OK. So mistakes were made during the last expansion period of MAC. My eyes got bigger than my available time, and the leasing of the Twin Otter has just not worked out to be financially viable. I love the airplane - and I’m going to get it back, but for now I had to make a decision that leads to a sustainable course of growth.
Discovering the bank loan capability was awesome. So I went ahead and ended the lease on the Twin Otter - which gave me back $127,976. The short two-month lease program was a mistake, and returning the airplane does have a cost. I paid an initial deposit of $243,507 and one month lease payment of $108,000. So I lost $115,531 by returning the plane. During the lease period (I escaped a second lease payment by 2 days!) I earned $161,860 - so I did at least offset some of those expenses with some revenue.
All told, the mistake cost me $189,647 - not a great beginning of 2018.
But now that my reputation is about 40% (still), I discovered this evening that I could take out a loan from the bank of about $1,000,000. At 10.8% interest, my monthly payment is only $9,072.
With that money, I’m easily able to buy a Quest Kodiak for $860,812 and still have a good bit of money left over (plus my remaining balance from previous company operations).
So the outright purchase (granted - on a bank loan) brings my monthly overhead down to just $16,145 vs. the $115,298 I was facing each month when I leasing the Twin Otter.
And the Kodiak is a nice little aircraft - not quite the hauling capability of the Twin Otter, but I’ll be way more profitable for the amount of flying I’m doing per month - and I’ll not have to worry about going bankrupt because I’ve missed a few weeks of flying!
So I’m very much relieved that I discovered all this bad math tonight. Another couple of days and another Twin Otter lease payment would have been due and I’d be out another 100K or so.