Virgin America cutting capacity during Winter, offering leaves

[Flyer1015]

"Virgin America also reported that its third-quarter net loss widened to $12.6 million from $3.3 million a year earlier."

Or not....

Operating profit was nearly 16 million. That's the airline's operations itself. Every quarter, they pay back investors. It was always listed as "other expenses" but now for the first time it's listed as "interest expense, net." In the profitable quarters, they pay back the investors a certain amount. For "other expenses" it's always been a shell game. The airline's profits were used to pay the investors back a small amount every time.

 

[ackattacker]

Operating profit was nearly 16 million. That's the airline's operations itself. Every quarter, they pay back investors. It was always listed as "other expenses" but now for the first time it's listed as "interest expense, net." In the profitable quarters, they pay back the investors a certain amount. For "other expenses" it's always been a shell game. The airline's profits were used to pay the investors back a small amount every time.

I don't think you understand the financial reports correctly, or you are blinded by wishful thinking.

You cannot pay back investors with money you don't have. Every dollar Virgin America has, every asset they own, every penny, is borrowed. There has never been a profit to speak of. The only way they can "pay back their investors" is by borrowing money from a different investor. "Interest Expense" is exactly what it sounds like... interest on their debt. "Other expenses" was also interest expense. They only changed the name. If you've been paying attention, you'll have noticed that the expense has gone up every single quarter they've been in existence. This is because their debt has gone up every single quarter and hence their service on the debt. If they were "paying back their investors" beyond the required interest payments, their debt would be going down, not up.

An "operating profit" will never, ever, pay off the debt. The debt will continue to grow. Only net profit can pay down the debt.

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.

 

[redflyer65]

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.

BINGO!

You can easily ride an 'operating profit' right into bankruptcy. Continued quarter losses are what matter....and cash on hand.

 

[clickclickboom]

Shut it down in the spring. Right when the other airlines gear up hiring with age 65.. You guys will be online before the kids go back to school and it will be the bigest favor anyone ever did for you.

Also dont waste your time with JB. You get sick or injured you will be bankrupt in 6 months..

 

[Flyer1015]

I don't think you understand the financial reports correctly, or you are blinded by wishful thinking.

You cannot pay back investors with money you don't have. Every dollar Virgin America has, every asset they own, every penny, is borrowed. There has never been a profit to speak of. The only way they can "pay back their investors" is by borrowing money from a different investor. "Interest Expense" is exactly what it sounds like... interest on their debt. "Other expenses" was also interest expense. They only changed the name. If you've been paying attention, you'll have noticed that the expense has gone up every single quarter they've been in existence. This is because their debt has gone up every single quarter and hence their service on the debt. If they were "paying back their investors" beyond the required interest payments, their debt would be going down, not up.

An "operating profit" will never, ever, pay off the debt. The debt will continue to grow. Only net profit can pay down the debt.

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.

I'm amazed you are smart enough to write that but can't figure out that what "binding" really means.

Consider this scenario, the operating income was $15.8 million and the interest expense to investors was $28.45 million, for a "net" loss of $12.6 million. Since money can't be produced out of thin air, if your profit can't pay the investors off for the interest on the debt, then it must come out of your cash on hand. At the end of quarter 2, there was 82 million and now at the end of quarter 3, the cash on hand is 75 million. That's a 7 million reduction, but "somehow" paid the investors 12.6 million. It's a shell game, I think there's a lot more going on behind the scenes.

 

[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.