MOROBE AIRE Business Plan
Prepared by: Date: Version:
Advanced Business Consulting (1-104093) March 2015 1
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CONTENTS Table of Contents BUSINESS SNAPSHOT – MOROBE AIRE!............................................................................................!5! 1.!
OVERVIEW!.....................................................................................................................................................!6!
1.1! BACKGROUND!................................................................................................................................................!6! BUSINESS PURPOSE!..........................................................................................................................................................................!6! CURRENT POSITION!..........................................................................................................................................................................!6! BUSINESS CHANGES!........................................................................................................................................................................!7! KEY MILESTONES!...............................................................................................................................................................................!7! APPROACH TO DECISION MAKING!...............................................................................................................................................!7! 1.2! STRUCTURE AND RESOURCES!..................................................................................................................!8! ORGANISATIONAL STRUCTURE!.....................................................................................................................................................!8! BUSINESS ENTITIES!..........................................................................................................................................................................!9! 2.!
MARKETING PLAN!.................................................................................................................................!11!
2.1! MARKETING!.................................................................................................................................................!11! TARGET MARKET!..............................................................................................................................................................................!11! COMPETITORS!..................................................................................................................................................................................!12! MARKETING AND PROMOTION!...................................................................................................................................................!13! RECENT ACTIVITIES!.......................................................................................................................................................................!13! PLANNED ACTIVITIES!....................................................................................................................................................................!15! 2.2! CUSTOMER STRATEGY!.............................................................................................................................!17! CUSTOMER MANAGEMENT!............................................................................................................................................................!17! CUSTOMER ACQUISITION!............................................................................................................................................................!17! 3.!
BUSINESS ENVIRONMENT!..............................................................................................................!19!
3.1! MARKET ANALYSIS!...................................................................................................................................!19! THE INDUSTRY!.................................................................................................................................................................................!19! SWOT ANALYSIS AND BRAINSTORMING!..............................................................................................................................!23! 4.!
OPERATING PLAN!.................................................................................................................................!24!
4.1! PRODUCTS AND SERVICES!.....................................................................................................................!24! PRODUCTS/SERVICES OFFERED!................................................................................................................................................!24! PRICING!..............................................................................................................................................................................................!24! PAYMENT!.............................................................................................................................................................................................!25! DISTRIBUTION!.................................................................................................................................................................................!25! FUTURE GROWTH!............................................................................................................................................................................!26! KEY SUPPLIERS!................................................................................................................................................................................!27! KEY CUSTOMERS!.............................................................................................................................................................................!27! 4.2! FACILITIES!..................................................................................................................................................!28! PREMISES!...........................................................................................................................................................................................!28! ASSETS AND EQUIPMENT!.............................................................................................................................................................!29! STOCK AND INVENTORY!...............................................................................................................................................................!30! 4.3! BUSINESS RESOURCES!............................................................................................................................!31! PEOPLE!................................................................................................................................................................................................!31! FINANCIAL RESOURCES!................................................................................................................................................................!32! DATA AND CUSTOMER INFORMATION!.....................................................................................................................................!32! 4.4! RISK MANAGEMENT!.................................................................................................................................!33! RISK ASSESSMENT!.........................................................................................................................................................................!33! BUSINESS CONTINUITY PLANNING!..........................................................................................................................................!34! SUCCESSION PLANNING!...............................................................................................................................................................!35! INSURANCE!........................................................................................................................................................................................!36! 3
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FINANCIAL ANALYSIS!.......................................................................................................................!38!
5.1! INVESTMENT OPTIONS!...........................................................................................................................!38! BASIS FOR INVESTMENT!..............................................................................................................................................................!38! 5.2! FINANCIAL FORECAST!.............................................................................................................................!38! FINANCIAL BENEFITS!.....................................................................................................................................................................!38! COST BENEFIT ANALYSIS – P6 AIRCRAFT!..........................................................................................................................!39! BUDGET FORECAST!........................................................................................................................................................................!41! SALES ANALYSIS!.............................................................................................................................................................................!41! INCOME (CASH-FLOWS)!..............................................................................................................................................................!41! 6.!
FUTURE BUSINESS GOALS AND OBJECTIVES!..................................................................!51!
6.1! BUSINESS AND PERSONAL GOALS!.....................................................................................................!51! BUSINESS GOALS THIS YEAR!.....................................................................................................................................................!51! 5-YEAR PLAN!.....................................................................................................................................................................................!51! 6.2! ACTION PLANS!...........................................................................................................................................!52! TOP 3 IN 3 MONTHS!......................................................................................................................................................................!52! TOP 3 IN 6 MONTHS!......................................................................................................................................................................!52! TOP 3 IN 12 MONTHS!...................................................................................................................................................................!52!
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Business Snapshot – Morobe Aire Purpose of this business plan
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To establish Morobe Aire and to capture current unmet demand for remote air services in PNG.
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To also capture commercial contracts (corporate, government, NGOs and remote communities) for passenger, cargo, emergency and medical transit services. To deliver dividend revenue to the investor across the first five years with options for investor to retain company ownership longer term.
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Business structure
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Morobe Aire will be a private limited liability company in joint shareholding (private equity) with Mr Robert Herschman, who will assume company management and Chief Pilot roles.
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A management contractor (SME Developers) will support all strategic, administrative and financial management functions alongside Mr Herschman.
Business activity • • •
Provide remote airline services across Morobe Province (short-term) and PNG Perform air services contracts to corporate, government, NGOs and communities Service the market demand for passenger and cargo transportation
Points of differentiation • • •
Pilatus Porter P6 aircraft is technically superior for PNG remote flying conditions Morobe Aire is the first remote airline to service Morobe Province Mr Herschmans professional flying (20 yrs.) experiences
The market • • •
Remote communities- farmers (coffee, cocoa), passengers and general cargo Government – teaching/medical staff transfers and project cargo (emergencies) NGOs/Industry – Project teams/logistics
Vision, goals and objectives What are your top three goals for the next five years? 1. 2. 3.
Establish market share in Morobe (short term) and Western Provinces Grow business contract segments (government, farmers, NGOs, industry) Expand territory coverage to Islands and other regional provinces across PNG
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1.
Overview
1.1 Background Business purpose The proponent (Mr. Robert Herschman- PNG Minerals Exchange Ltd and PNG Highlands Summit Coffee Co.), has been operating a remote (bush) air operation servicing communities across Morobe Province Papua New Guinea since 2011. He operates a Cessna light aircraft to conduct transactions for coffee, gold, cargo and increasingly passenger business. Since then there has been an increase in demand for his aircraft across his Morobe regional territory. This has motivated him to start up a third level airline to be based in Wau and to provide airline services (subject to Part 135 approval) to most remote locations across Morobe Province, short term (2015-16) and to expand to include other Provinces longer term (2016 beyond). This enterprise aims to capture some of the current and future increased market demand for remote (bush) airline services
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Passenger travel – Missionary Aviation Fellowship1 (MAF) PNG reports in its 2014 statistics, that it provided air transport (faith-based Part 91) to over 33,000 remote community residents across all its’ PNG Provincial areas of operations.
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Farmer’s goods transport – The Morobe Provincial Government web site (http://www.morobepng.com/id23.html) lists this region as a major economic contributor to PNG, with widespread agricultural development in coffee, cocoa, rice, cattle and fisheries industries. A recent article in Post Courier (Mar’15) claims that tonnes of rural grown coffee crops are suffering from proper road access to markets in Lae.
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Freight business– MAF also reported it’s 2014 cargo demand was over 2,000 tonnes of air freight to its’ remote communities. Mr. Herschman’s current cargo deliveries total over 200 flying hours/annum at forecasted revenues around PGK4,000/hour or PGK2 million/annum.
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Medical related business– Mr. Herschmans’ demand for medivacs from his Morobe regional destinations averages 2 flights per week. He has also been consulted through Australian Foreign Aid body DFAT, to enter into contracts to deliver medical aid supplies across Morobe Province remote destinations. The PNG National Research Institute2 reports 39 Health Centers and 219 Aid Posts across Morobe Province.
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Government business – Mr. Herschman has received feedback from his various discussions with remote placed teachers and health personnel, of their need for his flights. MAF reported providing over 3,500 passenger seats for teachers and health workers (over one year of operations), into its’ remote community regions across PNG.
Current position Mr. Herschman has experienced a sharp increase in demand for his flights, beyond the current operational capacity of the single aircraft (Cessna 206), that he deploys. His current aircraft services around eight (8) remote airstrips in Morobe Province and he
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Faith-based (Non-commercial Part 91) http://maf-papuanewguinea.org/maf-png-statistics-from-2014/ http://www.nri.org.pg/research_divisions/cross_divisional_projects/13%20Morobe%20Province.pdf
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has been requested to open up (though landowner labour), a further 16 remote strips. This is to provide farmer goods transport (coffee), freight, medical and government business flights. This business plan sets out the feasibility case for increasing the aircraft fleet he manages to include another craft (Pilatus Porter -P6). The aim is for upgrading the existing service to commercial airline status per PNG Civil Aviation Safety Authority (CASA) Part 135 registration (Civil Aviation Act 2000), to capture the current market opportunities for increased airline services to remote communities across PNG and in particular Morobe Province. The P6 will be registered with CASA under the company name (including shareholders), along with the aircraft insurance certificate. This is to provide protection to the investors for potential risks to theft, damage or any other loss to the investors resulting from the aircraft.
Business Changes Mr Herschman started flights in 2011 (PNG Minerals Exchange Ltd and PNG Highlands Summit Coffee Co.), with a Cessna aircraft. His company aim was to conduct direct buying of coffee and gold from remote community producers across Morobe Province, PNG. He has secured coffee and gold permits including buying and exporting of these commodities from PNG to his markets in the US. Since this period he has experienced an increase to the demand and type of flights required from various stakeholders. This includes Morobe Provincial Government officials (refer LOIs), NGOs (DFAT), GOPNG and Miners (MMJV). This has forced him to restructure to seek to form a commercial services through registration application to PNG CASA under Part 135. This in turn has required for a new company to be created with a private equity shareholding structure, in order to acquire a second aircraft (Pilatus P6).
Key milestones • • • •
Establish remote communities flight operations in Morobe3 Coffee (green bean) buyer/export licences Gold (small scale) buyer/exporting licences Export to US of both commodities
Approach to decision making Up to now (Mar’15), Mr Herschman has been sole director (PNG Minerals Exchange Ltd and PNG Highlands Summit Coffee Co.) and primary decision maker for operational and management planning and execution both here in PNG and in the US market. He has had to consult and negotiate extensively to secure registration of the Cessna and all commodity licences along with company registrations. He has also required to engage with other PNG agencies (IPA, IRC, Customs, accounting, legal, suppliers), to effect proper establishment of all his company’s regulatory and operational needs. This also extends to consultations through government, NGOs, Missions and private sector
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PNG Minerals Exchange (1-80551)
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bodies to negotiate additional flights to the remote communities across Morobe and (soon) Western Provinces.
1.2 Structure and Resources Organisational structure Morobe Aire is proposed to have two broad areas of management responsibilities: Air Operations – Mr Herschman will assume role of Chief Pilot and manage all aspects of airline operations including-
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Direct management of air operations planning and execution, Direct management of pilot and maintenance training and recruitment programs, Direct management of CASA compliance obligations.
Business Management - A proposed contractor SME Developers Ltd, will provide the business enterprise management functions including-
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Strategic and business management planning and execution, Support to administration and financial management tasks, Support to taxation and other statutory compliance and reporting.
Operations Staff – There will be two broad staffing groups to support both areas of the business enterprise-
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Co-pilots – These positions will be directly recruited by the Chief Pilot from the market including from trainee pilots. The Chief Pilot will also manage all CASA (Part 135) training and operations compliance for these recruits. These roles will directly support the Chief Pilot in managing air operations and crews,
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Ground Crew – A small team of baggage and cargo handlers will carry out ground tasks as well as light aircraft maintenance,
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Administration Staff – A small team of office staff will perform administration and accounts support tasks.
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Chief Pilot
Air Operations
Business Management
Operations Staff
Contractor (SME Developers Ltd)
Administrative
Co-Pilots
Finance
Maintenance/ Ground crew
Business entities Morobe Aire will be a jointly owned enterprise with Mr. Robert Herschman to acquire 49% shareholding through the new IPA registered company. In accordance with IPA company registration (Companies Act 1997) and foreign investment rules (Investment Promotion Act), the remaining 51% shareholding equity will be taken up by the (PNG) private equity partner. The company will be registered with both the IPA and the Civil Aviation Authority under Part 135 which rules small airlines in PNG.
ENTITY
SHAREHOLDING
DIRECTORSHIP
49% Mr Robert Herschman
Mr Herschman
51% PNG Equity Partner
TBD
Morobe Aire
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Key people Name
Role
Skills/attributes US registered pilot20 yrs remote flying experience including 5 yrs in Morobe Province, PNG. Business management consultants including SME projects to rural communities across PNG.
Mr Robert Herschman
Chief Pilot
SME Developers Ltd
Business Manager
TBD
Co-Pilot
TBD
Company
Role they play
Key advisors Name
Business Management
SME Developers Ltd
TBD (Accountant)
SME Developers Ltd
TBD (Lawyer)
TBD
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Business management services – strategic and general business planning and execution; administrative and training support to staff Manage entity financial controls, compliance (IPA, IRC, DLIR, NTC) and reporting and provide accounts training to staff Manage as required all legal compliance and contract management scope
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Marketing Plan
2.1 Marketing Target market The market demand for remote flights (Part 135) across Morobe Province and PNG and therefore the channel segments that Morobe Aire will target includes: REMOTE COMMUNITIES Passengers (everyday travel) – MAF (faith-based Part 91)4 conducted over 33,000 remote community passenger transfers in 2014 across all PNG and this segment continues to grow due to the road infrastructure challenges across PNG. Due to increased demand Mr Herschman is planning to expand that will see his operation open up an additional 16 strips this year 2015. Currently his aircraft covers eight (8) remote airstrips across three Morobe Districts1) BULOLO-WAU DISTRICT - Garasa/Garaina valley 2) BULOLO-WAU DISTRICT - Garaina/Garaina valley 3) BULOLO-WAU DISTRICT - Omora/Garaina valley 4) MENYAMYA DISTRICT
- Umba
5) MENYAMYA DISTRICT
- Engati
6) MENYAMYA DISTRICT
- Marawka
7) FINSCHHAFEN DISTRICT –Lengbati 8) FINSCHHAFEN DISTRICT -Mindik Cargo (everyday travel) – Mr Herschmans’ current demand for cargo lifts is over 200 flying hours annually at average profits around PGK4,000 per hour. His clients are Churches/Missions and teaching/heath staff. MAF also reported moving over 2,000 tonnes of general cargo between its’ remote communities during 2014. Airlines PNG5 (APNG) reports increase amongst its’ remote community passenger and freight business, is driving its’ strategy to buy new ATR 72-600 aircraft. Cargo (farmers commodities) –MAF airlifts around 800 tonnes of coffee from the Highlands regions to Lae market each year. Mr Herschman has been buying coffee direct from Morobe farmers and consolidating at Lae, for shipments to his importing/roasting/distribution company (PNG Highlands Summit Coffee Co.www.pnggourmetcoffee.com) in the US. He has achieved profits around 35% and plans to double coffee imports for 2015. A recent (Mar’15) Post Courier article cites poor road infrastructure in Morobe Provincial Districts, is causing economic losses to coffee farmers. OTHER AGENCIES Passengers (under contract) – Mr Herschman has seen increased demand from NGOs (DFAT), teaching and health staff for his flights into remote communities across Morobe Province. Adventist Aviation Papua New Guinea6 (faith-based Part 91)3 reported increased flights to transport teachers, ministers, nurses, builders, mechanics, NGO Aid personnel and residents, from over 500 bush airstrips across 4 5 6
Church-purposes only and therefore not in competition with other operators Based on 30+ seater market
-http://www.apng.com/Portals/0/AIRPNG_IER_FINAL_20141104.pdf
2007 - http://www.adventistmission.org/article.php?id=320
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PNG. MAF transports over 5,000 Church/mission staff across all its remote communities. Cargo business – MAF also supports “hundreds of tonnes of "church" freight (building supplies etc.)”, across PNG remote communities each year. Mr. Herschman has also been approached through GOPNG and DFAT officials to seek his aircraft to transport medical supplies, teachers and medical staff across Morobe and Western (Wasu) Districts. He has also been approached by Hidden Valley (MMJV) Mining to transport gold- refer LOIs attached.
Profile
Ideal target market
Current customers
Health and teaching staff
Community residents
Cargo
NGOs/GOPNG/Miners
Farmers
Where do they live?
Morobe and Western
Morobe Province
What sort of work do they do?
NGOs/Gov/Resources
Farming
What are their needs?
Long term contracts
Mobility transfers
Why would they choose your product/service?
Expanded fleet/regions
Competitive rate
Passengers
Competitors Morobe Aire
MAF
North Coast Aviation
Adventist Aviation
Products
RPT
RPT
RPT
RPT
Price
PGK5/kg
Subsidised
Fare rates
Subsidised
Market share
TBD
Major operator
Major in Morobe
Major operator
In business since
2011
60 years
>10 years
60 years
Business structure
Sole Owner
Faith- based
Private co.
Faith- based
Target customers
Remote
Remote
Remote
Remote
Growing market
Leader
Major-Morobe
Leader
Farmer focus
Subsidised fares
Strengths
Fees/flexible
Established
Unsuitable craft
Established
Weaknesses
One aircraft
Funding
Costs
Funding
Positioning in the market Point of differentiation
RPT – Fare paying passenger and freight services
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Destination fares
Subsidised fares
Marketing and promotion Recent activities Communication method
Target audience
Objectives
Key message
When
Where
Cost
Return
NIL
In-principle expressions of support for the airline has been generated from PNG (customs broker/ Morobe PG) and US (coffee distribution/ roasters)
TBD
Global readership (this author connected with Mr Herschman through this article)
Advertising Letters/flyers/ brochures
Calling / visitation programs
Mr Herschman has directly canvassed target segments (Morobe PG/GOPNG/ NGOs/ Industry)
Mr Herschman has commenced making approaches to seek support via inviting LOIs
Mr Herschman has detailed to these targets the benefits and commercial advantages the airline services will provide these entities
Mr Herschman has been previously interviewed by Business Advantage 7 PNG
Business Advantage PNG is the premier business and invstment guide for PNG with a global readership
Portray of Mr Herschman’s coffe/gold buying services amongst remote communities and his pioneering efforts to open up remote strips for
2014current (Mar’15)
PNG (Morobe Province, NCD-Port Moresby, US)
Sponsorships / Events Trade shows
Media coverage (PR)
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23 Apr 2014 by Paul Howell http://www.businessadvantagepng.com/?s=herschman
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Apr’14
Port Moresby, PNG
Communication method
Target audience
Objectives
Key message isolated communities in PNG
Loyalty programs Website Internet [Other]
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When
Where
Cost
Return
Planned activities Communication method
Advertising
Target audience
Where
Cost
Expected Return
Web site to be created on funding and to be targeted towards market segment s up to inaugura l launch
Web site to be ceated through PNG based agency in Port Moresby or by a Morobe based wed developer
TBD – budget to limit cost to less than 2% of invest ment fundin g
Web site will aim to raise target segment awareness and will be assessed against increased contracts secured through this channel
Increased fleet capacity (P6 cargo functionality) Part 135 Registration (commercial airline services)
MarJun’15
Port Moresby/ Morobe/ Western Provinces (NGOs/ GOPNG Agencies/ Miners/ Exporters
TBD
Increased market channels (RPT contracts)
Raise awareness to target segments (Gov/NGOs/Indust
Date to coincide with the
Port Moresby, PNG
TDB
Increased market segment and
Objectives
Key message
When
Market segments (Gov/NGOs /Industry/ Communities)
Web site to be created prior to launch to raise awareness amongst targets
Wed site will aim to raise market attention to unique (Part 135) commercial airline services for this operation to remote sectors in Morobe Provincethe first ever milestone for the Province
Mining/NGOs/ GOPNG/ Farmers/ Community
Passengers (teachers/doctors& nurses/Aid teams) Cargo (medical supplies/project supplies) Farmers goods (coffee/cocao-buying & export) Gold (transportation/ buying/export)
Business Advantage PNG article
Mr Herschman to provide follow up article to editors on the new airline
Letters/flyers/ brochures
Calling/ visitation programs
Sponsorships/ Events Trade shows Media coverage (PR)
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Communication method
Target audience
Objectives
Key message
When
operation and expanded commercial services offered
ry),broader PNG/Global economy- on inaugual Morobe Province remote airline services and offerings
securing of funding
Where
Cost
Expected Return broader PNG/Global economies awarenessassessed against numbers of new business contracts secured
Loyalty programs Website Internet
Newspapers
Post Courier/ National newspapers
Submit and article and/or request for interview with these two premier country newspapers- to raise market awareness of inaugural remote airline services for Morobe Province
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Communicate to all key stakeholders in PNG (GOPNG/PGs/ LLGs/ Communities/ Industry) and globally (Int NGOs/Industry)
To coincide with secured funding
Port Moresby, PNG
TBD
Measured against increased new business development s secured
2.2 Customer Strategy Customer management Mr Herschman manages profitability to his flights by adopting a cash payments (up front) policy for all his business services (passengers and cargo). This policy has reduced risks of non-payment for his services and improved the cash flows to the business. His clients (communities and agency staff), have met this obligation consistently since his services started in 2011 and he aims to keep this policy in place under the new entity. He has targeted multiple market channels across his Morobe territory coverage including increased medivacs (average 2/week), increased passenger transfers for teaching and heath staff and increased geographical territory to supply his companies coffee buying. This strategy has seen his company requested to open up sixteen (16) new remote airstrips in Morobe (Finschaffen) and Western (Wasu) Districts, this year 2015. Australian Aid agency (DFAT) has requested his aircraft to deliver medical and Aid teams/project supplies into remote communities across his territory of operations. The national and provincial governments have also requested he commence this third level (bush) airline to broaden the scope for his flights (commercial passengers and freight) for Morobe and Western Province communities. The proposal with the new entity (once Part 135 granted) will be to develop long term contracts with agencies like DFAT (reduced risk) and mining (MMJV) firms, for provision of these services. GOPNG and Provincial/LLGs will be reviewed for risk before credit and payables terms are considered.
Customer acquisition New clients will be secured through formal presentations, negotiations, targeted advertising and promotion:
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GOPNG – National govt department heads of relevant program delivery to Morobe/Fly PG/LLGs,
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Int/NGOs - DFAT, WB, ADB, EU, USAID- Country missions/managers for aid project delivery in PNG,
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Church/Missions – PNG faith-based bodies and councils responsible for remote missions servicing and support,
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Media channels - Business Advantage, Post Courier, National newspapers, web site.
This phase to the business development will occur over this next three months (AprJun’15) in Port Moresby, Lae, Morobe, Wau, Hidden Valley and Kiunga townships. Presentation/marketing rounds will be conducted through the established consultations of Mr Herschman, with the aim to provide detailed operational capabilities of the proposed company including the functionality of the proposed Pilatus 6 aircraft. The aim
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will be to secure LOIs through these targets, to include as part of the business case feasibility for investor assurance.
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3.
Business Environment
3.1 Market Analysis The industry Overview/Trends Airlines PNG5 reports the aviation market is small compared to other (Western) countries due to the terrain and lack of airport/strip infrastructure in PNG. The market for passengers has grown sharply over five years 2009-13, at around 1million. Overall the charter segment has reduced due to cost pressures from resource companies (reduced commodity prices). However general cargo/freight continues to increase consistent with the trend for passenger growth in PNG. Segments 1.Commercial - The two major commercial airlines dominating RPT services (fare/cargo business) in PNG are Air Nuigini and Airlines PNG (APNG). Both Air Nuigini (Asia, Oceania, Australia) and APNG (Australia) service international routes. 2.Charter/Industry - Below these there are around five (5) other minor fixed wing and rotary operators that focus on first and second level airstrips across PNG (22 major/23 secondary strips). These operators mainly service the charter hire and industry (mining, oil & gas) logistics market in PNG. 3.Third Level - Of the remaining fifteen (15) third level (bush) services, there are around five (5) commercial level (Part 135) registered operators, with the rest under Part 91 (non-commercial) flights that operate across most provinces, servicing around 1,000 remote strips. Of these there are Faith-based operators including Missionary Aviation Fellowship (MAF) and Adventist Aviation, that provide heavily subsidised fees for their remote services. Mr Herschman’s current operations and the proposed business entity will participate within this segment. The new operation will service the remote (underserviced) market segment.
LEVEL
Airline
Premier Commercial
Air Nuigini
Regional Commercial
Link PNG
Regional Commercial
Airlines PNG
Regional Charter-Ok Tedi Mine
Asia Pacific Airlines (PNG)
Regional Charter
Islands Nationair
Industry Charter
Hevilift PNG
Industry Charter
Tropicair
Helicopter Charter
Heli Solutions Ltd
Industry Charter
Travel Air Ltd
Helicopter Charter
Pacific Helicopters PNG
Industry/Remote Charter
Adventist Aviation Services
Industry Charter
Sunbird Aviation
Industry Charter
Central Aviation
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LEVEL
Airline
Helicopter Charter
Heli Niugini
Helicopter Charter
Helifix Operations Limited
Helicopter Charter
Manolos Aviation
Helicopter Charter
Nuigini Helicopters
Industry/Remote Charter
North Coast Aviation
Industry/Remote Charter
New Tribes Mission Aviation
Industry/Remote Charter
SIL Aviation
Industry/Remote Charter
South West Air
Industry/Remote Charter
MAF PNG
Industry/Remote Charter
OM Holdings
RPT – Fare paying passenger and freight services
Regulatory environment Civil Aviation Safety Authority of Papua New Guinea (CASA) is the PNG aviation industry regulator. Of specific relevance to this business plan will be the requirements under PNG Civil Aviation Rules Part 135- Air Operations — Small Aeroplanes. Part 1358 sets out prescribed rules governing air operations using an aeroplane having a certificated seating capacity of 9 seats or less and Mr. Herschman (Chief Pilot) will manage all processes to seek full compliance to the rules set out within. The airline will need to be registered and appropriate certificates issued through CASA, which Mr. Herschman will manage including all CASA start-up and ongoing compliance processes. Rural Airstrips Authority (RAA) is a newly created agency (Ministry of Civil Aviation) that provides funding under a Public-Private Partnership (PPP)9, for implementing maintenance programs to restore safety and functionality to remote airstrips across PNG. To date the PPP program has been developed with MAF and the intention is to seek other (reputable) third level airlines to partner with. This agency has been allocated PGK5.9m for 2015 and early approaches (this author) through MAF’s project partner (ATProjectsGoroka) has commenced to secure support for this companies remote airstrips in Morobe Province. Other principle regulatory procedures and agencies that will need to be complied with include: !
Investment Promotion Agency (IPA), Papua New Guinea – The business name and company will need to be registered, company directors, public officers, secretaries, constitution or shareholders agreement to be lodged with the IPA.
!
Internal Revenue Commission (IRC) – The registered company will need to apply to IRC for GST and Group Employer registrations. SME Developers Ltd (management services) will coordinate with Mr. Herschman to complete these IRC processes. SME Developers through its’ financial management services to the new company, will also manage all tax Annual Tax Returns, BAS Reporting and Annual Financial Statements to IRC and other agencies.
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http://www.casapng.gov.pg/index.php/legistation/operations# - part 135 - air operations small aeroplanes VOLUME 2d 2015 BUDGET – 545 - Rural Airstrips Authority
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3.2 SWOT (Strengths, Weaknesses, Opportunities and Threats) Analysis Strengths (internal factors) • Mr Herschman is experienced in providing remote flights across Morobe Province (5yrs) • • • •
Operation will have the first Pilatus Porter P6 in PNG and with amphibious floats Mr Herschman has established clients including remote communities Mr Herschman has established stakeholder networks who are supportive Mr Herschman is highly experienced pilot (20 yrs)
Weaknesses (internal factors) • This new enterprise has no experience as a team • This new enterprise has no experience operating commercially • This new enterprise has no experience operating two aircraft • •
This new enterprise has no commercial contracts This new enterprise has no established business operations (systems, controls)
Opportunities (external factors) • There is increased market demands for remote flights across PNG • • • •
More than 95% of the population lives in the rural regions of PNG The Ministry Of Aviation is to introduce fuel subsidies for remote air service operations The major stakeholders (Gov/NGOs/industry) are willing to provide LOIs The Pilatus Porter P6 provides island/sea services capability
Threats (external factors) • Lack of funding • High failure rates for third level industry • Aviation fuel access is constrained through few suppliers in PNG • •
Fuel costs are considerably higher in PNG Wau (base location) is poorly serviced (infrastructure) and costs are higher
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SWOT analysis and brainstorming How will your strengths help you take advantage of your opportunities? • • •
P6 is able to capitalise on increased market demand (prior experience) P6 floats will enable expansion to island provinces and communities New enterprise is able to reduce fees through combined subsidies (CIC/Govt)
How will your strengths help you address your threats? • • •
Established stakeholder support in Morobe Province aids business development Prior operations experience assists against competitors (in Morobe Province) Prior experience and built supplier networks reduce risks (operational/fuel access/costs)
How will your weaknesses restrict you from taking advantage of your opportunities? • • •
New team and processes will constrain operational efficiency (short-term) Inexperienced team may constrain market development (short-term) Extra aircraft and new team will constrain market access (short-term)
How will your weaknesses expose you to your threats? • • •
Lack of capacity will reduce operational efficiencies (short-term) Adjustment to commercial level of operations increases competitive pressures Lack of funding and weak infrastructure and services (in Wau) will add to risks
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4.
Operating Plan
4.1 Products and Services Products/services offered This airline service (subject to Part 135 approvals) will seek to capture unmet market demand for remote air services to community destinations in Morobe Province. Third level (bush) airlines operations are greatly needed across PNG and the proposed airline business operations aims to provide passenger and cargo business to meet this demand. Vital to the Morobe Province Strategic Plan10 socio-economic development aims, are increased transport linkages (including air), to connect this major agricultural and manufacturing hub to markets. This business service aligns with the Morobe Plan to deliver an inaugural third level (bush) airline service to communities and the economy of Morobe: • • •
Remote flight services (passengers, cargo, medivacs, supplies, market linkages) Experienced air operations (safety of operations, regional knowledge) Vital linkages for remote communities (farmers, Govt/NGOs, miners)
Pricing Fees are to re-assessed against fixed rate (PGK5/kg) and on weight-based, in context of commercial (Part 135) upgrade for airline services (fares based). Current (CIC) fee subsidies for coffee cargo will be factored into the fee structure, to reduce cost base and passed onto clients. The impending fuel subsidies being offered through GOPNG (Ministry of Aviation), will be strongly pursued through industry and stakeholder networks (including govt representatives). Cost/Benefit model (capital component) will be applied to financial forecasting and modelling in addition to standard analysis methods (NPV-capital budgeting, Break-even, IRR, statements forecasting-Income, Balance Sheet, Cash-Flows). Discount rate to be assessed for private equity returns and subject to sensitivity testing (scenarios, economic risk). Pricing ultimately will be subjected to competitor analysis along with budget (operating) comparisons. Intention is to draw from industry standard (PNG) for remote flights to align fully all forecasts to properly reflect current/future conditions for PNG market. Insurance cost to be fully market assessed for PNG and this airline operation and options investigated through local (PNG) industry and Mr Herschman’s networks. Overheads to be weighted against demand analysis (planned trips, fees) and be applied using industry standard Over-Head Recovery Rate method. Margin to be assessed against all forms of financial analysis (sensitivity testing, scenarios, competitors), and business and market share objectives.
10
Morobe Province Government Five Year Strategic Development Plan 2008-2012
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Payment This proposal for (Part 135) commercial level airline status, may necessitate reevaluation of Mr Herschman’s current fixed rate (PGK4-5/kg) pricing policy as outlined earlier. It is planned that a tiered arrangement for managing revenue payments for each market client and ultimately terms will be managed to the financial models developed. In general there will be a financial plan developed that aims to balance cash-flows, receivables and trade terms, to protect liquidity, risk and exposure to the business operations: !
Communities – The existing cash-upfront policy for remote community passenger business, will be kept. All remote community passenger travel to/from communities (including cargo) may remain under both fixed rates and cash-upfront basis. This policy is to reduce risk for non-payment and to protect cash flows from this business segment.
!
Government agencies – The aim will be to secure long-term contracts to support all government levels across PNG (National, Provincial, LLGs), through developing standard (PNG) trade terms in return for guaranteed volumes. This market segment will be a major source for passenger and cargo business opportunities to the airline services and contract terms will be regulated through agencies like the Central Supply & Tenders Board.
!
Industry/NGOs/Faith-Based – These agencies will provide other major passenger and cargo business opportunities and the aim will be also to secure long-term support contracts. Each agency will have procurements policies/procedures to manage their contracts and this will act to regulate trade terms with the proposed airline.
Distribution There will be a number of customer channels that will be targeted in developing business across passengers and cargo opportunities to/from remote communities: !
Current operations – Mr Herschman has build networks across most of the intended market targets (Gov/NGOs/Missions/Farmers/Industry/Communities) and this will provide the new company with developed business for the new airline to capture.
!
Web site – A web site is to be developed as part of the early market mover strategy, to conduct market awareness campaigns up to the inaugural launch of the airline for Morobe Province. This site will provide early mover advantages to the business and its target segments (Gov/NGOs/Missions/Industry/Farmers/Communities), through ‘early bird’ contract and pricing arrangements. The web site will be broadcast to all segments through the supporting marketing/negotiation phases (securing LOIs, submitting articles, interviews).
!
Industry Alliances – Other options to align to target market segments for capturing early mover advantages will include forming alliances through key contracts/procurements agencies like the PNG Central Supply & Tenders Board, rural development agencies and faith-based services delivery bodies. Plans will be developed to align to these supply chains into service deliveries across remote
25
communities for PNG, with the aim to secure awareness of the air services for the company and to scan for contract opportunities.
Future growth Together with the company management, Mr Herschman will seek out through his market networks, new business development opportunities to expand the scope of services and geographical coverage of the operations. This strategy will be based on early mover advantages models where the management will scan market opportunities through developed industry/government alliances and networks. The Pilatus Porter-P6 will provide competitive advantages to the company services which will be pursued on commencement: " Capacity to carry (cargo) fuel in it’s wing spaces for additional fuel cargo to remote communities " Additional cargo space in the rear tail section of the P6, allows for the service to transport extra bulk cargo lifts " The amphibious floats on the P6 allows for the business to secure cargo/passenger business to island and coastal based communities across PNG. The existing coffee and gold buying/exporting operations of Mr Herschman will provide advantages for the services in this specialised area, in that Mr Herschman has export licences, current export experiences from PNG to his US based coffee manufacturing/distribution operations. This will provide competitive advantages in providing the companies clients with a single level supply chain capability, to deliver farmers greater returns.
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Key suppliers Supplier
Terms offered
Why critical
Jet fuel
Trade terms
Aircarft consumable
Aircraft maintenance
Recruitment
Safety/operability
Utilities
Trade terms
Premises/business operations
How supply risk is managed Developed supply contracts with Morobe based suppliers – then seek alternative (contingency) suppliers (supply/services risk mitigation) Initial contrated but will move to internal resourcing (cost reduction) Will plan for locating nearby aircraft facilities and compiement with generator power/water tanks (supply/services risk mitigation)
Key customers Customer/distributor
Why critical
Government agencies (Health/Education)
Large and urgent demand (teachers/medical staffing tarnsfers)
NGOs (int/domestic)/Faithbased
Project teams/supplies contracts across PNG
Farmers/Industry
Major economic hub and vital ongoing business channel
27
How risk of losing is managed Negotiate long-term contract rates, provide improved terms/conditions to meet their needs Offer tailored contracts and aligned fully to meet their programs/project needs Specialised aircraft (P6) provides extra cargo (fuel), island/coastal based services and developed (single-level) supply chain of Mr Herschman
4.2 Facilities Premises Mr Herchman has secured an arrangement with Wau airstrip management/operators to park his current Cessna there free of charge (including maintenance of the airstrip mowing etc.). This new company seeks to secure the maintenance programs offered through the PPP with MAF/ATProjects11 and further reduce maintenance costs for all Morobe airstrips planned to be serviced by the airline. Negotiations will be further managed through Mr Herschman to include proposed operations/hangar facilities at Wau airstrip, under the existing free access arrangements (PNG Minerals Exchange 1-80551). This base has been strategic to Mr. Herschman’s current air operations into Morobe Province (he operates to/from eight remote airstrips) and his experience and relationships with the airstrip management will provide advantages to the new company. Mr. Herschman has support from key Morobe Provincial Government stakeholders for this new airline and will seek their support for the new company to use its’ current site location. This base will be the main center for operations in Morobe Province over the mid-term planning periods (2015-17), with longer-term (2018-20) options to secure additional operational facilities in Morobe, Western and Islands Provinces. This will be a strategic expansion plan for the new airline with the impending program of Mr. Herschman to open another sixteen (16) remote airstrips in Finshaffen (Morobe) and Wasu (Western) Districts. Premises
Wau airstrip
Operations centre
Hangar/workshop
Purchase/ lease date
Price
Lease/finance rates, conditions, options
Since 2011
NO COSTthis is to be renogiated under the new company
TBD – Mr Herschman has secured free parking rights at Wau airstrip through owners since 2011
Options to purchase mobile kit homes to be set up at Wau airstip (subject to negotiation) Options to purchase canopy/used containers to set up at Wau airstrip (subject to negotiation)
11
TBD
TBD
Options to purchase (new/used) modular kit homes for construction of operations/accomm at Wau airstrip Options will include purchase of used (20/40 FCT) and canopy cover for erection of hanger/workshop at Wau airstrip
Innovative Rural Airstrip Maintenance Program (iRAMP) https://atprojectsblogs.wordpress.com/category/irampprogramme/
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Assets and equipment Mr Hershman has secured a suitable (second-hand) Pilatus Porter P6 aircraft currently located in the US (California). This aircraft has been personally inspected by Mr Herschman and he will undertake flight testing prior to personally flying the aircraft to Wau, Morobe Province (on successful funding/purchase). This purchase may come with one container of required spares/tools. Mr Herschman will manage all CASA precompliance (including registration) of the P6. The Pilatus Porter P612 provides superior Short Take-off and Landing performance on almost any type of terrain. The P6 is capable of taking off within a distance of 640 feet (195 m) and of landing within a distance of 427 feet (130 m) while carrying a payload of 2,646 lbs. (1,200 kg). The P6 is therefore popular for remote air services as it is frequently used to access short grass mountaintop airstrips in the highlands of Papua Province (Indonesia) and Papua New Guinea. The P6 will be registered with CASA under the company name (including shareholders), along with the aircraft insurance certificate. This is to provide protection to the investors for potential risks to theft, damage or any other loss to the investors resulting from the aircraft.
Asset
Pilatus Porter P6 aircraft
Truck
12
Purchase/ lease date
On funding approvals
On funding approvals
Price
US$650k (circa PGK1.4m)
Lease/ finance rates, conditions, options Capitalised purchaseMr Herschman has secured used P6 from US based seller
Current usage level
Anticipated replacement date
Used P6
To be deployed for initial business operations period 5 years (2015-2020)
TBD
OptionsCapitalised purchase/ Leasing
OptionsNew/ used per taxation benefits OptionsNew/ used per taxation benefits TBD
Vehicle (4wd)
On funding approvals
TBD
OptionsCapitalised purchase/ Leasing
Additional aircraft (longer-term)
Longer-term
TBD
TDB
http://en.wikipedia.org/wiki/Pilatus_PC-6_Porter
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To be deployed for initial business operations period 5 years (2015-2020) To be deployed for initial business operations period 5 years (2015-2020) TBD
Asset
Office technology/ consumables
Purchase/ lease date
On funding approvals
Lease/ finance rates, conditions, options Consumable purchasesIT (computers/ printers/ internet) Accounting/ Payroll ERS (MYOB software etc.)
Price
TBD
Current usage level
Anticipated replacement date
OptionsNew/ used per taxation benefits
To be deployed for initial business operations period 5 years (2015-2020)
Stock and inventory Mr Herschman will try to secure one container (20-fct) of aircraft spare parts and tooling as part of the purchase price (US$650k) he has negotiated with a US (California) based seller. This initial inventory of aircraft supplies will provide the maintenance operations with adequate capacity and reduces costs/risks to the new company for access to these materials in PNG. A full inventory list will be provided through Mr Herschman on purchase of the P6 aircraft. Storage of this container and security thereof will be on site at Wau airstrip and through internal (ground crew) labour resources. To support ongoing (longer-term) aircraft consumables/parts, Mr Herschman will develop supplier access to specialist parts/tooling to meet maintenance program needs, through his industry networks here in PNG/Australia and US.
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4.3 Business Resources People Mr Herschman will develop (recruitment/training) a small team of co-pilots to be sourced from his aviation industry networks in PNG and he will manage all CASA compliance (licencing, registration, training) of new recruits. One recruit will include a current trainee pilot in Morobe Province who is personally known to Mr Herschman and the SME Developer team have identified another trainee pilot currently completing commercial training program in the US. The pilot program for the new company aims to recruit and develop PNG trainee pilots to assist Mr Herschman build internal capacity and for longer-term succession planning purposes. It is Mr Herschman’s exit planning that this team of co-pilots will be trained and experienced in remote air flying operations/conditions (in compliance to CASA), to enable his exit planning around the end of this investment period (circa 2020).
Staff member Chief Pilot- Mr Robert Herschman
Co-pilots- TBD
Aircraft maintenanceTDB
Ground crew-TBD
Administration staff-TBD
Areas for development or cross skilling 20 years commercial and remote area flying including 5 years in PNG (Morobe, Hoghlands regions) Remote flying operations/Aircraft maintenance/checks/Trip planning/Cargo loading etc. Mr Herschman will manage initial commercial contractors for aircraft maintenance and phase to internal recruitment/training of maintenance labour Mr Herschman will recruit/train ground crews (including CASA compliance)- taxying/cargo operations/loading,unloading/flight manifests, documentation etc. SME Developed Ltd will manage through Mr Herschman all administration recruitment/training functionsaccounts/payroll/HRM/clerical etc.
31
How they’ll be developed or retained Mr Herschman will manage new co-pilot recruitment/training Mr Herschman will deliver operational and CASA complienance obligations to new recrtuits Mr Herschman will deliver operational and CASA complienance obligations to new recrtuits Mr Herschman will deliver operational and CASA complienance obligations to new recrtuits SME Developers Ltd (business management) will assist in general business management operations/training of company staff
Financial resources Facility
Provider
Private equity (PE) partner to be secured thrugh this business planning (marketing) campaign – PE funding will be sourced to provide capital items and first year operating budget
Private Equity partner/s –to be sourced within PNG (using networks of SME Developers Ltd)
Short-term financing facilities (bank O/D, credit acct) will be assessed (SME Developers Ltd) to provide on-going finance to new operation
TDB- Banks, FIs,Gov etc.
Approved limits or current balance Full PE fundig will be sought for start-up capital investment (P6/site facilities) and first year operating – Funding forecasts TBD
Limit on short-term financing facilities – PGK50-100k
Current usage/ balance
Conditions
PE- Capital budget circa US$1m (PGK 2.5m)/ Operating circa US$200k/yr (PGK500k)
PE subject to successful business investor support- to be campaigned between (Apr-Jun’15)
To be used to reduce cashflow risks and to support Operating Budget items across operations
To be negotiated through SME Developers Ltd with FIs – based on guarantees (LOIs/Contra cts secured)
Data and customer information SME Developers Ltd (management providers) will establish all accounting/payroll ERS for the new company including developing business, administrative and financial management processes and policies. Part of this component will include IT and CRM systems to manage client, contracts and financial data – ERS such as MYOB etc. will be assessed as part of the business management services by SME Developers to the new company. !
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IT systems - Options for purchasing a suitable small enterprise level Enterprise Reporting System (ERS) will be undertaken by SME Developers, to provide adequate database capabilities to the new airline operations. The ERS will combine functionality to process accounting, payroll and Customer Relationship Management (CRS) modules. SME Developers Ltd will manage all implementation, procedures and training of staff. Air operations – Through Mr Herschman, systems, procedures and training will be managed by SME Developers Ltd for database protection of all flight plans, manifests and other CASA required information. Mr Herschman will continue to oversee all air operations related data is identified, developed and SME Developers will coordinate to ensure data protection and entry.
32
4.4 Risk Management Risk assessment PNG Risks PNG presents challenge to business including macro-level, environmental, infrastructure and general costs. The latest ranking for PNG business indicators13, ranks PNG 133/189 economies for - starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. The current world corruption index14 ranks PNG 145/175 which presents increased risk for business operations. The Bank of PNG reports15 inflation around 10% (to Jan’15) with the Kina FX rates for US$/PGK 0.38 and AUD$/PGK 0.47. Although this company will not be engaged in exports, the purchase and importing plans for the Pilatus Porter P6 will require hedge strategies, as this will be paid in US$ to the seller (California, USA). It is planned that this transaction will be conducted through a bank-to-bank (LOC/BOL) importing process. Most supplies are also imported to PNG and this has risks on the final cost of sales (fuel, spare parts) and where possible the need for hedging against cross-rates fluctuations will be included in the financial plans. All supplier contracts will also be negotiated for forward/long-term prices to reduce risks of domestic price increases (jet fuel). Morobe Risks Morobe Province Government (http://www.morobepng.com/id22.html) reports the Province is also prone to climate-change driven disasters such as earthquakes, volcanic eruptions, tsunamis, drought, frost, floods, tropical cyclones and landslides. This has implications for the new companies operations across Morobe including its’ proposed facilities at Wau airstrip. The company management plans will be developed in consultation with National/Provincial (The Morobe Disaster Centre, MMJV) agencies, to include disaster preparedness measures to ensure operations are able to be protected and continue to service remote communities. Remote air services Airlines PNG5 reports general cost pressures recently have reduced demand for general charter business and the depreciating Kina also places cost pressures on the aviation industry (aviation costs denominated in US$). In general it depicts a slowing of the industry (from past three years). Remote communities are prone to the challenges of PNG natural disasters and the country in general suffers from lack of safe and adequate airstrips and aviation infrastructure. In recent times many of the remote air operators (MAF, North Coats Aviation) has also suffered cut backs to their services due to the increasing costs of fuel.
13 14 15
World Bank – Doing Business 2015 Papua New Guinea Transparency International -http://www.transparency.org/cpi2014/infographic/global
Bank of Papua New Guinea Monthly Economic Reviewhttp://www.bankpng.gov.pg/images/stories/MER_Report/20150306_MER_Report_Jan_15.pdf
33
Risk
Chance of happening (High, Medium, Low)
Impact if occurs (High, Medium, Low)
General business – (inflation, costs, corruption, security)
Higher- PNG ranks poorly for economic/social risks
High- potential to disrupt business/air operations/staff and facilities security
Disaster damages (cyclones etc.)- business disruptions
Higher- Morobe is prone to natural disasters
High- shuts down flights and business conitunuity
High- Morobe is away from main city of Lae and prone to reduced/delayed re-supplies
High-utilities services unreliable in Morobe Province townships, jet fuel generla consumables supplies will be at risk of disruption/delays/ cost increases
Consumables supplies (food, stationery, fuel) /utilities (power, internet, water)
How it’s managed Risk strategies to be developed including setting forward contract rates/contingecny measures to restore services/back-up power, water Insurance cover to be assessed capabilities Risk strategies will include linking to Morobe Disaster Centre/Lae major business communities/ MMJV – Insurance cover to be assessed Plan to develop wider sourcing options for jet fuel, numbers of suppliers to reduce risks to business operations – generator for power (including solar) and water tanks on site will reduce risks of disruption/cost increases etc.
Business continuity planning The management planning for this new business will address contingent risks across all parts of operations (staff, ground and air operations, assets and facilities), will be protected from a range of risk scenarios: !
Staff – Security threats are a major risk for PNG and the management plan will include measures to ensure staff are always under security watch from internal (ground crew) resources. Emergency response plans will include air lift to Lae for
34
hospital/medical treatment if necessary. Staff vaccination program to be coordinated through Morobe health agencies (TB, Malaria). !
Business Supplies – Contracts to be developed with critical suppliers (jet fuel, maintenance) to ensure the operations are protected from delays, disruptions, ceased or cost increases.
!
Facilities – All operational assets and facilities at Wau airstrip to be protected from natural disasters through insurance, back up power/water infrastructure and security services (ground crews)- insurance covers to be sought.
!
Remote communities – Through iRAMP and other maintenance measure the plan will be to ensure airstrips are always maintained in safe and operable conditions to ensure access at all times.
Succession planning Mr Herschman (Chief Pilot) will ensure his co-pilots are adequately trained and operationally experienced in remote air services during the period of this business (2015-20). This includes managing (CASA compliant) training programs, operational flying experiences and cargo management, throughout the periods, so that he is able to replace his services on exiting the business. Mr Herschman intends to have sufficient professional pilots in the company during his duration so that the business operations are protected from risk of his loss during operations and to ensure business continuity on his planned exit (around 2020). In addition Mr Herschman will manage all necessary insurance covers for his pilot crews, along with covers for general assets/property and the aircraft (P6).
35
Insurance The new company will develop as part of its risk management plan, a schedule of complete insurances and keep these current during period of operations (2015-20). Mr Herschman will manage all aircraft (commercial) and air operations (CASA) insurance covers to reduce risks of loss to the new company. SME Developers Ltd will assist him in management of all assets/facilities and personnel insurance (property, third party, accidental, work compensation). Mr Herschman will ensure both the CASA registration and aircraft insurance certificates are taken under the company (including shareholders) name, to provide risk protection to the investor parties. The initial import to PNG of the P6 aircraft will be conducted in accordance with international standards (LOC at sight/BOL etc.) including transaction specific insurance cover.
Insurance policy Aircraft (Regulatory, Property, Accident, Fire, Theft, Disaster) Pilots (Regulatory,Life) Facilities (Property, Fire and Theft, Disaster) Assets (Property, Accident, Fire, Theft, Disaster) Workers Compensation
Provider
Cover provided, terms and conditions
TBD
TBD
TBD
TDB
TBD
TDB
TBD
TBD
TDB
TBD
36
Last reviewed
Renewal date
37
5.
Financial Analysis
5.1 Investment Options Basis for investment The basis for the financial plan in this company is private equity investment for a fiveyear operations period (2015/16 – 2020): !
Ongoing dividends - This includes first year investment calls for between PGK2.22.3m and with earnings based on declared dividends (qtrly or annual basis). This company will be registered as a private limited liability form of corporation and will be financially managed through SME Developers Ltd (management contractor). Investors will be granted equity in the form of Ordinary Shares capitalised at respective investment contributions with dividends to be weighted accordingly.
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Strategic investment period - Ultimately this business plan calls for a strategic (2015-2020) investment time frame with the further option for investors to consider business continuity post 2020. In this context it is envisaged that the ideal investment partners will come from those parties with a vested interest in the remote airline/services industry in PNG or elsewhere. Ideally these investors may be also commercial pilots seeking an opportunity to enter this high growth market segment of the PNG aviation industry.
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Business Continuity - The business proponent Mr Herschman, will have an exit plan at the end of the operations period (circa 2020) and it is intended the remote airline/service will be fully market developed and grown beyond Morobe Province. This business presents investors therefore with a mature airline operation by 2020, with strong management and highly trained/experienced pilot crews and with planned further aircraft to support market growth.
5.2 Financial Forecast Financial benefits Subject to confirmation through IRC, this business proposal will seek to maximise current and/or planned taxation benefits provided through the PNG taxation regime: !
Taxation Exemptions, incentives and concessions – o There may be a 10-year tax holiday for new active business income derived in prescribed rural development areas o Possible double deductions for staff training of PNG citizens o There is no general capital gains tax in PNG o Dividend withholding tax (DWT) is a first and final tax for individuals
!
Fuel subsidies – o The PNG (Civil Aviation Ministry) government announced intentions to provide fuel subsidies to small airlines to reduce constraints to effective services to remote communities
38
o
The PNG Coffee Industry Incorporation (CIC) recently announced fuel rate subsidies to remote air services providers to reduce market constraints to growers
Cost Benefit Analysis – P6 Aircraft This business plan supports the feasibility case for purchase of the Pilatus Porter P6 aircraft to capture increased market demand in Morobe Province for remote air transport. Accordingly this financial analysis section of the plan demonstrates the costbenefit analysis (20% discount rate), for the P6 when compared to other optional craft: !
Lower cost – The P6 purchase cost will be the lowest for all craft with payload capacity over 1k (kg’s) at PGK 1.7m. This is due to the negotiation efforts achieved through Mr Hershman with the seller in the US (California).
!
Superior profitability – The P6 delivers stronger profit comparisons against the other craft modelled and at the second lowest overall cost.
!
Stronger break-even – This craft also demonstrates the lowest break-even analysis when measured against the average yearly payload at just under 300k (kg’s).
Purchase Price Used Pilatus Porter PC-6
K1,710,526
Used Super Otter
Used King Air 90
K2,631,579
K921,053
Used Std Caravan
K2,302,632
New Grand Caravan
K5,000,000
PAC 750 XL
K4,078,947
39
Net Profit, per Year, (Average Load)
Pilatus Porter PC-6
K807,523
Super Otter
Used King Air 90
K1,618,779
K(977,276)
Used Std Caravan
K2,665,362
New Grand Caravan
K(758,728)
PAC 750 XL
K(734,215)
Break Even Pay Load
Pilatus Porter PC-6
538.5
Super Otter
Used King Air 90
796.2
433.5
Used Std Caravan
656.9
New Grand Caravan
1271.7
PAC 750 XL
1056.8 No. Payloads
40
Budget forecast This business plan has forecasted the first year cost of operations between PGK 3.33.4m. This includes capital investment items around PGK 2.8M for the Pilatus Porter P6 and support vehicles. The other capital component includes estimate of PGK350k (includes assets and construction) for Option B to construct the office, hangar and accommodation facilities on site at Wau airstrip (subject to negotiations). Option A is to lease all facilities at either Wau airstrip or nearest location and is estimated to cost around PGK 200k. Staffing costs of PGK500k will include both salaried, wages and contractor (SME Developers Ltd) costs, with Mr Herschman will be employed through both a Management Services Agreement (MSA), direct flying rates and a travel component. SME Developers will be contracted through an MSA estimate around PGK150k and trainee/co-pilot will be salaried at PGK 35k. Overhead component Aircraft support costs around PGK170k Staffing costs PGK500k Option A – Premises leasing costs PGK 180k Capital costs Pilatus Porter P6 purchase costs PGK2m Support vehicles around PGK140k Premises construction estimation PGK450k
Sales analysis First year sales forecasts are based on cargo (payload) revenues and on P6 capacities for delivering around 1,400 kgs/flying hour and twice per day or 2,800 kgs per day or 56,000 kgs per calendar month. Sales rates have been initially set at PGK5.00/kg consistent with Mr Herschmans current PNG rates, for the purpose of the analysis. The analysis forecasts first year gross sales around PGK3.4m, with the first PGK1.3m contributing to break-even and with PGK400k to overhead recovery to deliver profit around PGK900k. Total cargo (payload) estimated at 670,000 kgs with the first 200,000 kgs contributing to break-even.
Income (cash-flows) Based on fixed rate (PGK5/kg) fees for remote community revenue segment, the first year net (after tax) cash flows are forecasted around PGK334K. It is intended however that all other business segments (corporate, government, NGOs etc.), will be priced under a contract based fee structure to be developed and this will increase the overall revenue base after Sep’15.
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P6 FINANCED COSTS COMPARISONS- Buyer Aircraft Type Total Yearly Cost Max. Cost per Kg of Payload (Full) Avg. Cost per Kg of Payload
New Grand Caravan
PAC 750 XL
K K K
6,358,728 3.97 5.68
K K K K
2 1300 910 5.00 K 1,300,000 910,000 13,000 K 9,100 K 6,500,000 K 4,550,000 K
2 1600 1120 5.00 1,600,000 1,120,000 16,000 11,200 8,000,000 5,600,000
Net profit, per year, (full load) (6)
K
1,215,785
Net Profit, per year, (avg. load) (5) (6)
K
Income Loads per Hobbs (Direct) Hour Max. Payload (Kg ) Avg. Payload (Kg) (8) Income -Payload Fee (per kg) Max. Payloads per Year (Kg) Avg. Payloads per Year (Kg) Max. Income per Hour Avg. Income per Hour Max. Income per Year Avg. Income per Year
Break Even Loads (Max. load) (6) Break Even Hours (Avg. load) Break Even Payloads (Kg)
K K K
K
5,284,215 4.06 5.81
Used Std Caravan K K K
3,284,638 1.93 2.76
Used King Air 90 K K K
2,167,276 6.37 9.11
K K K
3,981,221 2.49 3.55
Pilatus Porter PC-6 K K K
2,692,477 2.69 3.85
K K K K
2 1600 1120 5.00 K 1,600,000 1,120,000 16,000 K 11,200 K 8,000,000 K 5,600,000 K
2 1000 700 5.00 1,000,000 700,000 10,000 7,000 5,000,000 3,500,000
K K K K
2 1700 1190 5.00 1,700,000 1,190,000 17,000 11,900 8,500,000 5,950,000
1,641,272
K
5,215,362 K
(467,276)
K
4,018,779
K
2,307,523
(734,215) K
(758,728)
K
2,665,362 K
(977,276)
K
1,618,779
K
807,523
1056.8 580.7 1,227,382
1271.7 567.7 1,444,051
K
42
K
656.9 276.0 362,650
K K K K K
2 340 238 5.00 340,000 238,000 3,400 2,380 1,700,000 1,190,000
Super Otter
433.5 910.6 789,426
K
796.2 355.5 566,076
538.5 384.6 414,253
MOROBE AIRE Preliminary Budget FREQ
BUDGET'ITEMS OPERATING*ITEMS
PGK
YEAR'1 Option2A
Option2B
2,000 5,000 2,000
9,000
9,000
30,000 40,000 100,000
170,000
170,000
35,000 75,000 50,000 35,000 25,000 150,000 10,000
380,000
380,000
0
0
66,000
66,000
210,000 835,000
30,000 655,000
1,710,526 256,579 51,316 20,000
2,038,421
2,038,421
100,000 140,000
240,000
240,000
COMPANY(SET(UP
Once)off Once)off Once)off
Registrations2Fee2)2IPA Application2fee2)2CASA22 Stamp2Duty2)Morobe2PG AIRCRAFT(EXPENSES
Annual Annual Annual
Aircraft2Insurance Maintenance2(Parts/tooling) Fuel/consumables GENERAL(EXPENSES
Annual Annual Annual Annual Annual Annual Annual Annual2 Annual2 Annual2 Annual2 Annual Annual Annual Annual
Management2Fee2(Chief2Pilot) Flying2Rate2(Chief2Pilot) Travel2Expenses2(Chief2Pilot) Co)Pilots2(Trainees) Wages2(Ground2Crew) Management2Contractor Wages2)Administration2Staff PAYG2(On)costs) Workers2Compensation2(On)costs) Training2Levy2(On)costs) PPE2(On)costs) Fuel/consumables2(Truck/Vehicle) Maintenance22(Truck/Vehicle) Registration22(Truck/Vehicle) Diesel/maintenance2(GenSets)
10,000 5,000 1,000 50,000
PREMISES3LEASING
Annual Annual Annual Annual Annual Annual
Office2(Option2A) Telephone Electricity2(Option2A) Water Internet Accommodation2(Option2A)
Aircraft Contingency Once)off Once)off
CAPITAL*ITEMS Pilatus2Porter2P6 Surplus2Funds Broker/commission2Fee2 Travel2Expenses2
Once)off Once)off
Vehicles Truck)(Toyota2Open2Back) 4WD2Wagon2(Toyota252Door)
80,000 10,000 20,000 10,000 10,000 80,000
PREMISES3CONSTRUCTION
Office Hangar Accomm Power
Facilities)Office2(Option2B) Facilities)Workshop Facilities)Quarters2(Option2B) Industrial2Generators2
150,000 50,000 150,000 100,000
OPERATING CAPITAL
50,000 350,000 100,000 100,000 PGK'3,263,421 PGK'3,383,421 USD21,240,100 USD21,285,700 Option2A Option2B 835,000 655,000 2,428,421 2,728,421 PGK'3,263,421 PGK'3,383,421 USD21,240,100 USD21,285,700
43
MOROBE AIRE Required Start-Up Funds
Required Start-Up Funds Fixed Assets Aircraft P6 Real Estate-Land Buildings Leasehold Improvements Truck Equipment Furniture and Fixtures Vehicles Other Fixed Assets Total Fixed Assets Operating Capital Pre-Opening Salaries and Wages Prepaid Insurance Premiums (P6) Inventory Legal and Accounting Fees Company Formation Fees Rent Deposits Utility Deposits Supplies Advertising and Promotions Licenses Application Fees (CASA/IPA) Stamp Duty Fees Other Initial Start-Up Costs Working Capital (Cash On Hand) Total Operating Capital
Amount K K K K K K K K K
Totals
Depreciation
2,038,421 150,000 200,000 100,000 100,000 140,000 K
K K K K K K K
30,000 40,000 2,000 -
K K K K K
1,000 5,000 2,000 -
K
-
Total Required Funds
Sources of Funding Owner's Equity Outside Investors Additional Loans or Debt Commercial Loan Commercial Mortgage
Amount 0.00% 100.00%
Credit Card Debt Vehicle Loans Other Bank Debt Total Sources of Funding
0.00% 0.00% 0.00% 100.00%
10.00
years
10.00 10.00 5.00 5.00 5.00 5.00 5.00
years years years years years years years
2,728,421
K
80,000
K
2,808,421
K K
Totals 2,808,421
0.00% 0.00%
K
Notes
2,808,421
44
Fixed rate ROI option Monthly Payments
Loan Rate
Term in Months
20.00%
60.00
K
74,406
0.00% 0.00%
84.00 240.00
K K
-
0.00% 0.00% 0.00%
60.00 48.00 36.00
K K K K
74,406
MOROBE AIRE Salaries and Wages
Salaries and Related Expenses
Assumptions
Wage Base
Monthly
Year One
Percent Change Salaries and Wages Owner's Compensation Salaries Wages Full-Time Employees Estimated Hours Per Week Estimated Rate Per Hour Part-Time Employees Estimated Hours Per Week Estimated Rate Per Hour Independent Contractors (PNG) Management Fee Total Salaries and Wages
K K
K
40.00 25
K
20.00 20
Payroll Taxes and Benefits Payroll Tax (Training Levy) Superannuation Contributions Management Fee Witholding Tax (WFWT) Training Levy (Payroll Tax) Employee Pension Programs Worker's Compensation Employee Health Insurance Other Employee Benefit Programs Total Payroll Taxes and Benefits
Total Salaries and Related Expenses
2.00% 8.40% 17.00% 0.00% 0.00% 0.00% 0.00% 0.00%
K K K
245,200 245,200 185,000
Year Two
Year Three
Year Four
Year Five
3.00%
3.00%
3.00%
3.00%
9,167
110,000
113,300
116,699
120,200
123,806
4,333
52,000
53,560
55,167
56,822
58,526
6,933
83,200
85,696
88,267
90,915
93,642
12,500 2,917 35,850
150,000 35,000 430,200
154,500 36,050 443,106
159,135 37,132 456,399
163,909 38,245 470,091
168,826 39,393 484,194
409 1,716 2,621 4,746
8,604 36,137 31,450 76,191
8,862 37,221 31,450 77,533
9,128 38,338 31,450 78,916
9,402 39,488 31,450 80,339
9,684 40,672 31,450 81,806
40,596
506,391
520,639
535,315
550,431
566,000
45
MOROBE AIRE Fixed Operating Expenses
Fixed Operating Expenses
Monthly
Year One
Percent Change Expenses Advertising Aircraft Maintenance Car and Truck Expenses Bank & Merchant Fees Contract Labor Conferences & Seminars Customer Discounts and Refunds Dues and Subscriptions Miscellaneous Insurance (Liability and Property) Licenses/Fees/Permits Legal and Professional Fees Office Expenses & Supplies Postage and Delivery Rent (on business property) Rent of Vehicles and Equipment Sales & Marketing Taxes-Other Telephone and Communications Travel Utilities Expenses (taxable) Taxes-Other (VAT/GST) Total Expenses Other Expenses Depreciation Interest Commercial Loan Commercial Mortgage Line of Credit Credit Card Debt Vehicle Loans Other Bank Debt Total Other Expenses Total Fixed Operating Expenses
Year Two
Year Three
Year Four
Year Five
3.00%
3.00%
3.00%
3.00%
K K K K K K K K K K K K K K K K K K K K K K K K
11,667 1,250 12,500 4,167 833 417 167 1,667 1,667 833 35,167 3,517 38,683
K K K K K K K K K K K K K K K K K K K K K K K K
140,000 15,000 150,000 50,000 10,000 5,000 2,000 20,000 20,000 10,000 422,000 42,200 464,200
K K K K K K K K K K K K K K K K K K K K K K K K
144,200 15,450 154,500 51,500 10,300 5,150 2,060 20,600 20,600 10,000 434,360 42,200 476,560
K K K K K K K K K K K K K K K K K K K K K K K K
148,526 15,914 159,135 53,045 10,609 5,305 2,122 21,218 21,218 10,000 447,091 42,200 489,291
K K K K K K K K K K K K K K K K K K K K K K K K
152,982 16,391 163,909 54,636 10,927 5,464 2,185 21,855 21,855 10,000 460,204 42,200 502,404
K K K K K K K K K K K K K K K K K K K K K K K K
157,571 16,883 168,826 56,275 11,255 5,628 2,251 22,510 22,510 10,000 473,710 42,200 515,910
K
6,917
K
83,000
K
83,000
K
83,000
K
83,000
K
83,000
K K K K K K K
6,917
K K K K K K K
83,000
K K K K K K K
83,000
K K K K K K K
83,000
K K K K K K K
83,000
K K K K K K K
83,000
K
45,600
K
547,200
K
559,560
K
572,291
K
585,404
K
598,910
46
MOROBE AIRE Projected Sales Forecast
Products and Services
Assumptions Max. Payloads (1,400Kgs/Hr) Product/Service A Payload/Day (2,800kgs) Price Per Unit K 5.00 Variable Cost Per Unit K 3.82 Gross Margin Per Unit K 1 Projected Unit Sales Seasonality Factor Year One (Kgs) Year Two Growth 10.00% Year Three Growth 10.00% Year Four Growth 10.00% Year Five Growth 10.00% Overhead Exp Allocation 40.00% Projected Revenue Variable Costs Gross Margin Overhead Expenses Profit
K K K K K
3,360,000 2,567,040 792,960 412,636 380,324
Breakeven Sales Revenue Breakeven Sales Units
K
1,748,459 349,692
First Year Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Totals
8.33% 56,000 61,600 67,760 74,536 81,990
8.33% 56,000 61,600 67,760 74,536 81,990
8.33% 56,000 61,600 67,760 74,536 81,990
8.33% 56,000 61,600 67,760 74,536 81,990
8.33% 56,000 61,600 67,760 74,536 81,990
8.33% 56,000 61,600 67,760 74,536 81,990
8.33% 56,000 61,600 67,760 74,536 81,990
8.33% 56,000 61,600 67,760 74,536 81,990
8.33% 56,000 61,600 67,760 74,536 81,990
8.33% 56,000 61,600 67,760 74,536 81,990
8.33% 56,000 61,600 67,760 74,536 81,990
8.33% 56,000 61,600 67,760 74,536 81,990
100.00% 672,000 739,200 813,120 894,432 983,875
47
MOROBE AIRE Projected Income Statement - Year One
Jan
Feb
Mar
280,000 -
280,000 -
280,000 -
280,000 -
Total Income
280,000
280,000
280,000
Cost of Sales Product/Service A Product/Service B
168,000 -
168,000 -
Total Cost of Sales
168,000
Gross Margin
Income Product/Service A Product/Service B
Apr
May
Jun
Jul
Aug
280,000 -
280,000 -
280,000 -
280,000 -
280,000
280,000
280,000
280,000
168,000 -
168,000 -
168,000 -
168,000 -
168,000
168,000
168,000
168,000
Sep
Oct
Nov
Dec
Totals
280,000 -
280,000 -
280,000 -
280,000 -
280,000
280,000
280,000
280,000
280,000
168,000 -
168,000 -
168,000 -
168,000 -
168,000 -
168,000 -
168,000
168,000
168,000
168,000
168,000
168,000
168,000
2,016,000 2,016,000
3,360,000 3,360,000
112,000
112,000
112,000
112,000
112,000
112,000
112,000
112,000
112,000
112,000
112,000
112,000
1,344,000
Total Salary and Wages
39,329
39,329
39,329
39,329
39,329
39,329
39,329
39,329
39,329
39,329
39,329
39,329
471,946
Fixed Business Expenses Advertising Aircraft Maintenance Car and Truck Expenses Bank & Merchant Fees Contract Labor Conferences & Seminars Customer Discounts and Refunds Dues and Subscriptions Miscellaneous Insurance (Liability and Property) Licenses/Fees/Permits Legal and Professional Fees Office Expenses & Supplies Postage and Delivery Rent (on business property) Rent of Vehicles and Equipment Sales & Marketing Taxes-Other Telephone and Communications Travel Utilities Taxes-Other (VAT/GST) Total Fixed Business Expenses
11,667 1,250 12,500 4,167 833 417 167 1,667 1,667 833 3,517 38,683
11,667 1,250 12,500 4,167 833 417 167 1,667 1,667 833 3,517 38,683
11,667 1,250 12,500 4,167 833 417 167 1,667 1,667 833 3,517 38,683
11,667 1,250 12,500 4,167 833 417 167 1,667 1,667 833 3,517 38,683
11,667 1,250 12,500 4,167 833 417 167 1,667 1,667 833 3,517 38,683
11,667 1,250 12,500 4,167 833 417 167 1,667 1,667 833 3,517 38,683
11,667 1,250 12,500 4,167 833 417 167 1,667 1,667 833 3,517 38,683
11,667 1,250 12,500 4,167 833 417 167 1,667 1,667 833 3,517 38,683
11,667 1,250 12,500 4,167 833 417 167 1,667 1,667 833 3,517 38,683
11,667 1,250 12,500 4,167 833 417 167 1,667 1,667 833 3,517 38,683
11,667 1,250 12,500 4,167 833 417 167 1,667 1,667 833 3,517 38,683
11,667 1,250 12,500 4,167 833 417 167 1,667 1,667 833 3,517 38,683
140,000 15,000 150,000 50,000 10,000 5,000 2,000 20,000 20,000 10,000 42,200 464,200
Other Expenses Amortized Start-up Expenses Depreciation Interest Commercial Loan Commercial Mortgage Line of Credit Credit Card Debt Vehicle Loans Other Bank Debt Taxes Total Other Expenses
667 6,917
667 6,917
667 6,917
667 6,917
667 6,917
667 6,917
667 6,917
667 6,917
667 6,917
667 6,917
667 6,917
667 6,917
8,000 83,000
8,121 15,705
8,121 15,705
8,121 15,705
8,121 15,705
8,121 15,705
8,121 15,705
8,121 15,705
8,121 15,705
8,121 15,705
8,121 15,705
8,121 15,705
8,121 15,705
97,456 188,456
Net Income
18,283
18,283
18,283
18,283
18,283
18,283
18,283
18,283
18,283
18,283
18,283
18,283
219,398
48
MOROBE AIRE Projected Cash Flow Statement - Year One
Jan
Jun
Jul
111,587
145,575
179,563
189,187
280,000 280,000
280,000 280,000
280,000 280,000
280,000 280,000
168,000
168,000
168,000
168,000
39,329 38,683 -
39,329 38,683 -
39,329 38,683 24,364
39,329 38,683 -
246,012
246,012
246,012
270,376
246,012
Cash Flow
33,988
33,988
33,988
9,624
33,988
33,988
9,624
33,988
33,988
9,624
Operating Cash Balance
33,988
67,976
101,964
111,587
145,575
179,563
189,187
223,175
257,162
266,786
-
-
33,988
67,976
Beginning Cash Balance Cash Inflows Income from Sales Accounts Receivable Total Cash Inflows Cash Outflows Investing Activities New Fixed Assets Purchases Inventory Addition to Bal.Sheet Cost of Sales Operating Activities Salaries and Wages Fixed Business Expenses Taxes Financing Activities Loan Payments Line of Credit Interest Line of Credit Repayments Dividends Paid Total Cash Outflows
Line of Credit Drawdowns Ending Cash Balance
Feb
Mar
33,988
67,976
101,964
280,000 280,000
280,000 280,000
280,000 280,000
168,000
168,000
39,329 38,683 -
-
101,964
Apr
111,587
May
-
Oct
Nov
223,175
257,162
266,786
300,774
280,000 280,000
280,000 280,000
280,000 280,000
280,000 280,000
280,000 280,000
3,360,000 3,360,000
168,000
168,000
168,000
168,000
168,000
168,000
2,016,000
39,329 38,683 -
39,329 38,683 24,364
39,329 38,683 -
39,329 38,683 -
39,329 38,683 24,364
39,329 38,683 -
39,329 38,683 -
246,012
270,376
246,012
246,012
270,376
246,012
246,012
471,946 464,200 73,092 3,025,238
33,988
33,988
334,762
300,774
334,762
-
145,575
179,563
49
189,187
Aug
223,175
Sep
257,162
266,786
300,774
Dec
334,762
Totals
-
MOROBE AIRE Balance Sheet - Year One
Base Period Assets Current Assets Cash Accounts Receivable Inventory Prepaid Expenses Other Current Total Current Assets Fixed Assets Aircraft P6 Buildings Leasehold Improvements Equipment Furniture and Fixtures Vehicles Other Fixed Assets Total Fixed Assets Less: Accumulated Depreciation
40,000 40,000 80,000
334,762 40,000 32,000 406,762
2,038,421 150,000 200,000 100,000 140,000 2,628,421
2,038,421 150,000 200,000 100,000 140,000 2,628,421
-
Total Assets
2,708,421
Liabilities and Owner's Equity Liabilities Accounts Payable Loan Payable Mortgage Payable Credit Card Debt Vehicle Loans Other Bank Debt Line of Credit Balance Total Liabilities
-
Owner's Equity Common Stock Retained Earnings Dividends Dispersed Total Owner's Equity Total Liabilities and Owner's Equity
50
End of Year One
83,000 2,952,182
-
2,808,421 2,808,421
2,808,421 219,398 3,027,819
2,808,421
3,027,818
6.
Future Business Goals and Objectives
6.1 Business and Personal Goals Business goals this year Goal
Actions required
Complete by
Establish Morobe Aire
Implement business plan
Jun’15
Develop business segments
Marketing campaigns/LOIs
Sep’15
Goal
Actions required
Complete by
Grow market share in Morobe Province by 10% Increase business segments market
Implement expansion plans for 16 remote strips Secure additional business air service contracts
Person responsible for delivery Mr Herschman/ SME Developers Mr Herschman/ SME Developers
5-year plan
51
Dec’15 Dec’15
Person responsible for delivery Mr Herschman Mr Herschman/ SME Developers
6.2 Action Plans Top 3 in 3 months Action item
Complete by
1. Establish Morobe Aire company
Jun’15
2. Secure contracts/LOIs
Jun’15
3. Implement business plan
Jun’15
Person responsible for delivery Mr Herschman/ SME Developers Mr Herschman/ SME Developers Mr Herschman/ SME Developers
Top 3 in 6 months Action item
Complete by
1. Grow markets in Morobe Province
Sep’15
2. Increase business contracts segments
Dec’15
3. Establish operational capabilities
Sep’15
Person responsible for delivery Mr Herschman/ SME Developers Mr Herschman/ SME Developers Mr Herschman/ SME Developers
Top 3 in 12 months Action item
Complete by
1. Increase market share across PNG
Jun’16
2. Expand air services coverage
Jun’16
3. Grow Morobe Aire operations
Jun’16
52
Person responsible for delivery Mr Herschman/ SME Developers Mr Herschman/ SME Developers Mr Herschman/ SME Developers