Business Plan:Project Funding for Aviation Project (Canada)

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Business Plan:Project funding for Aviation Project (Canada)

ProjectSummery

The project of the company consists in starting a company which will specialize in aviation heavy

Maintenance and top-of-the-range maintenance of aircraft.

The ultimate goal of the company is to offer high quality and affordable MRO services,

In addition, the company will offer online services, parts manufacturing and sales of parts. For this purpose the borrower company is seeking22 145 000 USD .

ProjectLocation

The proposed project is located in Canada.

TheBusiness

BusinessLocation:Saguenay, Quebec, G7P1L1, Canada.

RelevantExperience:

One of the principals began his career in aviation as an aircraft mechanic for the Royal Air Airlines, and with Exeltech Aviation in Montreal, Quebec. It was during his time at "Premier Aviation" that he further developed his experience by obtaining certification as a licensed quality assurance inspector. Subsequently, he became a team leader, and is highly experienced in the areas of human resources and training management.

He has developed a well deserved reputation within the industry, relating to his expertise, and has developed a deep and extensive network of contacts and associates. He has built a solid relationship, with his staff, partners and airline representatives.

In discussions with his partners, he has identified specific needs and problems encountered by the majority of MRO customers on a worldwide basis. He discovered that a large number of MRO providers, did meet the needs of their clients, so he has decided to seize the opportunities available to him, which is to provide customized services to meet the needs of the global MRO client base.

Other Principal began her career in human resources management, working for "Global Management", "Premier Aviation", "Group SFP Human Resources" and "GL & V Canada Inc." Through her position as the Advisor of Health & Safety at "Premier Aviation" she discovered the aerospace industry. Her expertise lays in the areas of organizational problems, and creating recommendations and practical solutions to these problems.
Recognized for her leadership and organizational skills, He has developed a criteria of health & safety requirements, and has implemented complex projects specific to the heavy maintenance of aircraft.

TheMarket

Target Market & Marketing Strategy:

Estimate of volume and the share potential of the market Commercial aircraft

in Canada:

“Narrow Body” = 242 planes

“Wide Body” = 64 planes.

What means a need for 1.736.000 man/h (hours of labour) of maintenance HMV and PHASE Check on the Canadian

market. The volume of man/h available to Canada (in 2008) is 1.294.286 man/h; therefore, a under-capacity of

441.714 man/h

Market

PRODUCTS ANDSERVICES PRESENTATION

Companywill providemaintenance services forthe following types of commercial aircraft: typeBoeing727, 737, 757, 767, 787 AIRBUSA319, A320, A321, A310, A330, A340 DOUGLASMcDonell Douglas-MD80, MD81, MD82, BOMBARDIER CRG100, 200SERIES"C".
In addition, company will provide "A", "B", "C", MSG-3, PHASE CHECKinspectionsat their maintenance base/MRO in Bagotville, Quebec, Canada.In addition,Company will provide line maintenance servicesforairlines currently serving BagotvilleAirport.

TARGET MARKET

Description of market

Allairlines (Canada based):

BOEING 727, 737, 757, 767, 787;

AIRBUS A319, A320, A321, A310, A330, A340;

Marketing Strategy

The target market islarge, and relativelyeasyto target.These includeairlines andleasing companiesthat operatethroughoutNorth America.To market tothese companies, Company will participate atvarious industry exhibitions,witha boothto promotethe company and its services.
Ayoung and dynamic team iskey to the successof the company;listening to the needs of ourcustomer base isthe key to success.

Publicationin journals;
Mailings(brochure)potential customers(invitation toopen door);
Monitoringmailingswith an invitation tocome andaudit the company.

Solicitpotential clientsto invite them to visit the facility, and to meet the key staff.

TheFinances

TOTAL LOAN AMOUNT REQUESTED:22145000 USD

TYPE OF LOAN:Debt / Equity

INEREST RATE:6%

TIME PERIOD:20 Years

This loan could be in 3 disbursements as follow: 1st: 4 000 000$ , 2nd: 12 500 000$, and 3rd: 4 548 000$ on a 6 months period. The 1st disbursement will be required for April. 1st, 2015.

5 Years prevision.

Years / 1 / 2 / 3 / 4 / 5
Sales / 2,739,220$ / 6,268,295$ / 8,645,945$ / 10,221,585$ / 10,947,563$
Production cost / 1,781,960$ / 3,467,533$ / 4,434,348$ / 5,217,528$ / 5,660,351$
Gross margin / 957,260$ / 2,800,762$ / 4,211,597$ / 5,004,057$ / 5,287,212$
Selling and administrative fees / 1,410,572$ / 1,721,167$ / 1,527,689$ / 2,199,124$ / 2,225,664$
Operating profit / -453,312$ / 1,079,595$ / 2,683,908$ / 2,804,933$ / 3,061,548$
interest cost / 358,796$ / 402,417$ / 375,417$ / 300,417$ / 220,417$
Earnings before income taxes / -812,108$ / 677,178$ / 2,308,491$ / 2,504,516$ / 2,841,131$
Income taxes / 0$ / 152,967$ / 317,698$ / 340,903$ / 408,226$
Net income / -812,108$ / 524,212$ / 1,990,793$ / 2,163,613$ / 2,432,905$
Ebit / -949,422$ / 1,595,706$ / 3,136,879$ / 3,955,804$ / 4,212,420$
Economic benefit / -453,312$ / 926,629$ / 2,366,210$ / 2,464,030$ / 2,653,322$
Margin compared to sales% / -16.55% / 17.22% / 31.04% / 27.44% / 27.97%

Financial plan

PROJECT FUNDING

CostFunding

Equipment / tools(hangar) (1) $ 1,414,436Investment$ 1,609,669
Equipment / tools(shop)(2)$ 981,110Loan$ 6,024,171

Equipment / tools(shop)(3)$ 565,576Grants $ 414,503

Supplies(hangar) (4) $ 40,299
Equipment. / Software(5)$ 226,278
Equipment/rolling stock(6)$ 443,300
Office furniture(7)$ 85,344
Start-up costs(8)$ 80,000
Inventory(9)$ 1,112,000
Working capital$ 3,100,000

TOTAL:$ 8 048 343TOTAL:$ 8 048 343

WITH HANGAR:

Investment$ $ 2,600,000

Loan$ 10 400 000

Hangar$ 13 000 000

TOTAL:$ 21 048 000TOTAL:$ 21 048 000

Sales taxesGST and QSTtotaling$ 712,211are notincluded in thecost of the projectas they arefully recoverable. They can thenbe supported by theworking capital ofthe company(aboutthree months).Otherwise,the company willenter into aterm notefor the same period.

Project coast – FDR (3,1M) : 4 948 343 $

TPS (5 %) 247 417 $

TVQ (7,5 %) 389 682 $

Total taxes: 637 099 $

6.1.1Funding

Thescenario is developedaccording tothe following hypothesis:

-Down paymentof20%of the project cost;
- Grantsor loanswith a moratorium of 3years,totaling 30% of the funding;
-Loansrepresenting 50% of the funding;
•Interest rate:10% / year
• Amortization: 15 years.

The cash budget, together with the financial forecastdoes not demonstratea need forgreaterliquidityprovidedto more than 3.1 millioninworking capital.We donot thereforeincludea line of credit. Itwould still beprudent tonegotiateat the time ofthe negotiation of funding.

OPERATINGINCOME FORCAST

Year 1

We findsevensectors of thefollowing income:

Hourly earningsforgeneral maintenanceservices (60 $/hrs) + 10 % admin fees

= 66 $/hrs.

40 000 hrs billed * 66 $/hr = 2 640 000 $, broken down asfollows:

-Quarter 1(0) * 66 $/hrs:0 $

-Quarter 2(0) * 66 $/hrs:0 $

-Quarter 3(16 000) * 66 $/hrs:1 056 000 $

-Quarter 4(24 000) * 66 $/hrs:1 584 000 $

The reader will notethe absenceof income forthe first two quarters, resultingin abreak-in periodessential to the functioningofbusiness activities.

Hourly earningsformaintenance services(phase)

Noexpected income forthe firstfourquarters.

Hourly earningsformaintenance services(line)

($ 100 /hour) +10%service charge= $110 /hour.

12 Hrs billed * 110 $/hrs = 1 320 $, 4th quarter.

Revenues from the saleofparts;

Theprojected turnoverforyear oneis$ 200,000. The cost of salesis 90% ($ 180,000), real income is$ 20,000.

Hourly earningsfor thecompositedivision (66 $/hrs);

1 050 hrs billed * 66 $/hrs = 69 300 $, for 210 hrs per inspection, for the 3rd % 4th quarters.

No revenue for the 2 first quarters.

Hourly earningsforinterior finishingservices;

No revenue for the 4 first quarters.

Revenus for NDT services (100 $/heure) + 10 % = 110 $/hrs.

60 hrs * 110 $/hr = 6 600 $, at 12 hrs per inspection, for 3rd & 4th quarters.

No revenue for the 2 first quarters.

Year 2

We findsevensectors for thefollowing income:

Hourly earningsforgeneral maintenanceservices (66 $/hrs);

88 000 hrs * 66 $/hrs = 5 808 000 $, broken down as follows:

-Quarter 1(16 000) * 66 $/hrs:1 056 000 $

-Quarter 2(24 000) * 66 $/hrs:1 584 000 $

-Quarter 3(24 000) * 66 $/hrs:1 584 000 $

-Quarter 4(24 000) * 66 $/hrs:1 584 000 $

Hourly earningsformaintenance services(phase)

3 200 hrs * 66 $/hrs = 211 200 $, broken down as follows:

-Quarter 1 (800) * 66 $/hrs:52 800 $

-Quarter 2 (800) * 66 $/hrs:52 800 $

-Quarter 3 (800) * 66 $/hrs:52 800 $

-Quarter 4 (800) * 66 $/hrs:52 800 $

Hourly earningsformaintenance services(line) (100 $/heure) + 10 % admin fees

= 110 $/heure.

66 hrs * 110 $/hrs = 163 020 $, broken down as follows:

-Quarter 1 (36) * 110 $/hrs:3 960 $

-Quarter 2 (18) * 110 $/hrs:1 980 $

-Quarter 3 (0 ) * 110 $/hrs:0 $

-Quarter 4 (12) * 110 $/hrs:1 320 $

Revenues from the saleofparts;

The expected turnover for Year 2 is $480,000. The cost of sales is 90% (432,000 $), real income is 48,000 $.

Hourly earningsfor thecompositedivision (66 $/hr);

2530 hrs * 66 $/hrs = 166 980 $, broken down as follows:

-Quarter 1 (460) * 66 $/hrs:30 360 $

-Quarter 2 (690) * 66 $/hrs:45 540 $

-Quarter 3 (690) * 66 $/hrs:45 540 $

-Quarter 4 (690) * 66 $/hrs:45 540 $

Hourly earningsforinterior finishingservices;

80 hrs * 66 $/hrs = $5,280, broken down as follows::

No expected income for the first three quarters of the year 2.

Revenus for NDT services (125 $/heure) + 10 % admin fees= 137.50 $/hr.

132 hrs * $137.50 /hrs = 16 500 $, broken down as follows:

-Quarter 1(24) * 137,50 $/hrs:3 300 $

-Quarter 2(36) * 137,50 $/hrs:4 950 $

-Quarter 3(36) * 137,50 $/hrs:4 950 $

-Quarter 4(36) * 137,50 $/hrs:4 950 $

Year 3

The hourly rate to $ 62 / hrs gestion fees + 10% = $ 68.20 / hrs. We find the seven following revenue items:

Hourly earningsforgeneral maintenanceservices(68.20 $/heure);

112 000 hrs* $68.20/hrs = 7 638 400 $, broken down as follows:

-Quarter 1(24 000) * 68,20 $/hrs:1 636 800 $

-Quarter 2(32 000) * 68,20 $/hrs:2 182 400 $

-Quarter 3(24 000) * 68,20 $/hrs:1 636 800 $

-Quarter 4(32 000) * 68,20 $/hrs:2 182 400 $

Hourly earningsformaintenance services(phase)

9 600 hrs * $68.20 /hrs = 654 720 $, broken down as follows:

-Quarter 1 (2 400) * 68,20 $/hrs:163 680 $

-Quarter 2 (2 400) * 68,20 $/hrs:163 680 $

-Quarter 3 (2 400) * 68,20 $/hrs:163 680 $

-Quarter 4 (2 400) * 68,20 $/hrs:163 680 $

Hourly earningsformaintenance services(line) ($115 /hr + 10 % admin fees

= 126.50 $/heure.

66 hrs * $110 /hrs = $163,020 broken down as follows:

-Quarter 1 (36) * 126,50 $/hrs:4 554 $

-Quarter 2 (18) * 126,50 $/hrs:2 277 $

-Quarter 3 (0) * 126,50 $/hrs:0 $

-Quarter 4 (12) * 126,50 $/hrs:1 518 $

Revenues from the saleofparts;

The projected turnover for year 3 is $640,000. The cost of sales is 90% ($ 576,000), real income is $64,000.

Hourly earningsfor thecompositedivision (68.20 $/heure);

3 360 hrs * $68.20 /hrs = 229 152$, broken down as follows::

-Quarter 1 (720) * 68,20 $/hrs:49 104 $

-Quarter 2 (960) * 68,20 $/hrs:65 472 $

-Quarter 3 (720) * 68,20 $/hrs:49 104 $

-Quarter 4 (960) * 68,20 $/hrs:65 472 $

Hourly earningsforinterior finishingservices;

320 hrs * $68,20 / hrs = $21,824 broken down as follows:

-Quarter 1 (80) * 68,20 $/hrs:5 456 $

-Quarter 2 (80) * 68,20 $/hrs:5 456 $

-Quarter 3 (80) * 68,20 $/hrs:5 456 $

-Quarter 4 (80) * 68,20 $/hrs:5 456 $

Revenus for NDT services($125 /hrs) + 10 % de frais de gestion = 137,50 $/heure.

68 hrs * $137,50 / hrs = 23 100 $, broken down as follows:

-Quarter 1 (36) * 137,50 $/ hrs:4 950 $

-Quarter 2 (48) * 137,50 $/ hrs:6 600 $

-Quarter 3 (36) * 137,50 $/ hrs:4 950 $

-Quarter 4 (48) * 137,50 $/ hrs:6 600 $

Year 4

We findsevensectors of thefollowing income:

Hourly earningsforgeneral maintenanceservices(68.20 $/heure);

120 000 hrs * $68.20/ hrs = 8 184 000 $, broken down as follows:

-Quarter 1(32 000) * 68,20 $/ hrs:2 182 400 $

-Quarter 2(32 000) * 68,20 $/ hrs:2 182 400 $

-Quarter 3(24 000) * 68,20 $/ hrs:1 636 800 $

-Quarter 4(32 000) * 68,20 $/ hrs:2 182 400 $

Hourly earningsformaintenance services(phase)

24 000 hrs * $68.20 / hrs = $1,636,800 , broken down as follows:

-Quarter 1 (6 000) * 68,20 $/ hrs:409 200 $

-Quarter 2 (6 000) * 68,20 $/ hrs:409 200 $

-Quarter 3 (6 000) * 68,20 $/ hrs:409 200 $

-Quarter 4 (6 000) * 68,20 $/ hrs:409 200 $

Hourly earningsformaintenance services(line) ($115 /hrs) + 10 % admin fees

= $126.50 /hrs.

66 hrs * $126.50 / hrs = $8,349 , broken down as follows:

-Quarter 1 (36) * 126,50 $/ hrs:4 554 $

-Quarter 2 (18) * 126,50 $/ hrs:2 277 $

-Quarter 3 (0) * 126,50 $/ hrs:0 $

-Quarter 4 (12) * 126,50 $/ hrs:1 518 $

Revenues from the saleofparts;

The projected turnover for year 4 is $720,000. The cost of sales is 90% ($648,000 ), real income is $72,000 $.

Hourly earningsfor thecompositedivision($68.20 /hrs);

3 750 hrs * $68.20 / hrs = $255,750 , broken down as follows:

-Quarter 1 (1 000) * 68,20 $/ hrs:68 200 $

-Quarter 2 (1 000) * 68,20 $/ hrs:68 200 $

-Quarter 3 ( 750) * 68,20 $/ hrs:51 150 $

-Quarter 4 (1 000) * 68,20 $/ hrs:68 200 $

Hourly earningsforinterior finishingservices:

480 hrs * $68.20/ hrs = $32,736 broken down as follows:

-Quarter 1 (120) * 68,20 $/ hrs:8 184 $

-Quarter 2 (120) * 68,20 $/ hrs:8 184 $

-Quarter 3 (120) * 68,20 $/ hrs:8 184 $

-Quarter 4 (120) * 68,20 $/ hrs:8 184 $

Revenus for NDT services($125 /heure) + 10 % admin fees= $137.50 /hr.

180 hrs * $137.50 / hrs = $24,750 , broken down as follows:

-Quarter 1 (48) * 137,50 $/ hrs:6 600 $

-Quarter 2 (48) * 137,50 $/ hrs:6 600 $

-Quarter 3 (36) * 137,50 $/ hrs:4 950 $

-Quarter 4 (48) * 137,50 $/ hrs:6 600 $

Year 5

The hourly rate goes to 63 $/ hrs + admin fees 10 % = $69.30 /hrs

We findsevensectors of thefollowing income:

Hourly earningsforgeneral maintenanceservices($69.30 /hr);

120 000 hrs * $69.30 / hrs = $8,316,000 , broken down as follows:

-Quarter 1(32 000) * 69,30 $/ hrs:2 217 600 $

-Quarter 2(32 000) * 69,30 $/ hrs:2 217 600 $

-Quarter 3(24 000) * 69,30 $/ hrs:1 663 200 $

-Quarter 4(32 000) * 69,30 $/ hrs:2 217 600 $

Owners/Shareholders :

Principal-1 holds 50 % of the share

Principal-2 holds 50 % of the share

TheCollateral

The collateral gona be from the cie hangar and equipment's and we can also put are house as collateral value of 500 000$ with 100 000$ available.