Virgin America financials.

[ExFokkerFlyer]

Moral here is through the roof.

Really? What company do you work for?

 

[olympus593]

IPO is about growth potential. If Virgin can show consistent profits while fending off attacks from the mega carriers, then VA really has unlimited growth opportunities. Virgin has moved into some of the hardest fought territory in the US. We are not a Spirit or Allegiant that has found niche markets. We are not a Southwest that grew by flying into secondary airports. Virgin goes right into a major hub and offers a better experience for the customer. If we can do Chicago, Dallas, and Newark profitably, what's going to stop us from going into Atlanta, Denver, Charlotte, Minneapolis, etc... United is throwing everything at us in Newark and our planes are still full. Last time I flew to Newark, I had 10 guests tell me as they de-planed that this was the best flight they had ever been on and they never want to fly the competition again. We are the In and Out Burger/Trader Joe's of the airlines. In the Bay Area and LA people rave about us. Moral here is through the roof. Our FAs are young and happy and cost half as much as a legacy FA -- same could be said about our gate agents. What other airline has this much potential for growth?

How is the KOOL-AID?

 

[bri5150]

You see potential in your current company, and all of a sudden you drink kool-aid. Sad. You know it is possible to enjoy the company you work for and have faith in the future. It's okay. As pilots, i guess it is just bred into us to hate our company and just ask for more money.

What in his post is incorrect? (Other than morale. At least with the pilots it is not that high. The rest of the company is fine)

 

[Flyer1015]

How is the KOOL-AID?

Can't be too worse than the Blue Juice you drank a few years ago.

 

[Flyer1015]

Peter Hunt doesn't have a reputation for being honest. It could be that a lot of that $75 million was informally loaned to VX prior to the end of Q1. I don't know and I don't trust Hunt.
I do find it almost impossible that VX could increase cash on hand by $1 million in Q4 with a net loss.
I'm thinking that VX did a bridge loan prior to the $75 million loan, and simply used a large part of the $75 million to pay off the bridge loan.



It sounds like a debt to equity conversion where debtholders were converted to stockholders. And it's likely that only the Virgin Group did that. Hence the 'conditional equity'.
The reason why it's labeled conditional equity is due to the 25% limitation of stock owned by foreign interests. But if you dig a bit deeper in that rule, you'll find that it's 25% voting stock limit to foreigners. So the new stock holdings of Virgin Group is almost certainly nonvoting stock. That's much less valuable stock and there's probably a provision where the stock magically becomes voting stock when sold by Virgin Group.

The devil's in the details and I'll comment further once I have a chance to look at the VX form 41.


The timing of the $75 million loan doesn't make sense. $49 million cash on hand is enough to get through the summer without a problem, especially if losses in Q4 and Q1 total $18 million. Q2 and Q3 are VX's best quarters. That's why I think that a large part of the $75 million was added to the balance sheet prior to the close of Q1. But I really can't prove that until Q2's numbers are released and we can see cash on hand.

In closing, I think I stated that VX would need around $100 million to keep its doors open past 2013. I consider the $75 million to be 'close enough'. If there's an extra $75 million that shows up on Q2's cash on hand, they'll have no problem getting well beyond 2013 and could pull off an IPO after a few decent quarters.

It was confirmed in the all-hands meeting the 75 million is a new thing, well after the first quarter ended. The cash on hand at the end of 4th quarter and 1st quarter is as stated without any help of the 75 million.

 

[ExFokkerFlyer]

Morale is the only question I had... I wouldn't say morale is through the roof when a high percentage (very high) of people I fly with have applications out or are in the process of doing so. We aren't only talking junior people here either...

 

[Andy]

It was confirmed in the all-hands meeting the 75 million is a new thing, well after the first quarter ended. The cash on hand at the end of 4th quarter and 1st quarter is as stated without any help of the 75 million.

I don't think you understand what I'm saying about bridge loans in Q4 and Q1. I suspect that's what got them through and then they paid them off with some or all of the $75 million. There's no mention of other loans because they were paid off with some of the $75 million
Let me put it this way: Q4 and Q1 had a combined net loss of $71.378 million, yet they only burned through $17 million cash? Unpossible; Hunt used some cheap accounting tricks.

I looked at Q4's form 41s today. There's no information for VX. HUGE red flag. That means that they asked for an exemption to submit the data after the due date.

 

[redflyer65]

I'm sure Peter Hunt is having to 're-working' the numbers.

I hope he doesn't try and use derivatives like he did at Pinnacle. What a disaster that turned out to be. They pretty much made the employees pay for his screw up. It was so bad, they cancelled funding the FA's 401k to make their obligations. Peter is one slick dude.

 

[hyflyin]

I don't think you understand what I'm saying about bridge loans in Q4 and Q1. I suspect that's what got them through and then they paid them off with some or all of the $75 million. There's no mention of other loans because they were paid off with some of the $75 million
Let me put it this way: Q4 and Q1 had a combined net loss of $71.378 million, yet they only burned through $17 million cash? Unpossible; Hunt used some cheap accounting tricks.

I looked at Q4's form 41s today. There's no information for VX. HUGE red flag. That means that they asked for an exemption to submit the data after the due date.

So the question is, why do people continue to throw money at VX if it's operating with such shady practices? Are they being taken for ride? Why would Branson take conditional ownership of an operation if it were operating in a shady manner? Other than the assumed "HUGE red flag" senario, is there any other possible reason they didn't file?

Thanks for all the evals.

 

[mvedepo]

Virgin America is closing the doors any day now! They wont be around in a month! Everyone get out while you can! The ship is taking on water at an alarming rate!


Wait. Haven't we been hearing this for 5 1/2 years now? I find it interesting that so many are hell bent on others demise. I've never wished or hoped for someone to be put on the street. Guess it says a lot about ones character.

It also appears that there are more accountants and corporate attorneys on here than pilots. Pretty amazing. lol

 

[Andy]

So the question is, why do people continue to throw money at VX if it's operating with such shady practices? Are they being taken for ride? Why would Branson take conditional ownership of an operation if it were operating in a shady manner? Other than the assumed "HUGE red flag" senario, is there any other possible reason they didn't file?

Thanks for all the evals.

Why do they continue to throw good money after bad? Branson and the rest of the investors are trying to get this pig to an IPO. They have the potential to make a lot of money with an IPO. That simply means that they'll be selling the company to a bunch of new bagholders.

The cash burn here is nothing short of astounding for such a small operation. The last round of additional financing was $150 million in Dec 2011. http://www.bizjournals.com/sanfranc...gin-america-raises-cash-cushion.html?page=all
And now they've gotten another $75 million just one year later. Wow.

As far as not releasing the Q4 numbers to DOT, VX has given as a reason in the past that competitors would take advantage of the information and they requested that the release be delayed by several months compared to other carriers. The DOT allowed that for a while but finally put a stop to allowing them to delay release of their numbers.
I guess that Peter Hunt's debating on how much lipstick to put on the pig without going to jail.


The one bright spot that I saw is that VX'sr yields have improved significantly. The tradeoff was a small drop in load factors, but the yield difference more than offset the lower load factor. That's the first smart thing that I've seen from this company.

 

[bri5150]

Still nothing but doom and gloom. Cfo says we are having the best 2q in the history of this company and hinted at possible net profit. Still nothing but doom and gloom.

 

[ExFokkerFlyer]

deleted

 

[Andy]

Still nothing but doom and gloom. Cfo says we are having the best 2q in the history of this company and hinted at possible net profit. Still nothing but doom and gloom.

Let me be clear. Your CFO is not someone to be trusted. He has a long history of being dishonest and behaving in an unethical manner. 'Possible' net profit? Even after your quasi-bankruptcy (aka restructuring) that eliminates $20 million in debt payments/quarter?

If you think that $225 million in additional financing in 15 months isn't a problem, I'd hate to see your personal finances.

Again, show me the form 41.

 

[LoveGun]

OK, so VA has duped our investors out of nearly $1 billion and Branson stands to make "a lot of money" from an IPO. This sounds like the biggest con since Bernie Madoff. Someone should alert the SEC before things get out of control. Andy, this is your chance at fame and fortune. Get to work now on the book! You've already done the research. You're halfway there.

 

[Andy]

OK, so VA has duped our investors out of nearly $1 billion and Branson stands to make "a lot of money" from an IPO. This sounds like the biggest con since Bernie Madoff. Someone should alert the SEC before things get out of control. Andy, this is your chance at fame and fortune. Get to work now on the book! You've already done the research. You're halfway there.

Wow. You fly for them and don't even know their Airline Designator Code? VA is Virgin Australia, Einstein. http://www.virginaustralia.com/au/en/about-us/legal-policies/conditions-of-carriage/

It's not 'nearly' $1 billion; VX has 'only' burned through a bit more than $700 million CASH. That's not creative accounting; that's simply investor cash; the guys pushing for the IPO.

And as far as this goes, this is pretty normal business operations for the ethically challenged. The airline industry seems to be a magnet for ethically challenged management.
If you do a bit of research Sir Richard Branson, you will find plenty of times that he's been ethically challenged. Including not paying taxes that he was collecting on his record business until he got caught and was almost prosecuted for it; he was arrested and jailed for a day. The charges were dropped after his mother mortgaged her house to pay the back taxes.

 

[LoveGun]

Andy, that's why you're going to be the guy writing the book and I'm just a stupid airline captain -- you know your two letter codes! Editors love that attention to detail.

I can't wait to see your first CNBC interview... "Today we have as our guest Andy. He's a well known airline forum guru and the author of the current best seller 'Virgin?! The Not So Immaculate Conception'..."

 

[Andy]

I can see that my previous response was too complex for you to grasp. So let me state it more simply. If you're not intelligent enough to even know your own airline's designator code, you are definitely not intelligent enough to discuss the topic at hand. Better to remain silent and ...

Ignore everything I've written; there's no financial turbulence ahead for VX. War is peace, freedom is slavery, ignorance is strength. You are a flag bearer for an Orwellian utopia.

 

[bri5150]

Well Andy, you did say at one point there was no possible way we could have made an operational profit 4q2012. Yet, here we are. Is it possible you don't have all of the financial inner workings of VX? Also, is it possible he uses the VA abbreviation with friends and family because it is easier and it just slipped on the forum here?

 

[Flyer1015]

I don't think you understand what I'm saying about bridge loans in Q4 and Q1. I suspect that's what got them through and then they paid them off with some or all of the $75 million. There's no mention of other loans because they were paid off with some of the $75 million
Let me put it this way: Q4 and Q1 had a combined net loss of $71.378 million, yet they only burned through $17 million cash? Unpossible; Hunt used some cheap accounting tricks.

I looked at Q4's form 41s today. There's no information for VX. HUGE red flag. That means that they asked for an exemption to submit the data after the due date.

The DOT released this on May 14:

Tuesday, May 14, 2013
Largest Airlines Report Smaller Net Loss in 4th Quarter of 2012

Largest airlines. The DOT hasn't included VX in largest airline.

They have included them in LCC releases:

March 12, 2012
3rd-Quarter 2011 Airline Financial Data: Network Airlines, Low-Cost Airlines and Regional Airlines All Report Profits

as an example.