are seven airlines in Early Days world with >40% margin.. Best is 48.35. And there has been over 50% values too..

So let's see how it goes, I won't change anything yet. But might do in the future (the "empty planes" is probably too difficult also).

Online schro

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Re: New profit margin achievement unachievable.
« Reply #3 on: October 27, 2015, 12:50:04 PM »
At this moment there are seven airlines in Early Days world with >40% margin.. Best is 48.35. And there has been over 50% values too..

So let's see how it goes, I won't change anything yet. But might do in the future (the "empty planes" is probably too difficult also).

Early days is the only era that it's remotely possible to achieve it given the low cost of planes and fuel relative to revenue. Especially when you get to modern times, fuel is often 25%-40% of revenue, which by definition means level 2 and 3 are out of reach when taxes are part of the margin calculation.

Empty planes are easy to do.... I could do that with any of my small regional airlines today.

Ninja edit- for gw4 that is likely plane sale related where inflation puffed up his margins on the planes sold. 

Offline gazzz0x2z

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Re: New profit margin achievement unachievable.
« Reply #4 on: October 27, 2015, 04:10:36 PM »
Empty planes without losing money is really doable. If you have 10 big planes doing money & 200 Pilatus running absolutely empty with insane prices.

Online schro

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Re: New profit margin achievement unachievable.
« Reply #5 on: October 27, 2015, 04:26:49 PM »
Empty planes without losing money is really doable. If you have 10 big planes doing money & 200 Pilatus running absolutely empty with insane prices.

You don't have to be making a profit in order to get the achievement. So just pile up a few hundred billion in the bank and pump prices up for a quarter. The other folks that will make this goal are the ones in a death spiral that won't just file for bankruptcy.

Though, in the early days scenario, making money with that load factor may be possible because it's a license to print money...

Offline gazzz0x2z

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Re: New profit margin achievement unachievable.
« Reply #6 on: October 27, 2015, 04:29:33 PM »
Never played the early games, they seem fun.

Offline Sami

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Re: New profit margin achievement unachievable.
« Reply #7 on: October 30, 2015, 05:48:58 PM »
59% margin, fleet of 36: http://www.airwaysim.com/game/Info/Airline/View/292/177/#AirlineInfo

All of the achievements are not perhaps achievable in all game eras (there will be a few more that are also directly tied to the era/year), but the level 3 of this does work and is achievable under some conditions. So no changes for now.

Online schro

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Re: New profit margin achievement unachievable.
« Reply #8 on: October 30, 2015, 07:29:51 PM »
59% margin, fleet of 36: http://www.airwaysim.com/game/Info/Airline/View/292/177/#AirlineInfo

All of the achievements are not perhaps achievable in all game eras (there will be a few more that are also directly tied to the era/year), but the level 3 of this does work and is achievable under some conditions. So no changes for now.

Which game world does that link correspond to?


Offline Sami

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Re: [-] New profit margin achievement unachievable.
« Reply #9 on: October 30, 2015, 07:43:58 PM »
Early days (ref. what was talked earlier)

Online schro

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Re: [-] New profit margin achievement unachievable.
« Reply #10 on: October 30, 2015, 10:52:51 PM »
Early days (ref. what was talked earlier)

I suppose I'll pop in and look at the financials of that one.....

 

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