Changes to Bankruptcy

[Maytrix]

I just got closed by the bank in The Age of Flight.  My downfall really was using small planes.  It really seems it is impossible to make a profit using Cessna's.  I'm not even sure where the costs were from because each plane was making a decent profit and seemed to cover the fleet commonality and personnel costs.  9/11 devastated me putting me at about 100 mil in the red.  I ended up storing all my cessna's and that alone caused me to start making a profit.  And I reduced my negative balance by 10 million and was making about 2 million a week. 

So, first it would be great if we had more info on costs in order to see why I couldn't turn a profit with small planes.  Maybe seeing the actual costs per plane or ALL the costs associated with a specific plane type..etc.  A better breakdown of the costs, because even with my crunching numbers I calculated I should have been in the black.

That aside, the real feature request prompting this post is a request to change how bankruptcy works.  I had a decent sized fleet of Cessna's.  I owned all of them.  They were used for the collateral on the loans I had.  I was also making a profit.  If there was some other way to deal with this situation rather then just going bankrupt it would be great.  Like being able to get rid of my loans by having the banks take the planes that were used as securities.  Or a type of chapter 11 bankruptcy where you can re-organize.  I think given enough time I would have recovered.  Especially if I had been able to eliminate some of the loans.  I just think the bank shutting me down when my planes were used as collateral should be the last step - first should be repossessing all the planes and eliminate the loans based on them and then go from there.

[sanabas]

So, first it would be great if we had more info on costs in order to see why I couldn't turn a profit with small planes.  Maybe seeing the actual costs per plane or ALL the costs associated with a specific plane type..etc.  A better breakdown of the costs, because even with my crunching numbers I calculated I should have been in the black.

It's all there already, you just have to read it from the income statements. Using only <10 seaters is difficult, and it's mostly the staffing costs. An individual plane's listed profit doesn't cover staff, doesn't cover heavy maintenance. You can add up what your regular monthly overhead is, excluding fuel, landing costs, pax fees, etc. Count how many planes you have and how many hours you can use them, e.g. maybe 17 hours per plane with small ones. So if you have 20 of them then you have 340 hours/week to make money from routes, and you need to make $x/week to cover overhead, and so you know how many $/hr a route needs to make to be helping. If a route is 1:05 flight time out, 25 min turn, 1:05 flight back, 25 min turn before it can start next route, then that round trip takes up 3 hours. I did a 9 seater airline years ago, before there were changes to things like landing fees, etc to make it easier. In the US, it wasn't possible to make enough money to cover overhead. In Vanuatu, it was. But even there, adding a couple more planes flying 300-400NM routes, those flights did not earn enough money to pay for the extra overhead they created. Only earned enough $/hour on the shorter stuff.

[DanDan]

It really seems it is impossible to make a profit using Cessna's. 

yeah... the cessna has 14 seats and 2 pilots, which is quite a bad ratio. it will get better in the future, with the cessna and a few other small aircraft switching to single pilot operation. in general, one can make quite a lot of money with small aircraft, my top earner in airline generations is a 10-flights/day 30-seat-EMB120, outperforming any D928 with 95 seats. (although the EMB 120 will change to medium in future gw)

generally, the problem in my opinion is the general classification of aircraft in random groups (just try comparing A220 (large) with E195-E2 (medium))

[Maytrix]

It's all there already, you just have to read it from the income statements. Using only <10 seaters is difficult, and it's mostly the staffing costs. An individual plane's listed profit doesn't cover staff, doesn't cover heavy maintenance. You can add up what your regular monthly overhead is, excluding fuel, landing costs, pax fees, etc. Count how many planes you have and how many hours you can use them, e.g. maybe 17 hours per plane with small ones. So if you have 20 of them then you have 340 hours/week to make money from routes, and you need to make $x/week to cover overhead, and so you know how many $/hr a route needs to make to be helping. If a route is 1:05 flight time out, 25 min turn, 1:05 flight back, 25 min turn before it can start next route, then that round trip takes up 3 hours. I did a 9 seater airline years ago, before there were changes to things like landing fees, etc to make it easier. In the US, it wasn't possible to make enough money to cover overhead. In Vanuatu, it was. But even there, adding a couple more planes flying 300-400NM routes, those flights did not earn enough money to pay for the extra overhead they created. Only earned enough $/hour on the shorter stuff.

I've looked at all the info and I simply couldn't see why they weren't making a profit. I figured what the maintenance was per plane and broke that down to per week.  I figure the salaries per plane, broke that down..etc.  Each plane I had was exceeding that.  Even in my second base where marketing and other costs aren't factored I still wasn't making a profit.  I simply couldn't figure out where the issue was. 

But the way bankruptcy works was my bigger feature request.  I think I could have turned things around if the bank had just repossessed the Cessna's and eliminate my loans that were based on them. 

[sanabas]

If you post a pic of income statement, if you still have one, someone will be able to tell you why you weren't making money.

You were 100 million into negative cash? And making 2 million/week profit? So any heavy maintenance, any lease renewals (it sounds like you owned cessnas but leased bigger planes? Hard to tell) to come up in the next 12 months would have failed due to not having cash to pay for them. So you'd likely get fined for flying unmaintained planes, lose income as planes go back to lessors, etc. It'd suck to see your airline BK like that, especially if you can't work out why you were losing money to start with, but once a cashflow crisis puts you far enough into negative cash for C-checks to stop, there is generally no way back. Only real possibility is to quickly sell off enough owned planes to get cash back into positive territory. Even if the bank could repossess the planes and forgive the loan, you'd still need the bank to underwrite the regular expenses of a customer who has just defaulted on a loan, this time with no security or guarantee they would be around long-term.

[gazzz0x2z]

Loan payments might be the source of all evil. If you have to pay 2M$ of loan every week, do barely 2M$ of profit per week, and suddenly demand lowers, your overall profit plummets, and they you can't pay your loans anymore...even though you're still making profit.

But the cash flow kills you. It killed countless companies. Once, in a long game, I was facing a skilled opponent in Warsaw. He killed himself by lack of cash - 20% prepaid 707s. He was still profitable, but his risky orders did put him in the red, and he didn't have the loan capacity to face his purchases. Bye bye opponent, Warsaw was all for me.

He should have sold the 707s, by the way. He could have survived back then. Plys WAW is not a good airport for them. But many players dont accept their losses, and keep their stuff - which is killing them. Not that it was an option for you, nobody will purchase your cessnas.

[Maytrix]

If you post a pic of income statement, if you still have one, someone will be able to tell you why you weren't making money.

You were 100 million into negative cash? And making 2 million/week profit? So any heavy maintenance, any lease renewals (it sounds like you owned cessnas but leased bigger planes? Hard to tell) to come up in the next 12 months would have failed due to not having cash to pay for them. So you'd likely get fined for flying unmaintained planes, lose income as planes go back to lessors, etc. It'd suck to see your airline BK like that, especially if you can't work out why you were losing money to start with, but once a cashflow crisis puts you far enough into negative cash for C-checks to stop, there is generally no way back. Only real possibility is to quickly sell off enough owned planes to get cash back into positive territory. Even if the bank could repossess the planes and forgive the loan, you'd still need the bank to underwrite the regular expenses of a customer who has just defaulted on a loan, this time with no security or guarantee they would be around long-term.

I don't have any info from it, never saved anything.  But as soon as I stored all my cessna's, I started making a profit.  So even though I had a lot which reduced the per plane maint costs, they still weren't making any money.  And yes, I owned the Cessna's but had other planes - the other planes were all making me profit.  Even with some C checks mixed in, I was still turning a profit at the end - D checks might have ruined me at some point but I still had time before that happened.  Might have been able to pull through if I hadn't been shut down.  As my 2 mil a week profit was getting closer to 3 mil. 

I just think when it comes to bankruptcy having options to re-org or something else would be nice.  Especially if an airline is turning a profit.  If it is constantly losing money then I see why it should be auto shutdown, but if things are going the other way it would be nice to be given a chance to turn things around.

[sanabas]

You need to be losing money to trigger a BK warning, but once it's triggered, I'm not sure exactly what the criteria are to survive. Think you have almost a year of game time, 6 RL days? And possible that you need to be back into positive cash, that just being profitable again isn't enough. But as I said, the problem is generally not whether you are/are not profitable after doing some restructuring, the problem is that if you're that far into negative cash, C-checks stop, lease renewals stop, marketing stops, which almost always will cause you further issues before the cash climbs back into positive territory. If you can't generate instant cash by cancelling future orders or selling planes, you're almost certainly doomed. And ideally, you'd see it coming and generate that cash before BK warning triggered.

Certainly sounds like the overhead on the small planes was the problem. How many different fleets did you operate, and how many planes overall? If it was 4 fleets and say ~250 planes, then dumping the cessnas would have removed the 4th fleet penalty, your monthly fleet commonality costs would have been cut in half, maybe even dropped to 1/3 of previous numbers, which could have saved you a few million/week on its own. It's 1959 in HatF right now, I had about 350 planes when adding a 4th fleet, and my commanality costs more than tripled, went from ~600k/week to 2 million/week in 1959 money.

[schro]

Negative cash beyond an inflation-index threshold is what triggers the warning. Warning goes way if you're positive cash for more than a couple game weeks or so. Airline is toast if warning isn't gone in 6-7 RL days, though, spiral of doom will start by RL day 2-3...

Bankruptcy warning has nothing to do with profitability. Ordering planes you can't afford @ 20% down payment is a way to trigger it.