Final project Deliverable

Aviation finance Financial model

Motorway Presentation
Bus rapid transit
Gas powerplant
Metro rail
Gas pipeline

Pick an industry
Sub project
Lecture:
28-Aug-23
Debt 70%
Equity 30%
Cost of debt Benchmark rate + Spread
6-month SOFR 5.04%
Spread 4.50%
Total cost of debt 9.54%
Tax rate 29%
After cost of debt 6.77%

Cost of equity RRF + BETA *MP

RFF 10 yr TBILL 4.20%
Country risk premium 14.80%
BETA 1.6
MP 5.50%

Cost of equity 27.80%

Weighted Average Cost of Capital 13.08%

Operations and Maintenance Cost 1.5% * Project Cost 20,000,000

Total debt 70% * Project Cost 1,404,666,667

31-Aug-23

Construction period Months 24

Spread depends on overall risk of the project.

US Bond 4.20%
PK Bond 19%
Difference between these two is the country risk premium
Beta is the systematic risk
MRP is RM-RF

First stage of every project is: Feasibility stage

You go at the site and conduct some feasibility test whether it makes sense or not
Second stage is called a Contract stage (partners)
You go in to the market after conducting feasibility
You look for a partner, they will come with their proposals
Third stage is called The Financial close stage
After technical things, you look whether its bankable or not

Bring in your own money from diff sources (bank will decide whether project will pay off)
On third stage, we will arrange the equity.

Pro rate drowdown: whenever investment is needed, bank will provide 70% of it and 30% from us
Bank financing is done on pro-rate financing ^
Payment done by you, followed by bank payment
Financial close is the most critical stage
Banks give us a TERM SHEET/ Bank or Investor : Details of the project. Bank agrees to give xyz, debt will be paid back in xyz ye

Project starts working once financial close is completed

After financial close, It can take between 1-2 yr to begin the commericial operation date COD

Feasibility stage
Contract stage
Financial close stage
Commericial operations date

Now we need to make schedule

 To maximize roe, we use more debt to get a tax shield.

cost in millions 100

debt 70% 70
equity 30% 30

EBITDA 10
Tax 20%
Cst of debt 10%
Cost of equity 15%

Why cant we increase our ratio of equity? i.e 30%

70-30 RATIO
EBITDA 10
INT (70*105) -7
3
TAX -0.6
2.4 ROE 0.08
40-60 RATIO
EBITDA 10
INT (40*10%) -4
6
TAX -1.2
4.8 ROE 0.08

You get same return by giving less amount of money. i.e 0.6 tax in 70-30 ratio (more debt)
If you do 100% debt, the profit will be zero because interest will be (10% * 100)
Its bette to be more leverage, more amount of debt

xyz, debt will be paid back in xyz years.

Total debt 1,404,666,667.00
Total equity 602,000,000.00
Total EPC Cost 2,006,666,667.00 Assumption:before drawing down debt, you must use all of you
Interest during constrution 111,272,175.03 We will capitalize it
Total Project Cost 2,117,938,842.03 Now we will need more money to cover the cost.

Quarter Drawdown Total debt drawdown

1 12.50%
2 12.50%
3 12.50% 150,500,000.13
4 12.50% 250,833,333.38
5 12.50% 250,833,333.38
6 12.50% 250,833,333.38
7 12.50% 250,833,333.38
8 12.50% 250,833,333.38
9
10
11
12
 INTEREST DURING CONSTRUCTION

fore drawing down debt, you must use all of your equity

eed more money to cover the cost.

Total equity drawdown Remaining equity balance Total Debt outstanding Quarterly Intererst
250,833,333.38 351,166,666.63
250,833,333.38 100,333,333.25
100,333,333.25 150,500,000.13 3,589,425.00
401,333,333.50 9,571,800.00
652,166,666.88 15,554,175.00
903,000,000.25 21,536,550.01
1,153,833,333.63 27,518,925.01
1,404,666,667.00 33,501,300.01
Remaining debt balance If we add to debt and equity, the EPC will increase and it will be a loop

1,254,166,666.88
1,003,333,333.50
752,500,000.13
501,666,666.75
250,833,333.38
-
 Aircraft Finance

Value proposition: what routes are you going to fly on?

Route: how many hours, how many miles, whats the distance, how much fuel, budget airline
Planes for regional flights: A320, 737, A319 - Around 6flights a day
Jet Fuel: 11.12 b/mile
Fuel Duration
Khi-Jeddah: 1780 miles 250 minutes
Khi-Dubai: 740 miles 130 minutes
Khi-Doha: 971 miles 165 minutes

Normally airplanes can fly 18 hours a day

4.16666666666667 1.5 5.66666666666667

Planes 3
Total flights 11
Crew 2 4
Salary per person per
month 1,000,000 300,000

1 person can take 6 flights

Total flights 77 308
Total people required 72
Pilots 24 24,000,000
Crew Members 48 14,400,000
38,400,000

Per flight cost 124,675.32

Management Cost 100,000.00
224,675.32

14-Sep
Price
3 Airbus 320 m 101

Operating cost per flight Annual no. of flights

Jeddah 8055 1095
Dubai 3781 1460
Doha 4730 1460
Operating cost
 Lease Payments
Total cost of operating

Revenue
Total cost of operation
Profit before tax
Less:Taxes
Profit after tax
Reverse calculation:
profit before tax *(1-29%) = 4000000
Revenue
Total cost of operation
Profit before tax
Less:Taxes
Profit after tax

Max. capacity per flight Annual no. of flights Occupancy %

Jeddah 174 1095 70%
Dubai 174 1460 70%
Doha 174 1460 70%
ow much fuel, budget airline

Jet Fuel Fuel Cost $816/2204lb

19,793.60 7328.3
8,228.80 3046.6
10,797.52 3997.6

3.00 Maximum flights in a day to Jeddah

4.00 Maximum flights in a day to Dubai
4.00 Maximum flights in a day to Doha
11.00 Max flights AirIBA can take in a day

11 Flights per day

4+2 2 Flights

Quantity
3.00 303

Total Cost
8,820,225.00
5,520,260.00
6,905,800.00
21,246,285.00
 30,300,000.00
51,546,285.00

71,960,480.00
51,546,285.00
5,633,802.82
1,633,802.82
4,000,000.00

57,180,087.82
51,546,285.00
5,633,802.82
1,160,000.00
4,000,000.00

No. of passengers Mkt price of ticket Total Revenue

122.00 $ 200.00 $ 21,374,400.00
122.00 $ 125.00 $ 17,812,000.00
122.00 $ 230.00 $ 32,774,080.00
$ 71,960,480.00
0.37023593466425
4.11702359346642 Per mile

We are probably going to be leasing because 1, not enough capital and 2, we are not sure how long to continue this.

ROE = Net Profit / Equity

ROE = 20%

Equity 20,000,000.00
Targeted ROE 20%
Targeted Net Profit 4,000,000.00
Tax 29%

Retained Revenue One way to price: cost plus pricing

$ 160.00 But you can not stay efficent always by using it
$ 100.00 Marginal cost is the cost of producing one extra unit
$ 184.00
w long to continue this.
Green Line Project

Project cost 35,000,000,000 Opening balance

Daily Ridership 135,000 1 35,000,000,000
Number of buses 80 2
Debt equity 100% 3
Interest rate 23% 4
Maturity 15 5
Annual payment 8,427,686,717 6
7
One way distance Km 21 8
Distance coverper litre Km 6 9
Litres per km 0 10
11
Terminus 1 Surjani 12
Terminus 2 Numaish 13
Time for one-way trip (minutes) 60 14
Refuling+Rest+Cleaning (minuntes) 10 15
One round trip (minutes) 130 16
Bus operating hours 15 17
Bus operating minutes 900 18
Number of roundtrips per bus 7 19
20
Number of litres on one round trip 42 21
Diesel required for one round trip 7 22
23
Daily fuel consumption 3,792 24
Diesel price 329 25
Total diesel cost 1,247,447

Number of bikes 67,500

Consumption of fuel 1
Total consuption in litres 67,500
Petrol price 331
Total price 22,342,500

Total debt payment 8,427,686,717

Total diesel cost (variable cost) 455,317,981
Total cash requirment 8,883,004,698

Average daily cash requirment 24,336,999

Average ticket price (to breakeven) 180

Current average ticket price 45
Daily subsidy reqeured per ticket 135
18,261,999
Annual subsidy required 6,665,629,698
Interest payment Principal repayment Closing balance
8,050,000,000 26,950,000,000
 Modelling for AirPlane Business

Assumptions

Available Planes
A320
737
A319

Origin City Karachi

Operational Plane Hours 18
Fuel Utilisation (miles) 11
Fuel Cost ($) 816
Lbs per tonne (1000 KG) 2204
Price per mile 0.370235934664247
Fuel Cost 4.07259528130671

Fuel Costing

Destinations Distance in miles Time in Minutes Landing Time in Mins

Jeddah 1780 250 90
Dubai 740 130 90
Doha 971 165 90

Staff on Plane

Available Planes 3
Total flights 12
Pilots per flight 2
Crew members per flight 4
Total time in hours Max flights per day Fuel Cost
6 3 7249.2196
4 5 3013.72051
4 4 3954.49002
12 14217