Holdings vs. Subsidiaries #

When you start out with a new company, you create a holding in the country of your choice and receive a capital of 10 million AS$ (please note that the amount of starting capital can vary depending on the game world). Using that, you can acquire planes and become an operational enterprise. However, you can also use your funds (or parts of them) to create a subsidiary. In that case, your subsidiary can lease or buy planes and operate your airline. So what’s the difference?

Your holding is the parent investment firm for all of your business ventures and limits your transportation rights (depending on the country where it was founded). It will always remain your property, so you can’t sell it or sell shares.

If you create a subsidiary, you can go public and sell shares of your airline on the stock market. With your IPO (Initial Public Offering) you can attract fresh capital and still own 80% of the subsidiary afterwards.

As the capital injection allows you to grow faster, going public gives your company a boost. However, you have to pay a weekly dividend equal to 15% of your profit to your shareholders (if you don’t go public, the subsidiary remains in your possession and no dividend is paid).

Since your holding owns 80% of the shares, 80% of the dividend goes to your holding. You can buy back shares as they become available or your holding can sell more of its 80% shares to the public. It’s not possible to move money between a holding and a subsidiary, not even if you own 100% of the subsidiary shares.

Info
If you buy shares of another airline, you get detailed information regarding their operations, so it can be interesting to buy a few shares from your main competitors.

Apart from IPOs, creating a subsidiary can be interesting if you want to have more than three maintenance families of planes or a dedicated enterprise for intercontinental flights and cargo divisions. If your holding buys planes and leases them to a subsidiary, you can even move parts of its profit to the holding.