Airline Mogul Forum
Airline Mogul => Game Strategy => Topic started by: Yudhis on October 24, 2008, 09:33:54 pm
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[W14]
Hey everyone!
Again, I'm having some confusions in the financial area. This time my question is: Is it a good thing if the Retained Earnings is decreasing although the DOC, bank balance, airline value, daily revenue are increasing? If not, what/how can I fix this situation?
Some history about the past months of my airline that may be the cause of the situation:
Current destinations:
Jakarta->Palembang
Jakarta-> Yogyakarta
Previous destinations:
Jakarta->Surakarta
Jakarta->Bandung
Jakarta->Batam
Jakarta->Pontianak
Jakarta->Banjarmasin
Jakaarta->Medan
(all gates have been returned)
Fleet:
1 DHC6-100
*other stuff:
i had a little accident when I was searching for gates and accidently clicked on OCP on one of the airports. I've already returned the gates, now I'm wondering if this also affected the loss of value. :D
Many thanks!
CEO of AIR KINGDOM (NUSANTARA)
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I never look at that page, but I'm going to guess it's the added expenses of aircraft coming on-line.
Just look at the regular Finance page. If the Project Monthly Profit/Loss is positive and increasing regularly, then you are doing fine.
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Your retained earnings are basically all your sources of income, minus all your outgoing cash, for the entire time your airline has been operating. Retained earnings will go down when you buy aircraft, when you join an alliance, basically when you spend money, and they go up when money comes in (sell an aircraft, ticket income). That's about it. If you want to look if your airline is still profitable, as said by pseudoswede, you want to be looking at the projected monthly total profit/loss (the bottom right number).
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As pseudoswede said, the projected (at the end of month) profit (or loss) in the regular finances page will probably be of much better use. Use the Operations Dept report only to get a better understanding of where your money is coming and going to.
But no, it's not a very good thing if your retained earnings keep consistently going down. Keyword here being "consistently." When you rent a gate or pay market research to create/edit a route, it's natural for your airline value to go slightly down. As long as that expense allows you to earn more money in the future, it's quite alright.
So, as you suspect, switching gates may explain part of your value loss.
Also, be aware that monthly expenses are payed on the first of each month. These will be gate rental, aircraft maintenance and, if you have them, lease rates. It's normal for your airline value to go down at the start of each month. Again, look at the finances page. If your "month to date" totals are negative but projected totals are in the black, you should be alright.
Now, I'd like to comment on your strategy so far. Perhaps you are making the same "mistakes" most of us did when we started playing (I know I did). You had two routes already established and quit those to set a couple more at somewhat high frequencies. When you offer fewer seats on a route you will be able to charge higher fares. If, instead of flying 3x daily to Palembang and 2.5x to Yogyakarta you would stay at 1x frequency on each route, you could raise your prices and set up new routes with the same plane. You might be serving a similar number of pax but, since they would be paying you higher, your profits would probably go up.
P.S. - You still keep 2 gates at Jakarta but are using only one (each gate is good for 10 slots or frequencies). Unless you're planning on using the extra capacity very soon, you'd better give back one of the gates. This way, you won't be paying for the unused capacity. Just don't do it if you're planning on using the gate in the next month, otherwise you would be renting it again, paying the same.
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Correct me if I'm wrong though, but as long as your retained earnings remain above 0, there's not really any problem is there?
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Correct me if I'm wrong though, but as long as your retained earnings remain above 0, there's not really any problem is there?
I can see it going below zero without beeing much of a problem. You would have had a negative cash-flow but, as long as the money went into something you could sell (i.e., planes), bankrupcy wouldn't necessarily be around the corner.
I should also note that this screen does not take into account (pun intended) marketing expenses. (BTW, why not??)
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Because marketing has its own department ;)