CHAPTER VI - Determination of Capital Requirements

Abstract

This chapter discusses the process of determining the capital requirements of a fixed-base operator. The first step in determining how much total business a new operation might be expected to attain is generally that of checking the amount and nature of business for approximately similar operations elsewhere in the general region. The characteristic fixed-base operation ordinarily combines at least four different kinds of activities, which require differing amounts of capital. These four components are: (1) flight sales, including flying instruction, aircraft rentals, and charter trips; (2) aircraft sales, new and used; (3) repairs and parts sales, including maintenance of aircraft and engines, and the sale of parts; and (4) line service and storage, including gasoline sales, hangar storage charges, and aircraft tie-down or parking fees. The chapter outlines some of the more significant generalizations regarding estimating revenues of fixed-base operators. The chapter discusses the specific considerations, which were involved in making a forecast of the 1947 volume of business for Operation Andrew and estimates the amount of capital required for this volume of activity. A picture of a capital structure to fit the needs of Operation Andrew is also presented.