Blujay Aviation Memo

BluJay Aviation Memo

Embry-Riddle Aeronautical University

BluJay Aviation Memo

TO: BluJay Aviation, Inc.

FROM: EZ Consultants

DATE: December 19, 2015

SUBJECT: Memo

Dear Wren and Brad,

Based on the information you provided, our team of analysts feels that BluJay Aviation should raise capital by issuing bonds to finance the Raven44 helicopter. This can raise the $148,000 in cash for the Raven purchase and your company would not have to pay your bondholders for quite a while. Issuing common stocks to investors is another option to raise capital but comes with more stipulations than bonds. Stockholders in your company will then have voting rights and dividends paid out are not tax deductible. Issuing stock will also decrease earnings per share. We recommend that BluJay Aviation should wait a few more years until its cash flow increases and its financial reports reflect better operating ratios to finance the Raven 44.

Additionally, we believe that a life extension of your current aircraft from 15 years to 20 years will help the BluJay increase its profit as follow:

* Cost of buying an aircraft is very high. If life is extended, then depreciable value of aircraft per year will be lowered. Hence less amount of depreciation will be included in operating cost. It will improve profit.

* We realize that cash flow is low since a large amount of money is being spent at the initial three years of the start of your company. If the life of aircraft is extended then money will accumulate from these earnings. It will help BluJay overcome liquidity problems.

* Also, by extending the life of the aircraft to 20 years instead of 25, you help reduce the rise in maintenance cost associate with the aging aircraft and reducing the risks that comes with it.

In the matter of the recent opportunity to take over the current airport gift shop. While this presents a unique opportunity for BluJay Aviation, Inc.

, we want to ensure that all aspects of this opportunity...