The Principles of Long Term Financing and Effective Cost Management

Bijan Vasigh () and Farshid Azadian ()
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Bijan Vasigh: Embry-Riddle Aeronautical University
Farshid Azadian: Embry-Riddle Aeronautical University

Chapter 6 in Aircraft Valuation in Volatile Market Conditions, 2022, pp 233-264 from Springer

Abstract: Abstract Aircraft and jet engine manufacturing are incredibly capital intensive and technologically driven industries; consequently, effective cost management is the key to profitability and growth. Effective capital budgeting and proper cost restructuring have become more and more important for airlines. In our current market environment, airline costs and revenues are dramatically impacted by the consequences of Coronavirus. In response to the collapse in air traveling caused by COVID-19, easyJet Airlines is cogitating to cancel an order for 107 Airbus aircraft, worth an estimated €5 billion. Hence, airlines should be able to manage costs, keep expenses low to increase profits. In earlier days, larger aircraft were designed and built with Captain, the First officer and Flight engineer’s position. In the early 60s, there was a rule requiring more than two crew on any aircraft grossing over 80,000 lb. In fact, the first A300 had a 3-person crew. Many four-engine airplanes such as DC-6, DC-7, Constellation, Boeing 307, Boeing 377 and early three- and four-engine jets, Boeing 707, 727, early B747, DC-8, DC-10, L-1011, required flight engineers. The introduction of a two-person cockpit eliminated the need for an on-board flight engineer, and it also pioneered fly-by-wire control, improving handling and safety.

Date: 2022
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DOI: 10.1007/978-3-030-82450-1_6

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