JO interview on thestreet.com

[Dave Benjamin]

No surprise thier profits are better than expected......

http://www.thestreet.com/_yahoo/markets/ericgillin/10107170.html

 

[nimtz]

My favorite excerpts:

"It's very simple. If you took JetBlue or Southwest's cost structure, and when I say cost structure, let's speak bluntly -- wage levels, work rules, seniority -- and you were to overlay it on a United Airlines or a U.S. Air or an American or a Delta (DAL:NYSE - commentary - research) with a hub network, they'd be the most profitable airlines in the world. Period. End of sentence. Do the math. "


"The reason why some of these carriers have proven to be successful is that they are buying all their goods and services at something closer to market than the other hub carriers. You cannot sell a product at market, which is what we all do, while you're building it at some price that is significantly higher than market. And you say, well, how is that possible? Well, do you think the market rate for a 747 captain these days is $350,000? I know at Virgin, they hire guys for $150,000. "



I'm sure glad he ain't my boss! Everytime he starts talking about high costs in this article it comes down to pilot salaries. Right Johnny! You might think you've built some Empire out of being a hoar to whatever Mainline chose you this week, but the crap that you force on your own people will be your own downfall. Mark my f*cking words...

 

[big dog1]

Second act
William P. Barrett, 08.09.99

If your career has a black spot on it, take heart from the strange case of Jonathan Ornstein. A failed stockbroker at age 30, he has fashioned a new career fixing airlines. The effervescent Ornstein, now 42, is chief executive of Mesa Air Group, based in Phoenix, Arizona. It was sinking when he took over in May 1998, but it's profitable now, on annual revenue of about $380 million.

The turnaround was simple, declares the casually dressed Ornstein in an office overlooking the Phoenix airport, where Mesa serves as America West Airline's feeder line: "We stopped flying where we lost money." That's indeed what he did, but he is oversimplifying. Turnarounds are never easy. Look at the turnaround in his own life.

In 1978 Ornstein dropped out of the University of Pennsylvania after his junior year, drove to Los Angeles and, at age 21, became the youngest-ever broker at E.F. Hutton. But in nine years he bounced around five firms, getting fired from some. Why? A lengthy disciplinary record charging unauthorized trading, misrepresentation, document alteration and churning. Eventually, Ornstein was fined $20,000 and suspended as a broker for three years.

Can a leopard change its spots? Radical transformations are not common, but they do happen. There seems to have been one here.

Exiting the personal-finance business, Ornstein began Act Two of his life. In early 1988 he joined Air L.A., a startup commuter airline so small that he loaded baggage when he wasn't planning--or trying to raise money. That job led him to Mesa, a then tiny airline founded by Larry L. Risley and based in Farmington, New Mexico. Ornstein signed on as Risley's assistant in 1989. In four years, with Ornstein negotiating deals and refinancings, Mesa bought six other airlines.

Ornstein left Mesa in 1994 to head Continental Express, a commuter line owned by Continental Airlines. By drastic cutting and pruning, Ornstein moved Continental Express in short order from a $40 million yearly loss to a profit of $25 million. Ornstein wanted Continental to spin off the Express subsidiary so he could be boss of his own show. When the airline declined the invitation, Ornstein quit to take a job running entrepreneur Richard Branson's new low-fare Virgin Express airline.

While getting that carrier off the ground, Ornstein kept an eye on his earlier airline. Mesa had slipped badly. It was caught by unprofitable agreements with the big airlines it fed and by new federal rules mandating more safety measures like better training. For the fiscal year ended September 1997 Mesa lost $49 million on revenues of $511 million. The stock fell below $5.

Ornstein organized an investment partnership that bought 6.6% of Mesa on the open market for $9 million, an average price of $5 a share. Then he started pushing for improvement. The opportunity came when United Airlines, citing poor service, canceled a contract that made Mesa its feeder in Denver, Colorado, and on the West Coast--a gut-wrenching 48% of Mesa's revenues. Ornstein's friend Risley, 54, stepped down. While remaining as chairman of Virgin, Ornstein left its day-to-day management to take on Risley's job. Remarkably, they're still friends. He took low pay--$200,000--but lots of options that are exercisable at $7 or so.

Ornstein wanted to make Mesa bigger someday, but he had to shrink it first. It was running out of cash. He fired 16 of 17 executives and sold or deleased 80 of Mesa's 180 planes. He moved its headquarters to Phoenix, figuring recruitment would be easier there than in remote New Mexico. He aimed more at business travelers, with better on-time performance coupled with fare boosts.

Ornstein solidified ties with America West and US Airways, which it serves as US Airways Express out of Boston, Pittsburgh, Kansas City, Philadelphia and Orlando. The first big expansion was one that didn't cost Mesa any cash. Ornstein paid $53 million in stock to buy CCAir, a commuter line based in Charlotte, North Carolina.

Results? After losing money for two years, Mesa turned in profitable quarters for December 1998 and March 1999. Analysts project a net for the current fiscal year (ends Sept. 30) of $15 million, or 54 cents a share. The stock has not yet moved much from when Ornstein joined, but if it does, Ornstein will do well. At $20, his options would be worth $13 million.

Can Ornstein genuinely put his first career behind him? Ornstein does the best he can to explain his sorry record. "I was just too young," he says. "My problem was that when a client lost money, I felt so bad that I would do anything to try and make it back for him."

 

[dav8or]

Second act
William P. Barrett, 08.09.99

Can a leopard change its spots? Radical transformations are not common, but they do happen. There seems to have been one here.

I'm sorry. Am I the only one missing the part where he changes?

 

[RJPilott]

My prediction for JO?

I bet it wont be long before one of his workers goes postal on him with a Glock or 12 gauge..... sad but true i think. Its unfortunate these type monsters such as JO turn good people into a worse monster than himself. I give him 3 years to live...anyone wanna start a pool? lol

 

[the turtle]

JO's the largest shareholder of MESA....200 grand plus. Ouch.

 

[mckpickle]

My prediction for JO?

I bet it wont be long before one of his workers goes postal on him with a Glock or 12 gauge..... sad but true i think. Its unfortunate these type monsters such as JO turn good people into a worse monster than himself. I give him 3 years to live...anyone wanna start a pool? lol

I dont think there is much hope if no one put a cap in Lorenzo's A$$.

 

[mckpickle]

And on another note. The numbers for COEX are crap. COEX never reported numbers because they were wholey owned. In fact in the early 90s COEX was contributing a little under a milion profit a month to CALs bottom line.

 

[Ivan Yankenoff]

I wouldn't urinate down his throat if his guts were on fire.