Tuesday, November 20, 2007

HI Superferry: Break Even Analysis...Forthcoming


I have called upon a Cost Accounting class from years past and spent all of my spare time yesterday doing a thorough proforma profit/loss, breakeven, and multiple scenerio financial analysis on the Superferry. Anybody can do these calculations with the information that has thusfar been divulged publicly by the company. It is a lot easier to do this in a spreadsheet, but I did it instead on paper. Here are a few links about BEA: http://www.beyondtechnology.com/tips_bkevn.shtml
I may take a few posts to get all of the pertinent conclusions out.

First, what inspired me on this:

One, on my last profit/loss evaluation of Superferry's recent low rates offer, the point that stands out is that even with high loads of passengers and vehicles on the Superferry, the ferry would likely be operating at a net loss under the low rates. (In doing those prior calculations, I used the prices quoted by the company, loads higher than expected by the company on average, costs that have been divulged by the company, and prior calculations by Dick Mayer as published by Larry Geller.)

Second, it becomes obvious that a breakeven analysis under multiple scenerios needs to be done because of how high are the Superferry's expenses; just to see the extreme of what would be necessary for the Superferry to get out of the red. Also, I do this to see what kind of flexibility the Superferry may really have regarding pricing, scheduling, types of loads, and key conditions.

Third, watching the forum on video of Governor Lingle's last visit to Kauai, toward the end of the forum there was a speaker (I did not get his name) who proposed three conditions under which the people of Kauai might be able to accept the Superferry back in Nawiliwili Harbor. They are: 1) No vehicles brought to Kauai on the Superferry; 2) Superferry travel interisland at the same speeds as the cruise ships (about 20 to 24 knots); and 3) No security expanded zone in Nawiliwili Harbor. I found very interesting what that speaker proposed at least twice in public forums that I viewed. So, I seek to financially and logistically analyze the first two of those.

Fourth, I will therefore look at the schedule, distances, speeds, and time of day (day or night) to make some obvious constraint conclusions that thusfar don't seem to have made their way into the public debate.

Fifth, and lastly, one of the Kauai speakers at the Senators' forum on Kauai mentioned and a few others have also referenced how long it would take to adequately inspect each vehicle getting onto the Superferry. It is a shocking amount of time. The assumption they make is that there would be one inspector for all of the vehicles. I expand upon that to what would be realisticly necessary to adequately inspect the cars before they get onto the Superferry.

So, with my next post, I will wade into it.

Aloha, Brad

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