Cabair upbeat despite current climate

[kingfisher03]

Speaking to a key member of staff at the Cabair college recently, who said they had the cash reserves and projected cash flow to stay operational for UP TO 12 months.

Hopefully this time frame should see most current students through (avoiding the misery SFT students are experiencing), but then UP TO 12 months could mean 12 weeks or even 12 days!

:(

[RVR800]

Pay as you go and or
Credit cards is the way through this one

[zoru]

evidently the MD recently offloaded his shares in the company.....not a good sign i would suggest.

[kingfisher03]

Whose the new MD then?

Remarkable timing for the outgoing - laughing all the way to the bank.

[henchman]

Can Zoru tell us where the shares went? It might show who does have the confidence to back Cabair.

Or take the advice of RVR800 and pay by credit card!

Have also posted this in reply to Zoru comment on the SFT thread.

[zoru]

i do not know who the shares were sold to .
I believe that the seller is currently still working for cabair,however i do not know in what capacity.

Kingfisher:

perhaps your contact at Cabair could enlighten/reassure us all?

[ 08 November 2001: Message edited by: zoru ]

[WAIF-er]

no sound business person would continue to throw money away for up to 12 months if necessary. The simple business solution would be to shut up shop until things pick up.

There are enough good people out there who would jump at the chance to join a school once it re-opens.

I'm just referring to schools in general.

[foghorn]

WAIF-er,

I know that you're speaking hypothetically, but with comments like that I'd be surprised if you've ever run a business or been in a financial role in a company.

It really isn't as simple as that, especially in a flying school which will have expensive assets on its books (ie. aircraft) that can't be simply mothballed for a year. They need to be kept flying to cover as much of their fixed costs as possible. These fixed costs will more likely than not include interest payments on the loans you took out to buy them in the first place, as well as parking, maintenance etc. You could return any leased aircraft to the lessor, but there would be financial penalites involved with that. So already we have a big financial hit from shutting up shop, and substantial ongoing costs to keep your operation in mothballs ready for the upswing.

That's not to mention leases on buildings which will have to be honoured and the rent paid, or the leases cancelled (with possible penalties). So now you have no buildings, where are you going to store your files, office equipment, teaching equipment, engineering equipment etc.? You'll have to dispose of it and repurchase it when you restart (at a much higher cost) or suffer the massive disruption and ongoing cost of moving it all into storage.

So now you have your staff but no ongoing business operation. What do you do with them? Do you pay them to do nothing for a year which is a huge waste of money? Or do you make them all redundant? But wait a minute, some of them have been employed by you for longer than two years, so you'll have to pay them statutory redundancy pay. And you can forget about being able to rehire them all as a loyal workforce when the upswing happens - some will have moved on, some just won't be interested - so you've lost the institutional knowledge of those people who knew how your business runs. Which means the new people you hire when the upswing happens are going to be underproductive for at least three to six months while they learn the ropes. That's a massive cost to bear when you restart after the recession.

There are only two options when faced with something like this: either continue to run a viable but as lean as possible operation and trade your way through the recession, or shut up shop completely now and forget about re-opening.

The reason that we see so much misery at the moment with schools collapsing left right and centre is because many schools are trying to take the former option and trade their way through a bad patch that they weren't strong enough to make it through in the first place. But realising that in time goes against the optimism of human nature: and of course hindsight is a wonderful but useless thing.

foggy.

[ 09 November 2001: Message edited by: foghorn ]

[WAIF-er]

Ok foggy,

if aircraft have to continue flying in order to cover as many fixed costs as possible, then you will incur variable costs such as fuel, not to mention depreciation, extra hours on the engine bringing it closer to needing replacement. Plus the other variables such as instructors' wages, running costs of the school: electricity, phone, gas, cleaning, maintenance.

If you have very little income to begin with, added to this the fact that you have little or no customers, the revenue generated from your precious few customers will barely cover the additional Variable costs incurred, never mind the Fixed costs that you mentioned earlier.

The trouble nowadays is that banks will finance you up until the last moment, then they just drop all support for you and then leave you in the ****.

The basic theory of finance is like a water tank: as long as there is as much coming in as there is going out, you will survive. If you have a big tank full of water, you can operate at a loss until the tank runs empty, but lets face it, which businesses operate with a "full tank"?

[foghorn]

WAIF-er,

Maybe I did not make myself clear enough. I am not suggesting that the school should operate as a charity and train students at a big loss* or for for free, nor am I suggesting that aircraft should just be flown around without students 'just to keep flying'.

What I am saying is the fixed costs of mothballing are a high fraction, if not equal to the fixed costs of the ongoing business. Therefore training some students and getting some revenue is better than training no students and getting no revenue(ie. give up and try to put the whole operation in mothballs).

If you try to reduce your fixed costs, say by laying off staff, terminating leases or getting rid of assets, you just leave yourself with bigger restart costs after the recession. These restart costs will almost always be higher than the savings you made on ongoing costs by getting rid off assets or staff in the first place. This is due to lease penalties, the cost of acquiring new assets against your proceeds on the sale of your old assets, opportunity costs of hiring green staff etc. etc.

This is why in the majority of businesses including FTO's there simply isn't the option to 'shut up shop until things pick up'. It's about keeping going as best possible, or forgetting it completely.

By the way I am not involved in the FTO business but have been involved in two businesses in other sectors, one as a founding shareholder and one as a director, so I can speak from experience.

As for the banks, they can be very harsh at times, but they are just protecting their other customers and shareholders.

foggy.

* This does not rule out a little loss-leading to keep business coming through the door.

[WAIF-er]

foggy,

Your points are all taken on board. My only worry if it were my school is that we dont know when an upturn will occur. As the stock market has shown, there is no such thing as a "bottom". The only bottom is absolute zero! What do you do if things get worse? Say, another terrorist attack.

Sure, anything is possible, and you have to be positive in such times, but in the face of continued attacks on Afghanistan and continued promises of terror from the perpetrators, the chances of further doom & gloom do outweigh the chances of a steady recovery.

My whole angle on this thread is basd on my idea that prevention is better than cure. Take stock of the business NOW and at least save something for the future, whenever that may be.

The simple truth is that no-one knows what the near future holds. Market projections are not worth the paper theyre printed on at the moment.

[Idle Power]

Ignore the rantings of Fly_146, he has a chip on both shoulders as regards Cabair Cranfield.

[LGL]

That's right, Fly_146 has a very balanced opinion, he has a chip on both shoulders.
From his past postings I wouldn't believe a word he says, most people don't.
Idle Power, mail me.

[QUERY]

Back to the beginning...... and reassurance ....'they had the cash reserves and projected cash flow to stay operational for UP TO 12 months'.

Any business may have projected cash flow but it is only an estimate or plan. Most aviation projections have been binned in recent weeks, so don't be re-assured by anyone. Note the warning in the current postings of many (ex) students of 'profitable' SFT who allege that they were given plenty of similar but now worthless promises.

I'm not picking on Cabair, as ANY of the ATPL places may be closed down in the current circumstances. Few jobs for inexperienced pilots must equal little demand for training. Jerez and Oxford may be subsidiaries of big backers but will their nasty beancounters give a ...., about your course or job, if the figures suggest that a shut-down of their school is sensible?

Re. 'the cash reserves' and whether it's your own or borrowed money, would anyone with any acumen continue to incur significant losses for long, especially if there is little prospect of a rapid recovery in sales? Doubt it now. A well known fact about any aviation-related business is that it's easy to lose loadsamoney very quickly.

How could anyone be genuinely 'upbeat' in, or despite, the current climate?

[prob30]

cabair cancelled the intake for november and i believe postponed it until december. Quite what that achieves i dont know. It could give them some breathing space to get a few 'slow burners' and weather hit students through and unclog flight school for example. This is not connected to Sept 11 at all.

Dont pay up front. Pay credit card as you go if you can. I dont trust them as far as i could fly a 150 into a strong head wind.

[126.825]

well where do i start? the MD i think everyone one is reffering too is CH, who i believe has sold the majority (all but around 2%)of his shares to someone already associated with the company. As far as i am aware it was not as much a business decision for CH to depart more a progressive move for the company.

remember there were more than CH at the top and some are still there!!

it is true that business has not been brilliant throughout the group over the past couple of years at the schools and the college. (the states is ment to be doing very well - even though it is not CABAIR!!). they have sold quite a few of their little empires and companies and have lost quite a few key personnel.

however, they have been running for over 30 years and as we all know they are very shrewd and clever. maybe the downsizing was to keep some money in reserves for the hard time ahead. who knows.

but always the best advise to pay with credit cards and in bits. :) :)

[A and C]

Of course these people are upbeat they want your money !.

I have not a clue as to the financal position of cabair but how often have we seen companys take thousands of pounds from a punter in the morning to go bust in the afternoon.

The advice about paying with a credit card is the best protection you have.

[captainbirdseye]

What I want to know is this: In the current economic climate do Cabair seriously expect anyone to part with £ 33K for the British European Sponsorship up front as stipulated in the sponsorship information booklet.

Regardless of the fact that there is a possible job offer at the end of the course, anyone with any sense, which is presumably the candidates Cabair will select after their “expensive” selection process, will see this is extremely risky for three reasons.

1) The market may not pick up = no job offer at the end, and you queue in line behind all the type rated experienced unemployed pilots.

2) Cabair go bust and you lose your wedge, have your training stopped / interrupted and have to fork out more cash to continue (if you can afford it). After all they have allegedly said they have enough money to continue operating for twelve months – well an ATPL could easily take longer than that to complete.

3) British European goes bust, and you have to come up with the £19 K (or part of it) that they would have contributed.

Would anyone from Cabair care to comment? As I expect a lot of the 200 candidates going for testing on Tuesday are asking the same questions.

Don‘t get me wrong I think the B.E. sponsorship is a great opportunity and B.E. are to be applauded to keep it running in such uncertain times. So on an ending note it is also possible that none of the above will happen and that the sponsorship, Cabair and British European will all be fine.


CBE

[ColinF]

Am I mad?

I'm self sponsoring, starting with Cabair in January. They say they're quite busy despite everything. Haven't paid anything yet, but have every intention of going ahead. I ask again, am I mad? :confused:

[informationage]

Am I MAD? YES, if you are self sponsoring! The current climate at the moment is not good for type rated people let alone abinito.I delayed my own training for two years during the last downturn of 1990/92 on the advice of a training Captain at a regional airline.But,when confidence starts to come back (it will we are a modern world!)start then, monitor F-International for flightdeck vacancies use BALPA (why not join?) they can confirm when the market is picking up with the unemployed Pilot register. I am not saying don't..... just delay, several close friends have been laid off over the last three weeks(two Capts with 7000hrs B747 as well as 5000 hr FOs) so I can assure you that this downturn will take at least two to three years to adjust the current unemployed PILOT levels within the U.K. Just one last point when Airlines are recruiting they do like applicants that are current both on pilot skills and knowledge,should you train now that may not be the case.Best of luck what ever way you decide.

[ 16 November 2001: Message edited by: informationage ]

[Ispy002]

Kingfisher003
Pay on credit card, and go for it.
I've got a beautiful "fly on the wall" perspective at Cabair HQ and despite the departure of Cut Throat, the way things are run at CAbair is very ingeneous to say the least. Cabair training college is run seperatly from all of the other schools. So the boasted of health at the training college is actually there. Considering that SFT has recently folded, there is now only 2 major training colleges, Cabair and Oxford. So part with your cash, but guard yourself by doing it on credit card.
Oh and I'm not an advocate of Cabair, if you feel that Oxford is better situated for you then go there. But most of all GET FLYING. :p

[rolling circle]

Considering that SFT has recently folded, there is now only 2 major training colleges, Cabair and Oxford.

An interesting concept, if somewhat at variance with reality. Setting aside the questionable grammar, and having had experience of them all (including SEACOAT) in one capacity or another, neither Oxford nor Cabair makes it to the first division.

Look carefully elsewhere before making a decision on where to spend your hard-earned cash. There are much better alternatives.

[The man formerly known as]

When I enrolled at SFT 2 months ago I too was told by sales they had sufficient cash to get all existing students through and there would be no possibility of a collapse.