Posted: February 1st, 2016

Fleet Replacement Analysis

nter data into the Excel template. As you will see, this decision is critically dependent on your projection
for future fuel costs and the discount rate employed. Run a few “sensitivity” analyses with varying fuel
and discount rates to see how the fleet replacement decision changes. Remember that the net present
value obtained is a total cost of operation. The spreadsheet computes the cost per available seat mile
(CASM). The aircraft with the lowest net present value CASM is the best financial choice. Prepare a
memorandum (not more than 2 pages not including appendices) to Mr. Kluyver summarizing your
analysis and making a recommendation. Remember that executive management will need to understand
how the analysis was conducted. Explain your assumptions and methodology concisely. Insert (copy and
paste) and reference Excel worksheets as appendices to support your fleet replacement recommendation.
Use other tables and graphs as appropriate to support your recommendation.