Aviation Business

You were recently hired as an upper level manager for Tulsa, Oklahoma basedABC Manufacturing. Upon hiring you the CEO mentionedthat he was considering some options for on-demand travel. Due to your background in aviation, he has asked youto come up with a recommendation that would best suit the growing travel demands of the company. He has given you some financial information along with a forecast for the next two years. Please look at the attached information and come up with a recommendation for the CEO.

(Please note: This information is not all the information one would normally use to make a final decision on aircraft acquisition, airport selection or management options.)

Should ABC manufacturing purchase or lease an aircraft? Should they hire a management company or handle it in house? Or would charter or fractional ownership be best? Also, where is the ideal base of operations?

Please justify your responses based on below information (p.2, p.3 and p.4)

Questions:

  1. Airport Selection(Tulsa international airport or OKC Will Rogers Airport)

-Please come up with an airport to base your operations.

-Why factors led you to select this airport?

  1. Select an aircraft (Own or lease)

-What aircraft do you recommend?

-Do you recommend that the aircraft is purchased/leased? Why or why not?

  1. Select a management style (In-house, Management company, Charter, Fractional)

-What option do you recommend? Why?

-Will this option create a solution for all the anticipated travel needs (ie. Hawaii)? If not, what is the recommended travel solution?

2014-2015 Trip Frequency/ # of passengers/ Distance (Average)

Tulsa to Dallas- 12 trips with 4-6 passengers 300 Miles

Tulsa to Miami- 8 trips with 4-6 passengers 1220 Miles

Tulsa to Albuquerque- 20 trips with 2-4 passengers 620 Miles

Tulsa to Las Vegas- 15 trips with 4-6 passengers 1080 Miles

Tulsa to Chicago- 10 trips with 8- 10 passengers 575 Miles

These aircraft types are just a list of potential candidates. If other aircraft are better suited, it is okay to recommend another aircraft. (Please provide aircraft information)

Income Statement and Projection

2014 / 2015 / 2016 / 2017 / 2018
Net Sales / $1,500,000.00 / $2,500,000.00 / $3,250,000.00 / $5,500,000.00 / $8,000,000.00
Interest Revenue / $45,000.00 / $75,000.00 / $97,500.00 / $165,000.00 / $240,000.00
Gain on Sales of Assets / $0.00 / $25,000.00 / $0.00 / $0.00 / $0.00
Total Revenue / $1,545,000.0 / $2,600,000.0 / $3,347,500.0 / $5,665,000.0 / $8,240,000.0
Cost of Goods Sold / $675,000.00 / $1,125,000.0 / $1,462,500.0 / $2,475,000.0 / $3,600,000.0
Travel Expense / $75,000.00 / $100,000.00 / $125,000.00 / $175,000.00 / $180,000.00
Commissions / $150,000.00 / $250,000.00 / $325,000.00 / $550,000.00 / $800,000.00
Office supplies / $250,000.00 / $1,000.00 / $1,500.00 / $2,000.00 / $2,500.00
Advertising / $5,000.00 / $25,000.00 / $45,000.00 / $50,000.00 / $67,000.00
Interest Expense / $3,550.00 / $1,550.00 / $950.00 / $850.00 / $0.00
Total Expense / $1,158,550.0 / $1,502,550.0 / $1,959,950.0 / $3,252,850.0 / $4,649,500.0
Net Income / $386,450.00 / $1,097,450.0 / $1,387,550.0 / $2,412,150.0 / $3,590,500.0
Anticipated Travel Needs 2017-2018
Department / Destination / Distance / Frequency / # of passengers / Mission
Manufacturing / Memphis / 350 / 6 / 4 to 6 / New plant construction
Manufacturing / Honolulu / 3900 / 2 / 4 / Product modification
Manufacturing / Honolulu / 3900 / 2 / 4 / Research and Development
Manufacturing / Memphis / 350 / 12 / 4 to 6 / Training
Legal / Memphis / 350 / 6 / 6 to 8 / Land Sale/ Acquisition
Sales / Chicago / 575 / 15 / 4 to 6 / Sales
Sales / Phoenix / 940 / 4 / 4 to 6 / Sales
Sales / Las Vegas / 1080 / 20 / 4 to 6 / Sales
Sales / Albuquerque / 620 / 12 / 4 to 6 / Sales