Options Going Belly up....

[JetA1]

Rumors on the street point toward Flight Options going bankrupt. Has anyone else heard any rumblings?

 

[Grim Reaper]

Yes, the rumor is now almost five years old. Raytheon has taken financial control of Flight Options. Time will tell.

 

[fracman]

No secret Flops ran out of money and Raytheon now has majority interest in a debt for equity swap. I don't think Raytheon will let it go Bankrupt, but I seriously doubt they will continue the aggressive growth strategy the Ricci was attempting.

 

[WileE]

Hmmm...

Now, my impression was that the only reason Raytheon bought a greater share of Options was to get the level of financing required to continue the rate of growth that had been planned. The finance gurus wouldn't fund the amounts being requested with only Flops assets. Now that Raytheon is providing more backing, there isn't any hold up on aquiring the number of new planes that Flops wants.

 

[GooseHZ]

WHY NOT?

FRACMAN,

Why would RTN not want to grow FLOPS? Where elese are thay going to sell ther new A/C? Flops and NETS is where! RTN will grow FLOPS as fast as they can so they can sell it when a buyer comes along......

If you think that RTN will lets FLOPS die on the vine you are wrong. Will there be changes....yes. Do i think we will start selling new A/C...yes. But FLOPS did good selling used A/C so i dont think that will stop, But RTN products will take the center stage.
just my 2 cents

There are lots of you who would love to see FLOPS fail.....just so you can say you where right. Why is that?

Fly safe

 

[fracman]

Raytheon has wanted out of the fractional business for a long time - the original Travel Air/Flops merger was part of their exit strategy. The only reason they have it back it the tremendous amount of debt owed them by Flops without an ability to pay, thus the debt for equity deal.

The bigger Travel Air got, the more it lost. The bigger Flops got, the more it lost. Raytheon can't make it up on volume when growth = greater losses.

Maybe I'm wrong - time will tell.

 

[JetA1]

Fractional Aviation is a losing prposition. Raytheon knew it when they tried to get rid of Travel Air. Now they have controll again of a losing company. Rayhtheon has been losing a ton of money and Flight Options will not help their bottom line. Flight Options value right now is probably in the 80 - 100 million dollar range....small potatoes for a multi-billion dollar parent company like Raytheon. My quess is that 3-6 months down the road Flight Options is either sold or more likely going to file for Bankrupcy. Another question: Why do you think John Nahill has been appointed CEO? Did he come from Travel Air? No. His background is in Corporate Strategy, not in running a fractional aviation company? What does that tell you?

 

[fracman]

I agree with everything you said except the bankruptcy part. Raytheon has too much exposure to let this happen. Your observation about Nahill is right on - if they were serious about being a fractional provider they would have found a world class industry expert to run the program, not an accountant with zero aviation or operations experience.

 

[Swass]

I've also heard Raytheon is up for sale, that could throw a major ringer into things.

 

[JetA1]

Maybe I should have said that the pre-owned fractional company is a losing proposition. Used high time aircraft with no warranty left cost too much $$$ to keep in the air. Thats the difference between F/O and EJ.

 

[banned username 2]

Maybe I should have said that the pre-owned fractional company is a losing proposition. Used high time aircraft with no warranty left cost too much $$$ to keep in the air. Thats the difference between F/O and EJ.

I have read and heard that NJA made their money from aircraft sales and not from the day to day operations flying them... and now with the economy in the crapper, and aircraft sales down... they are hurting because they aren't selling the shares...

Just what I have heard...

 

[JetA1]

Yes, NJA business is not making money right now either, But WJB has said that heis in this for the long term. Raytheon will not be in it for the long term. Raytheons patience will wear out with them losing money and will close up. 80 million charge off for the loss on this business is no big deal to them. Does anyone realize how big Raytheon actually is? We are talking about a multi billion dollar company. Fltops is a small peice of a very large pie....

I think Frac man sees the writing on the wall.....

 

[JetA1]

Raytheon sales last year...16.8 billion
Market Cap....11.6 Billion
80 million loss last yr...

 

[mike]

John Nahill

I think Raytheon was wise to put Nahill in as CEO. You would not want a "world class" aviation person solving a crisis management and marketing problem. All aviation guys suffer the same problem, a love affair with flying.

 

[Tim]

I heard that two years ago Netjets made a sliver of $$$ on operations, and then last year we lost some on it again. The feeling I got however was that profit was possible as we grew and reaped the benefits of scale. I also heard that we were keeping our management fees down to put some pressure on FO and FLEX. This was from the same guy that found out on his pager (like all the other pilots) that we had ordered the G200s, that guy would be the Chief Pilot so take it for what its worth.

I'm hoping that FO can reach critical mass sometime soon and start making some $$$. The more competition in the business the lower the costs, which creates more sales which creates a bigger base to absorb the inevitable price increases one day. Besides that I could not stand to hear of more pilot layoffs in the industry.

 

[h25b]

I also have heard the same as Falcon Capt. about the fractionals reaping the most of their profit from the sales of shares as opposed to the operations... Someone with better information on this topic should chime in. Also could someone comment on the information coming out that fractional customers are starting to get scared by aircraft depreciation lately...

 

[Aspiring to be]

FLOPS = Value ?

Guess I do not understand value or financing. How could a company (FLOPS) have a value of 80-100 million as a previous poster states. Information that I have read leads me to me believe that FLOPS would have been in bankruptcy Sept. 2001 if Raytheon had not started loaning money. I believe that FLOPS would have for sure been in bankruptcy if Raytheon had not merged RTA with FLOPS and given FLOPS an additional loan of some 20 million.

I find it hard to believe that if I had a company worth 80 million that I could not get 20 million to pay off Raytheon. I am sure Ricci did not like stepping down as CEO. No my opinion is that FLOPS has a negative worth. Most of the value of the used airplanes (which are owned by the owners and not FLOPS) have lost much of there value. The owners at FLOPS are maybe the biggest losers.

With the book keeping at Raytheon/RTA it would be very difficult to determine if RTA was losing money or not. It is for sure that Raytheon wanted and I am sure they still would desire to sell all of the small aircraft business.

 

[mike]

Raytheon

To find out information on publicly held companies, go to the SEC. EDGAR site. For Raytheon try

http://investor.raytheon.com/edgar.cfm

I can't comment on the accounting principals used, but the information is available for all that wish to read it.

It is difficult to make money in aviation. I believe this is true for fractional, airlines and charter companies alike. The fixed costs (salaries, benifits, insurance, buildings, utilities) have risen dramaticly over the past two years while the value of assets (aircraft) have dropped. Fees have not kept pace with costs.

The variable costs are going up, too. I saw a wholesale increase of 12 cents per gallon last Monday.

 

[Aspiring to be]

Well Mike what is that old saying that figures don’t lie but liars do figure. The numbers from RTA were somewhat inflated due to many ways of accounting and allocation. RTA was reported to pay more at Raytheon for every item it received from aircraft to fuel than did the others such as EJA.

Do not doubt that RTA, EJA or any company has or could lose money. In RTA case because of the accounting I do doubt the reported lost as being an accurate number. I do believe that Raytheon has been call because of their accounting procedure for about a four year period. Not another Enron but some possible trouble.