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A380MSN004
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Startup Airlines / Raised Funds Announcements

Wed Jan 20, 2021 9:50 pm

Hi everyone,

As a non finance guy i'm curious to understand how startup airlines founder manages their raised funds.

According to the below article, Ex United CFO raised 125M USD to launch a new airline.

Article : https://simpleflying.com/united-cfo-own-airline

Regarding those 125 M USD, usually are they 100% equity or is it a mix of Equity + Debt leading to 125 M USD?

Many thanks
 
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BWIAirport
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Re: Startup Airlines / Raised Funds Announcements

Thu Jan 21, 2021 6:22 pm

As many business that have been founded, virtually any legal way of raising money has been used as a startup fund at some point. For airlines, however, which require massive sums of money, it will be a mix between equity and debt, like you said. A few wealthy investors would have little issue contributing $25-50 million, and banks' primary business operation is lending, so with good credit and a feasible business plan the remainder of the required capital is fairly straightforward to receive from a bank.
Sometimes, people are so wealthy they can get the ball rolling themselves.
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A380MSN004
Topic Author
Posts: 813
Joined: Sat Jun 03, 2017 9:07 am

Re: Startup Airlines / Raised Funds Announcements

Fri Jan 22, 2021 10:08 pm

BWIAirport wrote:
As many business that have been founded, virtually any legal way of raising money has been used as a startup fund at some point. For airlines, however, which require massive sums of money, it will be a mix between equity and debt, like you said. A few wealthy investors would have little issue contributing $25-50 million, and banks' primary business operation is lending, so with good credit and a feasible business plan the remainder of the required capital is fairly straightforward to receive from a bank.
Sometimes, people are so wealthy they can get the ball rolling themselves.


Thanks for your feedback. At the beginning I was thinking it was a different way to raise money but at the end figuring out it's more or less the same as any other startup venture.

As a European and not an expert in raising debt (apart for basic investments) the balance rule I know is :
- 30% Equity
- 70% Debt

and when the bank are considering it's a more risky activity the balance is :
- 50% Equity
- 50% Debt

Does in the US the rules are different and there a way to raise way more debt with less equity ?

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