Vietnam Air Cargo

Topics: Investment, Capital accumulation, Finance Pages: 4 (1148 words) Published: January 2, 2013
CASE STUDY- BUSINESS SIMULATION AT VIETNAM AIR CARGO

I. Introduction:
Vietnam air cargo is considering if they should invest for a project to carry goods with the route Hanoi-Ho chi Minh city-Rangoon-Bangkok-Hanoi. This is the route except for the leg between Rangoon and Bangkok –where Vietnam Airline has regular passenger flights and Vietnam Cargo often buy the extra space and weights on these flights for their cargo. Mr. Toan is deputy head of the business development unit. He had come to a conclusion that the business may be expected to generate a net operating profit USD 30,000. With assumption that two trips per week, over 3 months (or total 24 trips/3 months) II. Situation:

* The route uses the plane AN12, with capacity of 18 metric ton (mt) * Plane lease is 58,000$ including crew for the whole period of 3 months * Air plan fees: Bangkok and Rangoon airports is 800 $ each, Hanoi and Ho Chi Minh City airport is $300 each. * Fuel fee is $5,700; Navigation is $2000 and cargo handling at $500 per trip. * Expected loading and fares:

RouteExpected loadFares ($/mt)
HAN-SGN12.0200
SGN-RGN1.52050
RGN-HAN0.5900
BKK-HAN14.0650
HAN-RGN0.52000
Question 1: To calculate the expect income from the project: 1.1 Expenditures
As the data from the Appendix 1, total expense in three months is 350,800 $. In which, fee for plane lease 58,000$ we have to pay on time when we decided to invest. I call this as initial investment capital. Other expenses for airport landing, fuel, navigation, cargo handling are operation expenditure (292,800$) for 3 months of operation. 1.2 Revenues:

Assumed that we can get expected load and fare per each route as showed in introduction, calculation revenues for whole project described in the Appendix 1. Revenues we can obtain in 3 months is 384,600$. 1.3 Incomes

After having all expenses and revenues in three months, income of the project will be: Revenues – expense = Income
386,600 –...
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