At least one fractional is doing well: Avantair

On Your Six

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At least during Thanksgiving weekend... Interesting that the CEO considers the Avanti a member of the "light jet" category... I realize the Avanti outperforms most light jets but that is pushing it definitionally IMHO. It's all marketing I suppose (but a little misleading). Read below:


Avantair Reports Record Thanksgiving Holiday Travel Demand

Wednesday December 3, 4:28 pm ET


CLEARWATER, Fla., Dec. 3, 2008 (GLOBE NEWSWIRE) -- Avantair, Inc. (OTC BB:AAIR.OB - News) (OTC BB:AAIRU.OB - News) (OTC BB:AAIRW.OB - News) (``the Company''), the only publicly traded stand-alone fractional operator and the sole North American provider of fractional shares in the Piaggio Avanti P.180 aircraft, announced today that it enjoyed a record number of flights flown during the Thanksgiving holiday, November 25th - November 30th, in sharp contrast to the overall slowdown in demand experienced by major U.S. airlines.

"Our record demand for flights over the Thanksgiving holiday highlights consistently strong trends by customers who, in these uncertain economic times, rely on Avantair to provide the lowest-cost and most fuel-efficient fractional program in the Light Jet category,'' stated Steven Santo, Chief Executive Officer of Avantair. ``As we continue to show our owners and prospects that flying privately with Avantair can be affordable, without sacrificing high quality service and comfort, we believe we will capture greater market share, as more and more consumers respond favorably to our value proposition.''

"We are very pleased to announce that we were able to meet this record, peak travel-time demand with minimal additional expense from third-party charter usage,'' continued Mr. Santo. ``This is a testament to the strength of our business model, continued efficiencies realized from our expanded fleet and the effectiveness of improved scheduling procedures implemented over the past several quarters.''

About Avantair
Avantair, the only publicly traded stand-alone fractional operator and the sole North American provider of fractional shares in the Piaggio Avanti P.180 aircraft, is headquartered in Clearwater, FL with approximately 400 employees. The Company offers private travel solutions for individuals and businesses traveling within its service area, which includes the continental United States, Canada, the Caribbean and Mexico, at a fraction of the cost of whole aircraft ownership. The Company currently manages a fleet of 50 aircraft, with another 59 Piaggio Avanti IIs on order through 2013. For more information about Avantair, please visit: http://www.avantair.com.
 
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cherry20's

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I don't think I would call that well either. Best of luck to you guys.
 
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On Your Six

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http://finance.yahoo.com/q/is?s=aair.ob

Not sure I would call this "doing well."
I agree that Avantair has not done very well to date and those financials reflect that. But keep in mind that some of that expense was related to outside charter expense as well as training costs, etc. Avantair has scaled its fleet in the hopes of reducing some of that outside charter expense (reach "critical mass" to provide better coverage). Building the critical mass and the infrastructure is never cheap (thank goodness NJA has Uncle Warren and Flexjet has Bombardier to bankroll these costly investments)...

Who knows what will happen going forward? What we do know is that the airplane is loved by Avantair customers and it is an efficient performer. Perhaps a management fee price increase for new customers is in order to increase cash flow... The cost would still be lower than competing products. I think they have a very competitive product in that market segment and I wish them well...
 

Flex-ible

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FlexJet's holiday week flying was UP over last year. I didn't see final numbers, but leading in to the week it was looking to be 5% or more higher.

Oh, and the company is going to make money for the fiscal year ending in January.
 

o2bflyn

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In a growing company, like Avantair, you don't always have to pull a profit to be successful. Sometimes you have to sacrifice profits for growth.

Balance sheets and Income and loss statements are all well and good, but they have to be interpreted in context to what the company is doing.
 

glasspilot

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As to the point of the CEO referring to the Avanti in the "light jet" category.

If I had a scooter that reached low to medium earth orbit for a crew of 8 and a payload of 80 tons I would compare myself to the space shuttle, not a Vespa.

It's not the method of propulsion, it's the performance that buyers pay for. Hell, I could put your shiny jets on a grey hound bus...but it wouldn't be the same as jet travel would it? Again, performance numbers matter, not what's pushing the air.
 

glasspilot

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As to the financial's, I agree it's a tad worrisome. However, this is a start up and all start ups take time to reach critical mass.

I have my fingers crossed and feel confident that a plane that will travel (in cruise flight) just shy of 500 miles in one hour while burning less than 600 pounds of fuel. With a 5'10" and super quiet cabin what could go wrong?

The financial trends do seem to be encouraging. Every quarter gets better. Here is the latest press release:

_____________________________________________________________________________________

CLEARWATER, Fla. – November 12, 2008 – Avantair, Inc. (OTCBB:AAIR) (OTCBB:AAIRU) (OTCBB:AAIRW) (“the Company”), the only publicly traded stand-alone fractional operator and the sole North American provider of fractional shares in the
Piaggio
Avanti
P.180 aircraft, today reported financial and operational results for the first quarter ended September 30, 2008.
First Quarter Fiscal 2009 Business Highlights
  • Strong sales growth resulted in a 27.4% year-over-year increase in total revenues, to $32.7 million, due to the success of recent marketing initiatives and despite ongoing challenging macro-economic conditions
    • Revenues from maintenance and management fees were $17.1 million, an increase of 31.6% versus the same year-ago period
    • Charter card and demonstration revenues increased 12.5% over the prior year’s levels
  • Loss from operations decreased 57.7% year-over-year, to $1.9 million
  • EBITDA loss for the quarter declined to $819,980 from $1.3 million for the fourth quarter of fiscal year 2008
  • Avantair was EBITDA positive for the month of September
"Our strong performance this quarter demonstrates continued penetration of the market for private jet travel and an ongoing focus on operational execution that culminated in the achievement of EBITDA profitability for September,” stated Mr. Steven
Santo
, CEO of Avantair. “Recent marketing and advertising campaigns, coupled with a weakening economy, are highlighting Avantair’s position as the lowest-cost and most fuel-efficient provider. This in turn generated significant interest, in the form of leads generated and fractional share sales, from customers of competing fractional share programs. Coupled with recent utilization improvements and lower fuel costs starting in September, Avantair is well positioned to further benefit from these trends.”
First Quarter 2009 Financial Results
Total revenues for the first quarter ended September 30, 2008 were $32.7 million compared to $25.7 million for same period last year, an increase of 27.4%.
Revenues from fractional aircraft shares sold were $12.5 million for the first quarter of fiscal 2009, an increase of $2.7 million or 27.4% compared with $9.8 million for the first quarter of fiscal 2008. This was primarily due to a 23% increase in the number of fractional shares sold to 678.5 through September 30, 2008, from 552 fractional shares sold through September 30, 2007. According to accounting principles generally accepted in the United States (“GAAP”), fractional Avantair, Inc. aircraft sales revenues and the associated costs of fractional aircraft sales are amortized over 60 months.
Revenues from maintenance and management fees were $17.1 million, an increase of 31.6% from $13.0 million in the year-ago period. This reflects a 23% increase in the number of fractional aircraft shares sold and the increase in monthly management fees for new and renewing fractional
shareowners
to $9,650 during the first quarter of fiscal 2009, from $9,400 in the prior year quarter.
Charter card and demonstration revenue for the three months ended September 30, 2008 was $2.4 million, up 12.5% from $2.1 million for the three months ended September 30, 2007. This reflects an increase in hours flown by customers using the Company’s card program, as a result of increased marketing of charter cards. Charter card revenue is recognized when the cardholder uses the hours, not when the card hours are purchased.
As a result of increased fleet size and a 23% year-over-year increase in the number of fractional shares sold, the expected increase in cost of flight operations, including the cost of fuel, was limited to 3.4% this quarter. The total cost of flight operations was $16.3 million for the first quarter ended September 30, 2008, compared to $15.8 million in the same year-ago period, which clearly demonstrates the
leveragability
of our business model. This was further highlighted by a
significant decrease in charter expenses, due to use of the Company’s core aircraft to alleviate scheduling conflicts, enhanced flight software and flight scheduling staff training.
SG&A expenses for the first quarter of fiscal 2009 were $6.6 million, or 20.1% of revenue, compared to $5.6 million, or 21.7% of revenue, in the fourth quarter of fiscal 2008. We were encouraged by the decline in these expenses as a percent of revenue, as this clearly reflects the leverage in our model as we increase our fleet.
Loss from operations for the first quarter of fiscal 2009 was $1.9 million versus $4.5 million in the same year-ago period.
Net loss for the first quarter of fiscal 2009 decreased by 30.4% to $3.3 million from $4.8 million during the same period last year.
Subsequent Development
For the month of October, Avantair announced record sales in what is seasonally a soft month. This performance highlights growing consumer demand for the
Piaggio
Avanti
P. 180 and success of the Company’s recent marketing and advertising campaigns aimed at increasing leads generated from owners of competing fractional share programs.
Mr.
Santo
concluded, “We expect demand for our fractional program to remain robust given its advantageous economics relative to competing programs and an expanding sales pipeline. Business momentum continued into October as sales reached a monthly record. As such, we anticipate strong year-over-year revenue growth for the second fiscal quarter.”
 

glasspilot

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Does Avantair do any charter flying or is it all owners?

We sell time cards like NetJets Marquis program. We call ours the "Edge Card" because alphabetically...ours comes first.
 

mainiac

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In a growing company, like Avantair, you don't always have to pull a profit to be successful. Sometimes you have to sacrifice profits for growth.

Balance sheets and Income and loss statements are all well and good, but they have to be interpreted in context to what the company is doing.
Nicely put!

As we inch our way towards profitability, I can say that the growth and increased stability during my not quite 3yrs here are proof of that statement! 21 airplanes then, 50 now! Industry 7/7 schedule, wide range of experienced pilots and increased QOL on the road, as our staffing and fleet has greatly reduced the really long days.
And, our owner group is easy to work with, and enthusiastic about the "unique" Piaggio. Most have done some homework on the plane, and take a real interest in its operation.
 

glasspilot

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lol funny......well my W2 has a few more numbers added to the END......
Not true. I make $73,678.845938103920573829 per year. WAY more digits than you!
 

o2bflyn

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Nicely put!

As we inch our way towards profitability, I can say that the growth and increased stability during my not quite 3yrs here are proof of that statement! 21 airplanes then, 50 now! Industry 7/7 schedule, wide range of experienced pilots and increased QOL on the road, as our staffing and fleet has greatly reduced the really long days.
And, our owner group is easy to work with, and enthusiastic about the "unique" Piaggio. Most have done some homework on the plane, and take a real interest in its operation.
Yup, and what I see when I look at the financials is a net gain in revenue and a reduction in losses over the past year. Seems like progress to me.

I think every business that ever tried to grow in the early stages all had balance sheets that looked like this at one point or another.
 

C425Driver

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Avantair was EBITDA positive for the month of September
That's the important statement in the press release. We've been working toward positive EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) and we finally achieved it. Now we must be able to sustain it. In a time when many companies are hurting financially and some are furloughing we're heading in the right direction.

We are a young company and we are not going to be profitable overnight. This takes time and as we grow we can continue to sustain our positive EBITDA. Also, we don't have the backing of Uncle Warren, Textron, Bombardier, or HIG to help subsidize us through the tough times so the fact that we can move toward profitablility in an economy like this on our own is impressive.
 

Correcting

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Speaking for NJA, Uncle Warren doesn't subsidize us or any of his other companies. Each company must stand on it's own merit. But don't take my word for it, just read a little bit about Warren. That being said, it can't hurt when every piece of paper at NJA says "A Berkshire Hathaway Company."

And in fairness to the Avantair financials, I can only imagine what NJA's financials were like in the beginning. Talk to some of the guys that were here back then and they'll tell you NJA was on the edge of extinction. It's really amazing to see what NJA has become once you learn how close they were to going out of business in the beginning.
 

glasspilot

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Speaking for NJA, Uncle Warren doesn't subsidize us or any of his other companies. Each company must stand on it's own merit. But don't take my word for it, just read a little bit about Warren. That being said, it can't hurt when every piece of paper at NJA says "A Berkshire Hathaway Company."

And in fairness to the Avantair financials, I can only imagine what NJA's financials were like in the beginning. Talk to some of the guys that were here back then and they'll tell you NJA was on the edge of extinction. It's really amazing to see what NJA has become once you learn how close they were to going out of business in the beginning.

A well thought, articulate, non-biased, evenhanded post.

Move along, this is flightinfo...we don't want your kind here!
 
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