Flight by Night Airline

8852 Words Jul 16th, 2013 36 Pages
BUS224 CORPORATE FINANCE
GROUP PROJECT: AN ANALYSIS OF FLY-BY-NIGHT AIRLINES [ Source: Scott et al. (1984:110-114)]

16 March 2012

Chua Li Ying (31780034) Li Xiao Hui (31771332) Tan Guizhen Cheryl (31771501)

AN ANALYSIS OF FLY-BY-NIGHT AIRLINES CONTENT PAGE

EXECUTIVE SUMMARY REFERENCES - ECONOMIC DATA CALCULATIONS NET CASH FLOW STATEMENT DECISION MAKING

1 2 3 10 13

AN ANALYSIS OF FLY-BY-NIGHT AIRLINES EXECUTIVE SUMMARY Fly-by-Night Airlines is a major commercial air carrier offering passenger service between most large cities, currently possesses a fleet of aircraft; model PJ-1, purchased from Puddle Jumper Aircraft Company. One of the more profitable routes between Los Angeles and New York subsidizes other unprofitable
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of planes (required) 5 5 4 3

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AN ANALYSIS OF FLY-BY-NIGHT AIRLINES

CALCULATIONS –TICKET REVENUE (Q2)

Q2) TICKET REVENUE (refer to Sch.2)

1. PER TICKET PRICING

The price of a ticket now costs $500. Every year, there is a growth in 5% compounding each year. To find the value of each ticket in

future, we use the formula FV = PV * (1+r).

2. NUMBER OF PASSENGERS

Then we find out the expected number of passengers instead of the full load. Economic data has stated the percentage according

to the plane models, so we multiply it with the full load passengers to find expected number of passengers.

3. TICKET REVENUE

Using the accurate per ticket pricing, we multiply it with the number of passengers calculated. This will give us the ticket revenue

per plane. Using the calculations of planes from question 1, we multiply the ticket revenue with the number of planes according to

plane models.

Total ticket revenue derived from option A is $3,102,584,407, option B $3,105,798,328, and option C $3,083,901,851.

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AN ANALYSIS OF FLY-BY-NIGHT AIRLINES

CALCULATIONS –TICKET REVENUE (Q2)

TICKET REVENUE

Model 1 500.00 2 525.00 3 551.25 4 578.81 5 607.75 6 638.14 7 670.05 No. of years 8 703.55 9 738.73 10 775.66 11 814.45 12 855.17 13 897.93 14 942.82

Qty

Per year

Per ticket price [ P1 = P0 * (1+r) ]

15 989.97

TOTAL

OPTION A 29,925,000 41,674,500 43,758,225 45,946,136 48,243,443 50,655,615 53,188,396
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