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Cigar Aficionado

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Well-known member
Nov 28, 2001
The current issue of Cigar Aficionado has an excellent synopsis of the airline industry. They cover everything from the Majors to companies such as JetBlue and NetJets. The writers in the magazine are not chumps they are pretty sharp and it's good reading.
I too read this article and recommended it to my coworkers. To those of you in training now and accumulating the experience to get hired in this industry when it begings again, this would be a good article for you to read.

When I graduated from college, I took a job in my field of study-real estate finance. We securitized commercial real estate and sold bonds backed by the cash flows of the underlying assets-much like a residential mortgage. This was a miserable business to be in. High pressure, no fun, stupid people in positions of autority with no regard for your personal life and hopes and ambitions. I started reading about Warren Buffet and the concept of investing in simple but proven ideas and things that had a strong franchise like Coke and Flight Safety for that matter.

So I leave investment banking world and go to work for a consumer brand company who fit the mold. It was a certain sports beverage company who had a guy called Michael Jordan as its spokesperson. For what it is worth, Gatorade was and still is the only single brand with a billion or more in annual sales that has over 80% market share. For a guy in his mid twenties, I was doing really well making a positive contribution to my family's financial goals and so on. I started to get this itch to fly so I did.

Now I find myself in almost the same position as I was in the IB world- high pressure, getting to be no fun and surrounded by mgmt who cant figure out how to sell their product for a profit because of this yield management system that preys on business travelers who book within seven days of departure. This is one of the dominant themes of the Cigar Aficianado article.

Look at a company like Wal-Mart and Southwest. Both offer essenitally every day low prices. Whether you like WM or SWA, if you go into a store or book a flight you know what you are going to get-- usually friendly people giving you what you need at a price that is predictable. Oh and both companies are profitable as a result of it.

Now, being Gump, I have to say that "I am not a smart man" but somewhere along the way to earning a BSBA in Finance we talked about supply and demand. If people arent willing to pay you enough for your product for you to make a profit, then you likely have too much supply of ASMs.

Ill go two more steps further. I blame the financial community and the individual investor as well as the management of an airline who cannot be profitable except in the absoulute best of situations.

The only reason I can think of to invest in an airline stock is that you need to generate a loss for income tax purposes. Analysts who are motivated by generating banking revenue for their firms arent going to tell you that this airline is lousy-look at the idiots who were pumping Enron and anyting ending with .com.

Now, to tie all of this ranting and raving together, for god sakes look for a company run by managers who can generate a profit. EJA and Flight Saftety are private and owned by Warrent Buffet for a reason-they deliver a qualilty product to the people who need it when they need it and can make money doing it.

If you are one of the thousands of people who drink the coolaid about getting on with the first company that you meet their mininmums and getting your 1000pic so you can apply to a major, you better go into it with a huge bankroll cause it is a long hard road. I know cause Im right there. If I had it all to do again, I wouldve done everything in my power to get hired by EJA and not the miserable little also ran regional I fly for now.

Read the article, educate yourself and carefully consider all career moves. As Ive said alot recently to those asking my advice, be careful what you wish for as you just might get it.

**CENSORED****CENSORED****CENSORED****CENSORED**, my subscription just ran out, I won't be gettin this issue.

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