(0 “EPAS DEAKIN BUSINESS ‘SCHOOL, Aussie Airlines: Consolidated Income Statement (Selected) Year Ended 30% June Currency AUD Millions (figures are rounded) Forecast 2020 Revenue 120 Expendinwre ‘Wages a3 Aircraft Coss 4.0 Fuel 25 Depreciation 16 ‘Other 25 reir ay Finance Costs (02) Tncome Tax 0 ‘Statutory Profit for the Vear ay Aussie Airlines As at 30 June Currency AUD Millions (figures are rounded) ‘onsolidated Balance Sheet (Selected) Forecast 2020 “Retuad “Ketual 2019 2018 ‘Current Assets Cash & Cash Equivalents a5 ry is Receivables 20) 15 10} ‘Other or 10 1 Total Current Assets 32 43 35. ‘Non-Current Assets | Property, Plant & Equipment Tas 150 is) Intangible Assets or, 2.0 21 Other 10 00 or ‘Total Non-Current Aveta 74.0 18.1 152 Total Assets 17.2 19.4 18.7 | ‘Current Liabilities Payables a 1 1 Revenue Received in Advance 10 50 45 Interest Bearing Liabilities 20) 06 a] Provisions cr} 10 1) ‘Other [otal Current Liabilities 79 8.6 | 76‘SCHOOL, ® DEAKIN roe BUSINESS EPAS ‘Non-Current Liabilities | Revenue Received in Advance oz 15 15 Tntrest Bearing Liabilities 65 46 43 Provisions Oa ot oa Deferred Tax Liable 08 os 09) other o.1 o1 00] ‘Total Non-Current Liabilities 40 Ta Ta “Total Liabilities 159 159 147 Net Assets 13 35 40 Equity | Issued Capital 1 1 25 Treasury Shares G2) O23) Oy Reserves 02: 02 a5 Retained Famings Gs) 16 11] [otal Equity 13 35] 40] Notes: You have received additional information from AA’s Chief Fi Board 1 ancial Officer and from your initial review of AA minutes: Not all 2020 forecast Income Statements line items and Balance Sheet balances have been finalised at this point, though they are best guesses, Intangible Assets constitute goodwill relating to an international airline business AA acquired five years ago. This business mainly services South East Asia, China, and Polynesia destinations, Property, Plant & Equipment consists primarily of aircraf, aircraft engines, and aircraft parts Revenue Received in Advance relates to customers” prepaid flights. Aircraft are leased from third parties. A reduction in monthly payments and a restructuring of the lease terms are under negotiation but, so far, nothing has been agreed with the aircraft makers/lessors. AA is currently negotiating with its bank to receive a grace period for repayment of short term and long-term debt as the company is currently in breach of its debt covenants per the loan agreement. If no deal is reached, this debt becomes due and payable on August 31° 2020. AA is seeking a financial bail-out package from the government of $7million to fund its ongoing operating costs for 12 months while its fleet of aircraft is grounded. The Federal government has made positive noises about the request but has not yet committed to support the request and has told AA that it will take at least two ‘months to reach a decision. ‘Under the current conditions, the CFO's papers to the AA Board estimate that cash coming in from operations will, on average, be $0.Smillion per month while unavoidable operating costs are estimated to be $0.8million per month. AA has an unused line of credit of $2.Smillion provided by its banking syndicate. I can access this money to fund its cash requirements, Currently, there are no other sources of cash beyond this line of credit.