Eagle Airlines - Introduction Giannis Hatjistelios president of Eagle Airlines is considering to invest on a Piper Chieftain airplane Taking into

Eagle Airlines - Introduction Giannis Hatjistelios...

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Introduction Giannis Hatjistelios, president of Eagle Airlines is considering to invest on a Piper Chieftain airplane. Taking into consideration the data provided from his past experience and competition analysis we will examine the possible results of the 3 Methodologies: Scenario Analysis, Sensitivity and Monte Carlo Analysis. With the implementation of Risk Analysis using the mentioned Methodologies above we will be able to examine the sensitivity of uncertain parameters, calculate the possible expected Annual Cash Flows from the use of the New Aircraft and recommend risk medication strategies that could be followed by Eagle Airlines in order to manage successfully the associated risk of the investment. Question a What is the range of possible values for the annual cashflow? Base your answers on the optimistic and pessimistic scenarios? In order to examine how the below uncertain parameters could affect the expected Cash Flow of the investment we used the Scenario Analysis. The following three scenarios (Base, Optimistic, and Pessimistic) were used for the calculation of the Annual Cash Flow. The Annual Cash Flow of the Pessimistic, Base and Optimistic Scenario is -€39.040, €46.184 and €273.180 respectively. It can be observed that there is a wide range between Pessimistic and Optimistic Scenario equal to €312.22 and as a result high variability between the Annual Cash Flow. Consequently, we shall proceed with further investigation and Risk Analysis.

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