Virgin America Cuts Airbus Order, Delays 30 Jets

[Flyer1015]

Relax, I am still at my Major airline with a 12 year upgrade, my pension, and ALPA chest-thumpers. All those predictions have come true. I am now on 5 yr pay and off reserve. You are correct. If I took the VA offer I would be a senior captain. The fact is my airline just ordered 50 more aircraft to be delivered before VA gets its first NEO and is making more money than any time in its 80 year history. VA has lost $800,000,000.00 and is deferring aircraft. Was it the right choice? Ask me when I retire. I'm comfortable with my choice so far.

What airline is this? Alaska? I wouldn't leave Alaska for VA.

 

[Green Banana]

What airline is this? Alaska? I wouldn't leave Alaska for VA.

I was trying to make the decision in 08'
VA was just a year old and I was just off 1st yr pay at AS. I applied to both companies at the same time and AS just called first. This whole profession is mostly timing and luck. We really have no control of the rise and fall of airlines themselves, just the airplanes.

 

[Flyer1015]

I was trying to make the decision in 08'
VA was just a year old and I was just off 1st yr pay at AS. I applied to both companies at the same time and AS just called first. This whole profession is mostly timing and luck. We really have no control of the rise and fall of airlines themselves, just the airplanes.

I agree, well said. If I was at Alaska, I wouldn't leave it for VA, even in 2008.

 

[tzskipper]

He was spot on Gilligan.

A point that seems to be missed (from my understanding) in the usual FI analysis, is that as a privately owned company VA's debt is owed to it's investors, and that the debt service that pushes the operating income into a net loss, is paid to those same investors. If (when) VA gets to an IPO, the investors cash out and the debt service is reduced due to the reduction in debt. In their eyes, the debt that the company has accumulated as it has grown since inception, will become equity in an IPO.

FWIW.

S

 

[NoPFactor]

A point that seems to be missed (from my understanding) in the usual FI analysis, is that as a privately owned company VA's debt is owed to it's investors, and that the debt service that pushes the operating income into a net loss, is paid to those same investors. If (when) VA gets to an IPO, the investors cash out and the debt service is reduced due to the reduction in debt. In their eyes, the debt that the company has accumulated as it has grown since inception, will become equity in an IPO.

FWIW.

S

One little problem with your theory. No company has ever offered an IPO when riddled with debt and has lost $800,000,000.00 since it's inception.
The financial institutions required to IPO wouldn't even talk to them.

 

[jonjuan]

One little problem with your theory. No company has ever offered an IPO when riddled with debt and has lost $800,000,000.00 since it's inception.
The financial institutions required to IPO wouldn't even talk to them.

A "minor" point often missed here on FI. Ain't no way an ipo is happening.

 

[Flyer1015]

"Ain't no way" = it is happening. Don't be using no double negatives.

 

[Splert]

...the debt that the company has accumulated as it has grown since inception, will become equity in an IPO.

Your wires are crossed and you have been to too many leadership spin sessions.

Equity in an IPO is NEW cash from NEW investors like me and you. We take money out of our pockets and buy a new share or 2 of VA. What VA decides to do with this shareholder equity (new cash) is up to them. They can buy jet A or aircraft or retire debt.

My guess is they will need the new equity for daily expenses NOT capital expenses or debt reduction.

Good luck to VA's employees.

 

[bri5150]

Your wires are crossed and you have been to too many leadership spin sessions.

Equity in an IPO is NEW cash from NEW investors like me and you. We take money out of our pockets and buy a new share or 2 of VA. What VA decides to do with this shareholder equity (new cash) is up to them. They can buy jet A or aircraft or retire debt.

My guess is they will need the new equity for daily expenses NOT capital expenses or debt reduction.

Good luck to VA's employees.

That makes no sense. The issue is the debt, not daily expenses. We made $12 mil this quarter with just paying daily expenses. I am not sure why people here want VA to go away. They don't seem to have a problem with other airlines existing. Everyone bitches that customer sevice is gone, they bitch about wearing hats and ties, they bitch the fa's are triple g's (we have two covered at least), but now an airline comes around that takes care of all that and they want it gone. Whatever, I guess I should stop trying to figure out FI.com.

 

[fam62c]

A point that seems to be missed (from my understanding) in the usual FI analysis, is that as a privately owned company VA's debt is owed to it's investors, and that the debt service that pushes the operating income into a net loss, is paid to those same investors. If (when) VA gets to an IPO, the investors cash out and the debt service is reduced due to the reduction in debt. In their eyes, the debt that the company has accumulated as it has grown since inception, will become equity in an IPO.

FWIW.

S

I don't know for sure but I would think that VA is leveraged meaning that in addition to the equity capital put in by the investors there is debt capital (borrowed money) as well. To say that "as a privately owned company VA's debt is owed to it's investors" is probably false, equity and debt investment are two different things. If VA failed tomorrow the debt holders would have the first crack at repayment from company assets. Until the debt holders were made whole the owners would get nothing. The owners may be putting in additional money to make the debt payments if the operation has a shortfall (which it certainly does) I would be surprised if there was no leverage involved here but I could be wrong.

In the event of an IPO it's very unlikely that outside lenders would convert their debt to equity because equity is not backed by collateral and comes with no guarantee of return. I would think that right now the company has a negative net worth and the owners don't really own anything. The day the investors stop adding new capital to fund losses is the day VA is done for.