Is XOJet killing your business?

[OCR]

I don't know what business model they are using, but there are some choices:

1. "We'll lose money on every flight, but make it up on volume." Not going to work - see People Express.

2. "We'll keep the prices low until the competition goes out of business, then jack them right back up again." See Independence Air. NWA, UAL, and others lowered prices to match them, added new routes to compete - and they all went away before the ink on Independence Air's Chapter 11 was dry. Of course, it doesn't work if you run out of money first.

3. "We need cash now. Get those planes moving at any price." See Chrysler! Usually a short term sustaining mode, but not a recipe for long term success.

4. "We can sell at those prices if we assume that aircraft values will go up by 2011." No aircraft depreciation, no depreciation expense. Fine if it turns out to be true, although the accounting board might complain (see thread on Netjets loss due to aircraft writedowns)

So...IMO XOJet's pricing could work - if their financiers are patient and the market turns.

Interesting analysis, but I'm not sure I understand your conclusion. If you are suggesting that #1-#3 clearly demonsrtrate failed business models, are you suggesting that #4 might work for them? If so, I'd like to understand your thoughts better, given that aircraft valuations are at an all time low, and XOJet paid almost full retail price (according to Cessna's publicly stated comments) for all of their Citation X's. How likely is it that values will rise that substantially to where in 2011 a three year old airplane will be as much as they paid for it in 2008 when they were contracted at a price several years ago during the market's all time high?

In any case, thanks for providing some meaningful analysis on this topic. I was starting to wonder if anyone would ever provide any intelligent conversation about this topic, rather than all the rhetoric and emotion that we've seen on this thread so far.

 

[X-rated]

In any case, thanks for providing some meaningful analysis on this topic.

Meaningful? How can you have meaningful financial analysis with no access to financial data? How do you evaluate a model when you don't know what the model is? How do you gauge performance when you've never seen the business plan?

I'm curious why you've chosen to single out XOJET? We are in far better shape and position than most other operators. Our cash burn in this excruciating economy is reasonable, and our financial backing is substantial. We have not seen nearly the slow down most other operators have, and we continue to sign new business.

With all due respect, you're talking about something you don't understand.

 

[jonjuan]

Meaningful? How can you have meaningful financial analysis with no access to financial data? How do you evaluate a model when you don't know what the model is? How do you gauge performance when you've never seen the business plan?

I'm curious why you've chosen to single out XOJET? We are in far better shape and position than most other operators. Our cash burn in this excruciating economy is reasonable, and our financial backing is substantial. We have not seen nearly the slow down most other operators have, and we continue to sign new business.

With all due respect, you're talking about something you don't understand.

To your first paragraph, how do you know you are in "far better shape and position than most other operators? How do you know your cash burn is reasonable? Everyone in this industry has "substantial financial backing" although what does that mean to you? Do you really believe TPG/Lehman will let you continue to burn cash until it's all gone? As you said, you're talking about something you don't understand. Good luck, however.

 

[imacdog]

Have the furloughed pilots been recalled yet?

 

[jonjuan]

Have the furloughed pilots been recalled yet?

Hey-they're growing.....just not in pilots. Sad.

 

[X-rated]

To your first paragraph, how do you know you are in "far better shape and position than most other operators? How do you know your cash burn is reasonable? Everyone in this industry has "substantial financial backing" although what does that mean to you? Do you really believe TPG/Lehman will let you continue to burn cash until it's all gone? As you said, you're talking about something you don't understand. Good luck, however.

First of all, you might want to pick up a newspaper once in a while. Lehman went bankrupt last September. I think you meant to say TPG and Tasameem. Both of whom have equity ownership positions in XOJET. TPG has Tens if not hundreds of Billions, and Tasameem is the real estate investment arm of IPIC, (International Petroleum Investment Company) which is owned by ADNOC (Abu Dhabi National Oil Company) which is controlled by the Royal Family and has a net worth in excess of a Trillion US dollars. That's what I mean by substantial; how about you?

Obviously, I would not expect anyone to continue to put money into a nonviable business. However, the people who know have given no indication of that, and say our cash burn is not excessive. I trust them, and the fact that we are keeping busy is very positive.

What I was trying to say is that this thread has become pointless. It's impossible to speak intelligently about a financial viability without data, and these opinions are based on nothing more than fantasy.

I'm done with this thread.

 

[OCR]

First of all, you might want to pick up a newspaper once in a while. Lehman went bankrupt last September. I think you meant to say TPG and Tasameem. Both of whom have equity ownership positions in XOJET. TPG has Tens if not hundreds of Billions, and Tasameem is the real estate investment arm of IPIC, (International Petroleum Investment Company) which is owned by ADNOC (Abu Dhabi National Oil Company) which is controlled by the Royal Family and has a net worth in excess of a Trillion US dollars. That's what I mean by substantial; how about you?

Obviously, I would not expect anyone to continue to put money into a nonviable business. However, the people who know have given no indication of that, and say our cash burn is not excessive. I trust them, and the fact that we are keeping busy is very positive.

What I was trying to say is that this thread has become pointless. It's impossible to speak intelligently about a financial viability without data, and these opinions are based on nothing more than fantasy.

I'm done with this thread.

Well, you almost got it right, but what I think you meant to say is that YOU have nothing intelligent to say. You make comments about my analysis that clearly demonstrate that you have no idea what you are talking about, but instead of taking a specific point that I make and suggesting an alternative point of view, you simply spew a lot of childish rhetoric. There is nothing in any of my writings that has been "bashing". It was meant to be an intelligent discussion about a business model that does not seem to make sense to ANYONE who has anything intelligent to say about it. If you had any desire to participate in this thread in a meaningful way, you could have taken any one of my talking points, asked one of the executives in your company if there is any truth to it, and if not, come back and objectively pointed out to where I was wrong. Instead you just write a lot of gibberish that says nothing and shows how naive you are to the world. To think that because XOJet has money behind it, that it can't be a flawed business model, which only further demonstrates your ignorance. There was just as much money behind JetDirect, Dayjets, Eclipse, and on and on and on. In any case, it is clear that there are few people who have anything intelligent to contribute about this discussion, and your preference is clearly to be kept in the dark like a mushroom, with no idea where the business that employs you is going. Some day you will learn, but apparently you need to stumble a few times before you figure it out.

And by the way, how do you know that I have never seen their business plan or had discussions with their key execs, former execs, customers, and former customers? You presume far too much. Enough said.

 

[52Vincent]

Have the furloughed pilots been recalled yet?

Terminated not furloughed, so chances of getting an invite are slim to none.

 

[H2OK9]

Wow!! OCR, jonjuan, you must get out and spend some time relaxing! We are not even in the same atmosphere as dayjets, eclipse etc....It seems to me that everyone has a lot of negative hopes for XOJET....hmmm well I guess I'll take that as a compliment. I guess when you feel threatened its easiest to degrade your competition. Thanks for showing your poker face. I personally don't hope for failure for your companies but wish you all the luck! I guess when you work for a quality company like XOJET, the others just make us look even better! Thanks again! No really, I mean that.

 

[Avpilot]

Hey guys. I am sorry to interrupt the conversation with a change of subject. I am trying very hard, but unsuccessfully to gain an interview for the Abu Dhabi operation. I have applied, updated several times, and left 1 voice mail for T.B. in HR. I am currently located in the Middle East, flying the Embraer Legacy 600. I'm reaching out trying to find someone I know who is inside the company for an internal rec. Did anyone working there work at ExpressJet before?

Any other advice for me to hear something from the company? Thank you in advance.

Tim Mitchell