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Author Topic: Scrapping Aircraft  (Read 464 times)

Offline Karl

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Scrapping Aircraft
« on: January 19, 2019, 12:45:43 AM »
I have read the manual concerning scrapping.  I understand that when an aircraft is scrapped, the program determines the book value of the aircraft which is then listed in green and red figures as what is gained and lost in the transaction.  OK

On my financial charts I can easily see where the debit is accounted for.  However, I cannot see where any amount is credited to my charts.

What am I missing?

On the other hand, I am quickly beginning to see that in AWS it seems to be cheaper to store aircraft than to scrap aircraft.




Offline wilian.souza2

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Re: Scrapping Aircraft
« Reply #1 on: January 19, 2019, 01:17:07 AM »
When you scrap an aircraft, you actually earn cash money because the junkyard pays you for the old aircraft you sell to him. The money loss is accounted in "loss on sold aircraft", which is the difference between how much you sold the aircraft to the junkyard and its book value.

BUT you shouldn't worry about it, because book value is just a theoretical value for the aircraft and it never represents the potential money you could earn if you sold the aircraft for another airline. Any aircraft over 16 years old is very hard to sell, with very little exceptions regarding the game's circunstances. To decide whether you could store or scrap your aircraft, you could ask yourself some questions:

- Will I use it later as a security asset if I need to take a loan, or as a substitute for some aircraft in heavy check?
- Will I succeed selling or leasing it to anyone?

If the answer is no for both questions, it's best to scrap it right away.

Also, if you want to store aircraft to wait until the best opportunity to scrap, the best time for scrapping is when turn 25 years old. It's the time you get less book value losses and even get profit sometimes. Beyond that, the junkyard will be willing to pay less and less for your dead weight, until your aircraft is worth nothing to him by the age of 30.
« Last Edit: January 19, 2019, 01:20:40 AM by wilian.souza2 »

Offline Karl

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Re: Scrapping Aircraft
« Reply #2 on: January 19, 2019, 01:29:32 AM »
It seems to me that the cost of a D check on a 14 year-old 30 - 100 seat aircraft  aircraft is really high - even considering any future profit.  It seems to me to be better to scrap it before incurring the D check expense - especially when it can be replaced by a bigger aircraft as the demand matures.


Offline wilian.souza2

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Re: Scrapping Aircraft
« Reply #3 on: January 19, 2019, 02:33:51 AM »
It seems to me that the cost of a D check on a 14 year-old 30 - 100 seat aircraft  aircraft is really high

It depends on your aircraft - soviet, 1st gen aircraft (from the 50s and 60s) and models launched 30 years prior to your current game time have really high maintenance, so when they're 16 you should consider carefully about using them further. Other aircraft can do fine until 30 years old if owned.

Offline freshmore

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Re: Scrapping Aircraft
« Reply #4 on: January 19, 2019, 03:13:35 AM »
16 years is not too bad, even the exceptions of Soviet/Russian metal can continue in use. A D-Check should only be undertaken at 16 years if you are going to use that aircraft until at least 20 years, ideally until the full 8 until 24. D and C checks are added to book value and depreciate, so in cash terms are annoying at the time of payment, but in accounting terms are considered Non-Current assets, so they should be treated as such and your Balance Sheet won't change in value because of them.

Not forgetting new aircraft are more expensive. Lets say in 2000 you have A320CEO for 75million and in 2016 you have the option to swap it for a A320NEO for 120million. The NEO will have higher ownership costs in terms of depreciation, so will effectively yield less profit from swapping, even taking into account fuel efficiency savings. So at that point continuing with the 2nd D-Check at 16 years can make a lot of sense, your aircraft has still got plenty of life, save the big Capital expenditure until when you absolutely need it, or use it for expansion.

It's a waste of money to replace aircraft early if you a just going to end up scrapping them when keeping them running for another 8 years is often a better option. In large fleets changeovers, that's when 16 years scrapping often makes the most sense, as you usually aim to have these done in a very short space of time, your oldest could be nearly 24 and the youngest around 16 when swapping them out, at that point scrapping 16 year old aircraft is often the better option, as usually the fleet you are replacing is outdated and will be hard to sell on the market.

 

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