Virgin America cutting capacity during Winter, offering leaves

[LoveGun]

Imagine a scenario where I start a business... say a lemonade stand. I borrow $100 from my dad to build the stand, and pay him back $1 a day in interest. Every day I sell 3 lemonades for $.50 each, and each one costs me $.25. At the end of the day I've made an "operating profit" of $.75. After I pay back my dad his $1, I've lost $.25 each day. This is my net loss. Keep this up in the long term, and my total debt just keeps increasing (reverse compound interest). This is the position Virgin America is in now. If they want to make it long term, they need to do a lot better.

More accurately stated.... Imagine a scenario where you have 100 dollars in your pocket and you use it to start a lemon aid stand. You set up the lenomaid stand as an LLC and pay yourself an exorbitant Interest rate on the 100 dollars the lenomaid stand borrowed. The lemonaid stand is profitable when you account for only the price of water, sugar and lemons, but when you figure in the cost of the interest you are paying to yourself, the lemonaid stand is no longer profitable. That's OK because the lemonaid stand now doesn't pay any corporate income tax. All the proceeds are taxed at the much lower capital gains tax rate. You can also tell the employees of your lemonaid stand that you are too poor to pay them industry standard wages because no one has enough attention span to understand your voodoo accounting practices. Years later during an economic boom cycle you IPO the lemonaid stand and sell it to wall street investors for $300.

 

[Mr.B]

yep... sure did.

Hey....when are you guys opening your windoww again?

 

[jonjuan]

More accurately stated.... Imagine a scenario where you have 100 dollars in your pocket and you use it to start a lemon aid stand. You set up the lenomaid stand as an LLC and pay yourself an exorbitant Interest rate on the 100 dollars the lenomaid stand borrowed. The lemonaid stand is profitable when you account for only the price of water, sugar and lemons, but when you figure in the cost of the interest you are paying to yourself, the lemonaid stand is no longer profitable. That's OK because the lemonaid stand now doesn't pay any corporate income tax. All the proceeds are taxed at the much lower capital gains tax rate. You can also tell the employees of your lemonaid stand that you are too poor to pay them industry standard wages because no one has enough attention span to understand your voodoo accounting practices. Years later during an economic boom cycle you IPO the lemonaid stand and sell it to wall street investors for $300.

Or you hire a lenomaid drinking employee to spin your company's survival on a public message board in an effort to appease those who are thinking about leaving because "the sun will come put tomorrow.". Heck, just look at how much $$$ was raised in past ipo's, to include toiletbrush.com. People dumping money into ipo's won't care if it's an airline, they'll just know they'll make Meeelions.

 

[Splert]

More accurately stated.... Imagine a scenario where you have 100 dollars in your pocket and you use it to start a lemon aid stand. You set up the lenomaid stand as an LLC and pay yourself an exorbitant Interest rate on the 100 dollars the lenomaid stand borrowed. The lemonaid stand is profitable when you account for only the price of water, sugar and lemons, but when you figure in the cost of the interest you are paying to yourself, the lemonaid stand is no longer profitable. That's OK because the lemonaid stand now doesn't pay any corporate income tax. All the proceeds are taxed at the much lower capital gains tax rate. You can also tell the employees of your lemonaid stand that you are too poor to pay them industry standard wages because no one has enough attention span to understand your voodoo accounting practices. Years later during an economic boom cycle you IPO the lemonaid stand and sell it to wall street investors for $300.

Someone is snorting the lemonade.

VA owes interest to a hedge fund whose clients want their ROI into the hedge fund NOT VA.

Are you 12 years old?

 

[Chairman]

Splert we can go all the way back to SKYW days of when you have been wrong. Who owns the lease to the airplanes.....Many of the same investors....Who buys the airplanes and then sells them to the investors.....Lots of fuzzy math to keep cash coming and investors happy.

 

[Splert]

Splert we can go all the way back to SKYW days of when you have been wrong. Who owns the lease to the airplanes.....Many of the same investors....Who buys the airplanes and then sells them to the investors.....Lots of fuzzy math to keep cash coming and investors happy.

Why defer a golden goose cash flow machine to 2020?

 

[Chairman]

Why defer the cash flow machine to 2020?

Guess we both will see if I am wrong I will be on the unemployment line so what do you have to loose. I didn't go to airline management school and we all pilots are always the smartest in the room. Have plenty of friend who felt when JB did the same thing pushing orders back in early 2006 were worried of there demise too. But shortly there after came the rate increase although I will keep my insurance. Like any good movie we will see. Just I am staring in it and you are watching.

Cheers,

Chairman

 

[LoveGun]

Someone is snorting the lemonade.

VA owes interest to a hedge fund whose clients want their ROI into the hedge fund NOT VA.

Are you 12 years old?

Really? Do you know the structure of Cyrus Capital? I'm pretty sure it's just one old guy rich guy named Cyrus and maybe his son. It's not exactly Berkshire Hathaway. But, I could be wrong. Try to find some info about Cyrus Capital and Cyrus Freidheim. There's not much out there. I've heard rumors he's linked to Texas Pacific Group, but that's just rumors. The guy keeps a low profile.

 

[Splert]

Good luck guys ...

 

[HA25]

Hey....when are you guys opening your windoww again?

I understand to expect that as soon as the 30 or so hires are done early next year.... maybe around May.