Credit Rating

[ezzeqiel]

I'd like to know how the credit rating is calculated with the new accounting system...

I'm seeing strange things with this

For example, in BW2, 261 out of 284 airlines are rating B... not BB, not CCC... 261 seems just stuck in B rating... On top of that, just 2 airlines. has D rating.. even tho BKs in BW are count by the dozens


I don't know how full worlds are working (since I'm not playing any right now), but that seems pretty odd to me...


Maybe the system needs a revamp...


PS.
Apparently something similar is going on in full worlds...

https://www.airwaysim.com/forum/index.php/topic,50464.msg292937.html

[LemonButt]

https://www.airwaysim.com/forum/index.php/topic,51401.msg293072.html

[ezzeqiel]

https://www.airwaysim.com/forum/index.php/topic,51401.msg293072.html

Well, I guess we can say transition is no longer part of the equation since BW2 started with the new accounting system...

[Saul Goodman]

Same prob. here in MT8
Went from AAA to BB and has stuck there since the accounting change.  I'm one of the most profitable, most valuable and no loans...  My competitor is going down, had a CI at 90 down to 76, his value is plummeting, pax are going down but manages to have a AA credit 

[Captim]

Sorry, but the CR system is either broken now since the new accouting came in, or it's amazingly accurate considering the banks behaviour since the crash of 2008...

[Troxartas86]

I'm running a series of silly doomed experiments in BW and I currently have a proper D to go along with my mountain of debt.

[Minto Typhoon]

I've gone from aaa to bb also. Making 70 to 100m a week

[LemonButt]

My credit rating has gone from B to BB to BBB to AAA over the past 4 game weeks, so something must have been changed or somehow interest rates going down improved my credit score substantially.

[[ATA] Sunbao]

My credit rating has gone from B to BB to BBB to AAA over the past 4 game weeks, so something must have been changed or somehow interest rates going down improved my credit score substantially.

No one knows, and everyone is talking about it

[Gevans]

I now own about half my fleet and about 70% of the aircraft I own are used for collateral for financing the aircraft I bought.......the other 30% are free and clear.
Buying and financing is a lot cheaper than if you leased these aircraft......... which maximizes profits.
My profits have never been better, leasing costs are $168,000 week and those planes bring in about 60% of my airlines profit and financing for the planes I own costs $32,000 week and those aircraft bring in the other 40% of the profit.  

It would make sense that doing this would improve my credit rating over just leasing and not owning any aircraft.

But just the opposite has happened, my credit rating has gone down with having these assets that I own free and clear.

It's like the credit system only takes into account the amount of money you owe..........and doesn't give you credit for owning planes or saving money by not leasing.

It doesn't make sense.

[Gevans]

Sami.............maybe you can explain what's happening and how you have this credit system set up.

If you have the system set up so it downgrades the credit rating for airlines that own their aircraft........please tell us.

[LemonButt]

My airline just went back from B to AAA.

I think it is ignoring cashflow and looking solely at operating net profit, which includes non-cash items such as depreciation.  I don't have any explanation other than that

[Curse]

From GW#4 speaking it's purely value based.

[Gevans]

Value based on what ?

In the real world assets go a long way towards establishing value.

But that doesn't appear to be the case in AirwaySim.

[Sami]

Incorrect. Credit rating is calculated based on your airlines' assets mainly, but company age and company image also play a role there. Assets as a whole in this usage are counted from the balance sheet and cash is also included there (Shareholders' equity line).

https://www.airwaysim.com/game/Manual/Office/Loans/#Rating

[Gevans]

Ok.
The issue then is how the value of an airline is determined in this game.

This still appears to have very little to do with assets.
An asset is something you own.............like aircraft that have no loans against them.
It's a stretch to call your rep rating an asset because it can go down very quickly........and the bank doesn't even treat it as an asset, it treats planes as assets.
But there's this disconnect between the bank using aircraft as collateral for borrowing money and having aircraft you own and clear of any debt being part of the value of your airline.

It was much easier to borrow money when I didn't own any planes or have millions in cash in the bank.

This isn't that much of an issue now because I have the cash to buy or lease planes without borrowing.

It's just that this is very odd and nothing like the real world.

[Sami]

Assets / value determination: https://www.airwaysim.com/game/Office/Balance

The owned planes do count in your overall 'assets portfolio' and thus shouldn't have any effect in the credit rating. $500 cash or $500 in airplanes = same thing.

[Gevans]

well I guess I don't understand it then.

I own 27 low hour C-46's
About 14 are used as collateral for low interest loans ( a heck of a lot cheaper than leasing those planes)
The other 13 I own free and clear, bought them with my profits........I got good deals on those planes, the bank value is a lot more than what I paid.
I have 3 million in the bank......that's after buying another plane and leasing a bunch more.

My profits are the best they have ever been and I payed off all the unsecured, high interest loans from before.

And yet my credit rating remains at CCC and I can't borrow a penny.

One thing that did effect my credit was all the money I spent starting a second base.
But that was a long time ago now, it turned out to be a good business decision as my sales and profits went way up and it didn't take long to make up the startup costs.

[ucfknightryan]

Secured vs unsecured doesn't really play into your credit rating, it just decides what rate you're going to pay for any loans you do take.

Looking at the financial info we can now see you already have a lot of loans, up to around 50% of your assets..  You also don't have an exactly huge amount of cash on hand.  I honestly don't find your CCC rating that surprising.  I currently have a BB rating and even if I had the physical assets to secure all of the secured loans the bank will offer me it would only take me a bit beyond the level of leverage you currently have.  Save up some cash to improve your asset:liability ratio and your rating will go up.

[Gevans]

Something that I also just noticed.

When I bought those aircraft I was very careful what I bought......only the newest, good quality C-46's that had a bank value of at least 40% higher than what I was paying.
But the way this game is set up.........it doesn't care what the bank value is, it only cares what you paid for it.
Even if you pay twice what it's worth.......that's what your asset worth is based on.
Not on it's value.

That's what I didn't count on.