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Author Topic: [-] Airline Credit Rating is wrong  (Read 743 times)

Curse

  • Former member
[-] Airline Credit Rating is wrong
« on: March 19, 2014, 11:45:16 PM »
GW#4:
https://www.airwaysim.com/game/Info/Airline/View/282/141/#AirlineStats

This airline has a B rating. A B rating means there is a good chance the loan will be paid back.

The reality is: Everybody can see the airline is doomed. It's losing faster money than Greece and Italy combined and it has a CI of nearly 100 with falling pax numbers.




Another example:
An airline has slots worth about 100 Million Dollars and prepaid lease assets of about 70 Million Dollars. The airline owns aircraft of a value of about 10 Million Dollars.

The weekly losses are about 2 Million Dollars while a BK warning is present and the airline is in negative cash. It still changes between BBB, A and AA rating.





So - is the rating agency ingame the same that rated Lehman Brothers with AAA? Or what am I missing? I don't even talk about healthy airlines that don't get a better rating than A - what's worse than the AA of the minus cash money losing airline.
« Last Edit: October 20, 2014, 09:10:17 PM by sami »

Offline Crazybernie

  • Members
  • Posts: 1208
Re: Airline Credit Rating is wrong
« Reply #1 on: March 19, 2014, 11:59:22 PM »
I am also puzzled the way the game works. Irl live an AAA rated company or instituation is not really common or even easy to achieve.
Companies that get AAA must have years of profit and usually gold plated assets to be able to get tripple .

It would be nice to get some insight into how the game calculates these scores.

Online LemonButt

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  • Posts: 2022
Re: Airline Credit Rating is wrong
« Reply #2 on: March 20, 2014, 01:26:27 PM »
I actually was going to post something about this, but never clicked post.

I have a successful (so far) all CRJ airline in GW2.  I have been turning ~22% pre-tax and ~15% post-tax profits to the tune of $1+ million/week.  The airline has been running for 2+ years now and I still can't take out an unsecured loan.

What I have noticed is that my secured credit line will be $35 million or so with a $250k unsecured line avail and CCC rating when I have about $5 million in cash.  If I lease an aircraft and buy slots, it goes down to $16 million secured and $0 unsecured and drops to CC rating.

Previously, the income statement was the same as the cashflow statement under the old accounting.  With the new accrual based vs cash based accounting, I believe the banks are looking at cashflow exclusively and not income statement.  So if you spend $5 million in one week and turn a $1 million operating profit, the banks think you are losing $4 million/week.  I think the loan/credit system needs an overhaul and it would be really really really nice if you could "see" your credit report and what is good and what is bad that determines your credit lines/ratings.  I am baffled and have no idea what I can do to improve my airline and get an unsecured loan at this point.

Curse

  • Former member
Re: Airline Credit Rating is wrong
« Reply #3 on: March 20, 2014, 02:22:43 PM »
Yes, LemonButt, the credit rating seems to be based on daily results while some of the biggest expenses for an airlines like staff are deducted just once a week.


An airline that makes a daily profit of $10 Millions but loses $120 Millions should not get a positive credit rating.

Offline Sami

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  • Posts: 16786
    • AirwaySim - Are you the next Richard Branson?
Re: Airline Credit Rating is wrong
« Reply #4 on: October 20, 2014, 09:08:40 PM »
This has been checked several times and is working as intended.


Here's a quick quote on how's it's calculated:

Things affecting credit rating are:

- 'Retained earnings / accumulated deficit' (= "value") ... NOT CASH!

- Airline age

- Image

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

Each of these items will score a value between 0 and 100 (value: max score at ~$500mil, age max at 6yo, image max at 100), and they are then added together with a formula of ((image*2)+(value*5)+(age*2))/90 to give the final score which turns into the rating (1 - 10). There are some other steps involved too, so it's not that simple but that's the basic structure.

(Any existing loans will then affect on the max loan amounts available)

So for example daily profit has got nothing to do with the rating in the way it's currently calculated. Possibly needs an update some time later, but not a bug really.

 

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