Advice on Loans

[Daemus]

I am hoping someone has some insight to share on loans.

I am primarily wondering when a second loan should be taken out?

My specific case, I have a fledgling fleet that is profitable, all used plane leases. I have an outstanding loan (the forced loan at game start) sitting at a little under a million unpaid. I have more than enough cash to pay it off without bringing my cash-on-hand anywhere near the red. I am eligible for an unsecured loan of around 200% of my cash-on-hand at the moment.

I could definitely put the loan to good use as I have plenty of pax demand available. The money from the loan would get me quite a few new planes on lease that I would be able to put to work as soon as I took delivery. Estimated time from factory to base is 2 months (means I would be sitting with the interest and no revenue from the loan for a short while). I would prefer to own but my company is young and I am, maybe foolishly, putting a lot of weight on quick expansion seeing as I have plenty of demand.

Do you feel a loan for new plane leases is justified as long as the pax demand is there, or should I be looking at getting enough of a fleet using profit earnings to be able to use loans for purchases rather than leases?

Should I re-pay my initial loan before looking at taking a second loan out?

Is there anything else I should be considering before taking out a second loan?

If it looks like a loan is a good choice, how much cash should I have on hand in relation to the loan amount?

I have the demand and can use the money but I am really looking to get some advice first before I step into a financial mess. Thanks a lot for taking a look.

[Ilyushin]

I think you shouldn't expand too quickly. Open 1 route at a time, and open a new one not before you have 80% LF on every flight of the last route you've opened.

I'm kinda in the same situation as you are.

[Daemus]

I think you shouldn't expand too quickly. Open 1 route at a time, and open a new one not before you have 80% LF on every flight of the last route you've opened.

I'm kinda in the same situation as you are.

I don't think I can agree with you on waiting till routes are up to 80% LF before getting another plane. My most recent plane LF% average is only 67 and it pulled Previous Week Profit 263 919 USD, more than covering a single month's lease cost for it. I have had the plane for less than a month. That is just the lowest number I have in front of me but I have watched my planes with less than 40 LF% pull in profit, and it takes very little time to get there. I am concerned about how fast I should try expanding but not concerned enough where I am waiting around for 80% LF.

Right now, as a bare minimum, I am not adding a plane(s) unless I will have cash on hand afterward for routing setup, any upcoming B checks, and any upcoming salaries due. Beyond that, I am profitable enough that I can feel very comfortable again within a few days of collecting revenue. If I didn't generate as much cash as I do, I would be more careful, but still not that 80% LF careful. I am flying with fairly low competition though, I think probably 75% of my routes without any competition and maybe two or three routes where pax demand is lower than supply.

I personally couldn't imagine being patient enough to wait till 80% LF.

[Ilyushin]

You might be right, but it's perhaps safer if you do wait till 80%, especially with competition.

It doesn't take long. Just a few hours combined with route specific marketing campaigns (radio/television).

[Zabuti]

I am hoping someone has some insight to share on loans.

I am primarily wondering when a second loan should be taken out?

My specific case, I have a fledgling fleet that is profitable, all used plane leases. I have an outstanding loan (the forced loan at game start) sitting at a little under a million unpaid. I have more than enough cash to pay it off without bringing my cash-on-hand anywhere near the red. I am eligible for an unsecured loan of around 200% of my cash-on-hand at the moment.

I could definitely put the loan to good use as I have plenty of pax demand available. The money from the loan would get me quite a few new planes on lease that I would be able to put to work as soon as I took delivery. Estimated time from factory to base is 2 months (means I would be sitting with the interest and no revenue from the loan for a short while). I would prefer to own but my company is young and I am, maybe foolishly, putting a lot of weight on quick expansion seeing as I have plenty of demand.

Do you feel a loan for new plane leases is justified as long as the pax demand is there, or should I be looking at getting enough of a fleet using profit earnings to be able to use loans for purchases rather than leases?

Should I re-pay my initial loan before looking at taking a second loan out?

Is there anything else I should be considering before taking out a second loan?

If it looks like a loan is a good choice, how much cash should I have on hand in relation to the loan amount?

I have the demand and can use the money but I am really looking to get some advice first before I step into a financial mess. Thanks a lot for taking a look.

Hey

It will depend on wether you want to grow first, or be autonomous first.

I'll give you my way based on my experience in AWS. It worked out pretty well to me, so I hope it will be the same to you. It's the grow-first method.

I'd suggest you take out a new loan and do not bother too much about your "initial" loan. The reason is that this new loan will give you more planes, and therefore more income. When your weekly income increases, repaying your initial loan will sound negligible to you.

I used to go from loans to loans, repaying the minor ones when my income was big enough. One day I felt I would'nt need any further loan, repaid the outstanding ones, and by credit rating went from B to AA in a real-time day.

It's just a way of doing it. I suggest aggressive growth in such games, but I understand that many other people would prefer being autonomous, even if they grow slower at the beginning.

Hope this helps

[karn39]

If you're based in crowded airport grow-fast should be considered. Take what ever you can take to have a new plane and plan a new route.
Assign route to a plane should do after Tuesday noon unless you will pay for new staffs incurred too soon (Staff cost charges weekly every Tuesday 11.59am)

When you grow to some point that you can afford a direct purchase of new plane, please start buy some planes not lease all too quickly. Because when you have assets, you can access to more loans.

[Terrence Klaverweide]

I am probably hardly the person to give advice, as I have just started playing. What I do know from my personal -short- experience is that I rather go for a rapid expansion than for a slow clean autonomous build up. Whether this is good or not, I don't know (yet)

I went bankrupt twice. First time I flew Fokker 50's, started infinite, never ending marketing campaigns, cancelled them, did the route campaign thing, cancelled them again, started routes, cancelled them, changed them. Of course I did this on peak slots, Frankfurt, London, Amsterdam. This way I lost hundreds of thousands of dollars, fooling around.

The regional thing didn't really work out (for me). Went too slow, lost too much money goofing around.

Second time, I started off with Fokker 100's, right from the bat. Went al right, until I didn't log in for a couple of days. I didn't see that my A and B checks weren't scheduled (small laptop screen, when you press confirm, the screen scrolls down automatically, so I missed the big red warning flag at the top of the screen). So when I got back, I got fined over a million, my 2nd Fokker 100 was down to 25% (fixing it to 75% cost 6 million) and bankrupt I went again.

Third time, the game I am playing now. I bought two F100's, right from the get go. Got lucky, as I could fly them on short routes (300nm and 500nm), with enough demand, being the only one on those routes. They 'do' 40.000 a day, with +/- LF around 65%. RI still low, CI still low, yet making a decent profit. 7 weeks in and I just leased my first 763, which should arrive in a couple of days. The first couple of times, I paid of my loans. Thought it would be 'best' to not owe money. Not this time, I took out an extra loan to lease the 763. If the route goes well (and I think it will, I should be able to do a twice daily, with the demand avail), I won't hesitate to loan money to get a 2nd one, and a third, and a fourth.

I'll let you know how it works out. It might backfire...who knows?

[Terrence Klaverweide]

This guy on the other hand says you should be patient : https://www.airwaysim.com/forum/index.php/topic,3728.0.html