Where treasury quietly costs an aviation business
Most operators do not have a treasury crisis. They have a treasury blind spot. Here is what it looks like in six areas. Figures are illustrative, for a mid-sized operator.
Your summer cash is already spent on winter.
Aviation cash moves with the season. Without a forward view, the gap appears when it is too late to fix cheaply.
Forward bookings lift your balance to CHF 14M in July. By February it is CHF 3M, and an engine shop visit is due in March. Your forecast covers four weeks, so nobody saw it coming.
Seasonality is predictable. A surprise means the forecast was too short.
Your card acquirer holds CHF 5M as collateral against flights not yet flown. Nobody has renegotiated the reserve since the contract was signed.
Cash you earned but cannot use still costs you.
Fuel is your biggest variable cost. You buy it at the price of the day.
Most operators this size have no fuel policy. The budget assumes one price and the market delivers another.
Fuel is CHF 18M of your annual cost. A 20% price rise adds CHF 3.6M, more than the profit in your plan. There is no hedge, no surcharge mechanism and no trigger for action.
An unhedged fuel budget is a guess.
Prices spike, the board asks what you are doing, and you hedge at the top of the market. Six months later prices fall and the hedge looks like a mistake.
Hedging rules have to be written before the market moves.
You earn in francs and euros. You pay in dollars.
Fuel, leases, engines and parts are priced in USD across the industry. Every dollar move reaches your margin.
Your USD cost base is USD 40M a year. A 5% dollar move changes your result by USD 2M, and nobody has mapped the exposure.
One currency move can erase a season of commercial work.
Each payment to a lessor, MRO or fuel supplier is converted separately at the rate your bank quotes that morning. There is no netting and no benchmark.
Converting one payment at a time pays the spread every time.
Your fleet is financed. Nobody manages what it costs.
Leases and aircraft loans are long commitments. Their cost keeps moving after the contract is signed.
You carry CHF 60M of floating-rate aircraft debt and no interest rate hedge. A 2-point rate rise costs CHF 1.2M a year, every year.
Floating rates without a policy leave the decision to the market.
An aircraft goes back to the lessor next year. Return conditions and maintenance reserves were never put into the cash plan, and the bill arrives with the aircraft.
Fleet events belong in the forecast, years ahead.
Your bank knows your business better than you know your bank.
Banking and payment costs hide in hundreds of small lines. Nobody adds them up.
Same bank for eight years, never benchmarked. A 0.5% spread on USD 40M of conversions costs about USD 200k a year.
Pricing that is never reviewed always favours the bank.
An email arrives from your fuel supplier with new bank details. It looks right, nobody calls back, and the payment goes out.
One unverified change of bank details can cost six figures.
The board asks how much risk you carry. Nobody has one answer.
Good governance lets a finance team act fast without acting alone.
There is no written treasury policy. Hedging, bank access and payment limits depend on habit and on who is in the office.
Lenders, lessors and auditors notice undocumented treasury.
One person prepares, approves and releases payments and holds every bank login. That person just resigned.
Key-person dependency is an operational risk hiding in plain sight.
Recognise any of this?
The pre-flight diagnostic checks all six areas against your situation and shows where to start.
Run the diagnostic