Matt Brown, Dylan Plunkett & Bowen Sun

Engineering Econ Project

Company Name: The PJ’s
Company Description: The PJ’s offer a luxury line of private jets for the new age of jetsetters to use at their discretion. A range of jets are on offer from the larger cross country and international jets to luxury puddle jumpers. Based out of Philadelphia Executive Airport, we offer travel throughout the Northeast Corridor and across the United States. After establishing our foundation in the market we will invest in a Gulfstream G650 to support international travel.

Oprah is my god mom, she gave us a cool 150 million

Basic Money Stuff
• 1 hour of flight time = $1,600
• Short Range Place; Piper Saratoga; $400,000 ; We need 4
• Embraer Phenom 100; 5,000,000; we need 4
• Mid Range Plane; Learjet 60XR; 14,000,000; We need 3
• Long range Plane: Gulfstream G650 – $50,000,000, need 1
90,600,000 for aircraft
OR
FLEXJET
OR
Leasing the smaller aircraft first then buying them at a discounted rate and then lease the G650 once we have built our clientele up.
• We need to still charger around $1,600 per hour of flight time
• Short Range; Embraer Phenom 100; 25k, we need about 5
• Mid range; Learjet 60XR; $50,000 per month. We need 3
• Long Range; around 110 per month After 2-3 years of steady profit we can offer international travel- G650
The leasing alternative requires less start up costs at the beginning but more per year after that, contingent that we make a profit we can buy the planes at a discounted rate, around 5% off of retail price.
Crew We need
o Regional Airline Pilots or Freshley Forced Retired Airline Pilot
 20,000-40,000 Salary for First Officers
• 60,000-85,000 for Captains
 5,000 Signing bonus and 10,000 Anniversary bonus
o 8 Flight Attendants for flights
 $36,000 per year
o CFO- Matt’s Dad who will work for a nominal amount
o Ground Staff

SEAT METHOD

  1. Identify the Investment alternatives
    a. Massive Loan upfront to get starter airplanes, crew, pilots, and administrative Staff
    b. Huge Loan upfront to lease airplanes per month instead of buying
    i. Not as big of a loan to buy the aircraft but still big enough to get us going
    c. Fractional Ownership of Aircraft
    . We appeal to rich people who want to buy their own planes but realize that they only use the plane a couple months out of the year. So we pool money together and we use the planes around said schedule.

Progression of Company/ What needs to happen for us to succeed.

  1. A multi-million loan to us to establish a foundation for the company. We need aircraft, advertisement through social media and more conventional means, our skeleton crew, storage, maintenance, and insurance for said planes.
  2. We offer air taxi services across the continental united states for businesses and rich people who want to travel in luxury. We can have 2 Phenoms and 1 Lear out west that offer travel across the west coast and cross country travel. We do the same thing on the east coast and appeal to traveling businessmen who need to travel a lot. We offer a personalized luxury experience
    a. Pricing for our customers vary
    i. For businesses we offer block pricing and not per trip.
  3. The businesses pay in increments of 50,000 and are contingent on flight hour. 50,000 gets 100 hours of flight time.
    a. The price is low but we hoping that the low price will be an incentive for them to buy more flight hours.
  4. Individuals pay per trip. We charge $750 per hour of flight time. So a flight from New York to Los Angeles has a flight time of around 5 hours and will cost the customer $3,750. This is compared to 2,700 on American Airlines. But disguise it as a flat rate.
    b.
    What We need to do
  5. Create cashflows for different investments Dylan
  6. Create our WACC Dylan
  7. Create our MARR by finding the breakeven point Matt
    a. Provide cashlfow by using our MARR Matt
  8. Predicted sales Bowen
    . Create some cashflows of different sustainable operations Bowen
  9. Write up report summarizing our plans for startup funding and sustainable profits All

Requirements for project
Start-up funding plan – a thorough plan to get you up and running o Funding sources should include a distribution of (1) investors (in exchange for equity), (2) bonds, and (3) loans – how much does each cost you, what is your return, and what is their return? o Consider and report on the WACC in your plan o Determine a reasonable MARR – with relevant justification o Provide a cashflow diagram from initial funding to sustained operation § Mark major events on the diagram, such as “first sale” o Perform a break-even analysis
Sustained funding plan – a thorough plan of continuous operation and growth o Predict fixed and variable operating costs o Predict sales volume and revenue o Predict profitability for the sustained business o Provide a cashflow diagram for sustained op
• Report: A clearly-written, concise report that summarizes your plans § Start-up funding § Sustained funding o Relevant calculations, clearly explained

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