In May 2017 the annual performance figures confirmed a profitable 2017 financial year. So in June 2017 we entered into negotiations with our main engine supplier about making a deeper engine investment.
This resulted in a staged approach to an engine investment in the turbine of the helicopter. Our turbine had been damaged in the hot start incident in April 2015, when our company had no reserves to replace or refurbish it. So we targeted reducing the amount spent on the rental turbine costs, which in the 2017 year were about 468,000 Rand (US$35,700). The approach was a 58% down-payment and then six further payments.
The result, without a bank loan was:
Increased engine output as a direct result of the engine investment, with scope for yet more power later, and
Reduced expenditure on rental units, whilst
Buying out a declared impairment of the old turbine of US$69,000
Realizing US$13,900 on the older, damaged turbine
Increasing the helicopter’s market value by US$66,000, and
Avoiding US$40,000 in mortgage costs if it had been financed via a mortgage.
In summary this was a book return on the engine investment of 316%. There were uncomfortable moments when other unscheduled work forced a bank overdraft for 2 weeks, but the engine investment programme successfully completed on 19 February 2018, with the monthly spend on a rental turbine reduced to zero from September 2017. Well done the finance and engineering teams!