Andy...while your research is impressive, it is also a bit creepy. What is your tie to Virgin America? I just go by what I was told when I was hired...VX had one profitable quarter (not sure if it was net or operating). Either way...creepy stalking
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As far as SJC as first base...I couldn't agree more. I actually texted that to my sim partner last night. :beer:
One other thing...I admit I am not a business guy. This is my thought and maybe I am completely wrong. The difference between operating and net profit is interest payments. Shouldn't our investors own our interest payments? That said, operating profit is actually a net for our investors? Again...not good at business here, just thinking logically.
I majored in Economics. I read a ton of quarterly reports - more than simply airline financial reports. This is the first time someone working for a company has called my comments about their financial reports as 'creepy'.
Personally, I find it odd how few people know how to read financial reports. How can you possibly invest if you don't know how to read a financial report???
Operating profits = EBIT ... earnings before interest and taxes.
There are other metrics used to measure a company's 'profitability', depending on how many items you want to exclude.
EBITDA = earnings before interest, taxes, depreciation, and amortization.
EBITDAR = earnings before interest, taxes, depreciation, amortization, and rent/restructuring costs.
EBITDARM = EBITDAR + management fees.
The longer the acronym, the less value I personally place in the number. Garbage in, garbage out.
Net income (loss) is the bottom line. It accounts for all additions and debits from the balance sheet. However, you still have to be careful because there can be a lot of garbage thrown into the number. You need to do a complete reading of the earnings report to find if there were accounting tricks used to arrive at the net income number. That kind of stuff is usually hidden in the footnotes.
Since VX isn't a public company, their earnings reports are very opaque; you don't know how much garbage is hidden. I don't know how much of their interest charges is paying back investors (I suspect very, very little) and how much is interest on lines of credit and other loans to the company. I'd be willing to bet that the bulk of the interest is on borrowed money from financial institutions.
As a simple example of how opaque VX's earnings reports are, there aren't even assets and liabilities listed.
As for the comments about John MacLoed, I've yet to figure out how he's earned this 'walk on water' reputation. During his tenure at both Alaska and Westjet, there appears to have been no huge change in company profitability either positive or negative.
Finally, I have no ties to Virgin America. I have no love nor hate for the company; I simply do the math and base my opinions on what the calculator tells me.
I've read that VX's product is great. I've never flown them so I have no impression one way or the other. There have been plenty of companies that have received high praise but gone out of business in the past. You can't sell your products for a loss forever - at some point, you have to charge your customers enough to cover your expenses. 5 years is a long time to still have net losses.
