Virgin America and Credit Squeeze

Mamma

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Here comes the credit squeeze......

Virgin America acts to find new investors

By Justin Baer in New York

Published: January 18 2009 20:46 | Last updated: January 18 2009 20:46

Sir Richard Branson's Virgin Group has hired Lazard to help recruit new
investors in Virgin America following concern that the fledgling US
carrier's current shareholders may move their stake back to its sister
company.

Virgin Group founded Virgin America in 2005 with a pair of domestic
funds, Black Canyon and Cyrus Capital Partners, to skirt US laws
preventing foreign entities from owning a controlling stake in an
American airline. The UK company now fears that the deepening financial
crisis could prompt the two firms to exercise an option to recall their
combined $150m investment in Virgin America in the next month --
eventually leaving Virgin Group the sole shareholder, people familiar
with the matter said.

Lazard, in an appointment from both Virgin Group and Virgin America, is
looking to line up potential replacements for Black Canyon and Cyrus,
those people said. Virgin Group would in turn transfer the firms'
*****ownership stake to new US investors once they had committed, remaining
in compliance with foreign ownership rules.

A person close to Cyrus denied the fund was facing a liquidity squeeze
and said it had not reached its decision on Virgin America, which has
enough capital to fund its growth plans through until 2011.

The San Francisco-based carrier, which operates more than 80 flights a
day to eight destinations, showed enough promise to win almost $100m in
additional capital last autumn. By comparison, the largest US carrier,
Southwest Airlines, offers more than 3,300 flights a day. Virgin America
has raised more than $400m in debt and equity since its founding.

Officials from Virgin Group, Virgin America and Cyrus declined to
comment. Black Canyon could not be reached for comment.

Virgin Group owns 49 per cent of Virgin America, including a 24 per cent
voting stake in the airline -- the maximum allowed under US laws.

Black Canyon and Cyrus hold the remaining equity, and appeared committed
to the business.

The firms have been free to exercise their option since September.

The turmoil that gripped the markets last year has only worsened,
leaving Virgin Group to assume that Black Canyon and Cyrus will put
their Virgin America stake back to raise cash.

Virgin America began service in 2007 after a protracted battle in
Washington over its rights to operate domestic flights and the company's
ties to Virgin Group.

The privately held airline petitioned US transport officials to withhold
important operational data from the public, keeping information from
rivals and fuelling rumours that it has found it difficult to lure
enough passengers to stay in business.

Robert Nisi, Cyrus's chief operating officer, told the Financial Times
last year that the carrier was filling 80 per cent of its available
seats and expected to turn a profit by the second half of this year.
 

BeachBummer

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Wonder how much of 80% is bu!!$#it? Hope you guys make it. Have afew friends there.

GoodLuck
 

Green Banana

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Ya, We are all pulling for you. You make us proud of the profession!
 

Green Banana

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Ah, about a year ago. It was actually a lot of fun. Nice to get a job offer as well. Why, you still stalking me?
 

metroplex

control, I'm here
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yeah, most alpa carriers are so crappy run that they can't keep you employed ....so you have to go somewhere else to put food on the table
 

flyboycmsu

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Spirit will be next..

Guess it does pay to be a public company .. in a way that none of us could have seen coming..
Why such animosity for us? Did we turn you down and now you’re looking at 10+ years in the right seat?
 
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clickclickboom

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Yes i was turned down by spirit. I spent my whole life preparing myself and now my career is over so I have resorted to self fufilling prophecies here on flight info.

Honestly though I have absolutely no animosity towards spirit or any other airline. In my humble opinion spirit will not be a survivor for many of the same reasons stated in the article above and many others that are not listed.

Dont take offense this is flight info.. Please feel free to bash Jetblue all you want. I am just over 100 numbers away from junior 320 Capt.. Could be 2 years or 20 til upograde and nothing i do can change that so it is the least of my worries.
 

kwick

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Hey DickBoom,

If you do your homework you'll see that Jet Blue is on the endangered airline list as
most likely to go out of business in 2009, according to the WSJ and NYT articles.

Why throw stones when your in the most fragile house of all, with your 5 year employment contract.

Sorry you didn't get hired at Spirit, but it might have been your attitude.
 
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clickclickboom

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Boy you spirit guys sure are touchy. But if it makes you feel better to rationalize that I was turned down by your company then so be it.

Inevitably time will bear answers and either discredit or validate your observations.

By the way how much unrestricted cash does spirit have on hand and how financially healthy is Indigo?

Some pieces are missing from the puzzle that show the whole picture but it is pretty easy to figure out if you take a look at the box...

Ask Yourself If i win the battle can I win the war?
 
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curtaindriver

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Hey DickBoom,

If you do your homework you'll see that Jet Blue is on the endangered airline list as
most likely to go out of business in 2009, according to the WSJ and NYT articles.

Why throw stones when your in the most fragile house of all, with your 5 year employment contract.

Sorry you didn't get hired at Spirit, but it might have been your attitude.
kwick,
Please post those articles you refer to, I searched and can't find anything recent stating that. I'm just curious to read the opinions.
Oh, and Jetblue pilots no longer have 5 year contracts, there is no time date on them anymore....just contracts.

Thanks,
CD
 

clickclickboom

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CurtainDriver,

the article he is referring to came out about 8 months ago. It named about 100 compamies and jb was named right on the front page along with krispy kreme, sbarro, eddie bauer, six flags, blockbuster

Of course the article didnt take into account retirement of 710 million in debt, a $100 per barrell drop in spot oil prices or the $900,000,000 increase in year over year revenue. Since the article surfaced JB has been upgraded by analysts twice.


ORIGINAL ARTICLE:

http://www.usatoday.com/money/companies/2008-03-21-sp-weakest-links-list_N.htm


November Update adding JB :

http://www.crainsnewyork.com/apps/pbcs.dll/article?AID=/20081118/FREE/811189982/0/rss01

How about that instead of throwing out insults about " being turned down at a another airline " I provide a factual and unbiased reply regardless of overall personal affiliation.
 

Dizel8

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Huh?
"The situation is also bleak at JetBlue, according to S&P. The airline has $250 million of debt and has posted net losses for four consecutive quarters. Equity analysts surveyed by Thomson Reuters, however, expect JetBlue will return to the black next year."

The debt has been paid down, forecast is for great operating margin in 2009, ancilliary revenue is increasing, revenue growth of 17% vs 4th quarter last year.

Odds are pretty good, that jetblue will be around a bit longer!
 

Green Banana

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Dizel8

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Huh?
Presentation FROM JET BLUE.
Just reporting, don't blame the messenger. Although, the same info was more or less presented in the conference call as of yesterday.

In the current climate, "massaging" the books will more than likely result in jail time, so yes, I do believe the numbers to be correct!
 
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