Virgin America may seek public offering next year, CEO says

[n757st]

Sure is a good thing we have all of the "Experts" here on FI telling us that ..."anyday now, they are going to pull the plug at Virgin." Hate to break it to ya boys/girls, NOT GOING TO HAPPEN!! Now go back to your regularly scheduled programming. (hating your jobs...pissed off at all of the grandes and grannies you fly with etc.)

We are a cocky one aren't we. Tomct, if virgin was to IPO tomorrow would you invest your money in the company?

 

[Chairman]

We are a cocky one aren't we. Tomct, if virgin was to IPO tomorrow would you invest your money in the company?

No more cocky then everyone telling us for the last 5 years we are going to close our doors....Takes a boat load of money and investment to start and airline, open new cities and fund growth. The company will go public and we will post a profit as growth is slowing this year. Investors are making returns on there money. They have invested in expanding HQ and bringing out sim training 100% in house. Just getting tired of year after year watching everyone else be wrong about what is really going on at the company they don't work at..

That is all,

Chairman

 

[Ralph Cramden]

We are a cocky one aren't we. Tomct, if virgin was to IPO tomorrow would you invest your money in the company?

No one in his/her right mind would ever put money in any airline.

Listen to the oracle of Omaha, he knows a thing or two about investing.

I will accept the promised IPO cash, but am not taking out a loan in advance of it, or planning for it to be a big windfall.

 

[ualdriver]

No one in his/her right mind would ever put money in any airline.

Listen to the oracle of Omaha, he knows a thing or two about investing.

I will accept the promised IPO cash, but am not taking out a loan in advance of it, or planning for it to be a big windfall.

Wait, your management promised you guys cash from a future IPO? What exactly was promised to VA pilots if an IPO were to happen? Do VA pilots have an equity stake in this private company? Or is it one of those "super secret" deals that you guys aren't allowed to talk about?

 

[LoveGun]

Wait, your management promised you guys cash from a future IPO? What exactly was promised to VA pilots if an IPO were to happen? Do VA pilots have an equity stake in this private company? Or is it one of those "super secret" deals that you guys aren't allowed to talk about?

The employees own 16.5% of the company. However $100 million was borrowed against the employee's share. At IPO the employee's share will be sold and the loan paid from the proceeds. Any funds remaining are to be paid in cash to the employees. The last time management posted an estimate of employee payout at IPO (a year or two ago - i can't remember) they put up a chart with payouts ranging from $2000 to $30,000. The pay out amount depended on employee longevity and current salary. This info was provided at a company wide meeting a long time back. Since then things could've changed, and my memory of the exact numbers is a bit foggy.

 

[ualdriver]

The employees own 16.5% of the company. However $100 million was borrowed against the employee's share. At IPO the employee's share will be sold and the loan paid from the proceeds. Any funds remaining are to be paid in cash to the employees. The last time management posted an estimate of employee payout at IPO (a year or two ago - i can't remember) they put up a chart with payouts ranging from $2000 to $30,000. The pay out amount depended on employee longevity and current salary. This info was provided at a company wide meeting a long time back. Since then things could've changed, and my memory of the exact numbers is a bit foggy.

Interesting. I'm surprised they could borrow against the employees' shares, unless all of you gave them permission or these shares are just a "verbal" promise.

 

[ackattacker]

The employees own 16.5% of the company. However $100 million was borrowed against the employee's share. At IPO the employee's share will be sold and the loan paid from the proceeds. Any funds remaining are to be paid in cash to the employees. The last time management posted an estimate of employee payout at IPO (a year or two ago - i can't remember) they put up a chart with payouts ranging from $2000 to $30,000. The pay out amount depended on employee longevity and current salary. This info was provided at a company wide meeting a long time back. Since then things could've changed, and my memory of the exact numbers is a bit foggy.

Very interesting. Let's run some back of the envelope calculations.

Employees own 16.5% of the company, and their share was used as collateral for a $100 million loan. This being a few years ago? The numbers may have changed significantly for the worse, but that implies that at the time, if the company had an IPO, they would have to raise a minimum of $606 million just to pay off that loan. Any payouts to the employees and investors would require *significantly* more than $606 million.

Again, keep in mind JetBlue's total market capitalization is $1.36 billion and they have a fleet size of 172, total revenue of $4.5 billion and are doing well.

At the time that JetBlue went public in 2002, they had $320 million in annual revenue, $27 million in annual profit, and raised only $158 million in their IPO. Which was considered wildly successful because they weren't deeply in debt and $158 million was perfectly fine. For VX such an IPO would be disastrous.

At present VX has a fleet size of 52 and a total revenue of around $1 billion and are losing money. They are expecting to reach a fleet count of 111 by 2019... If that happens, and they don't lose a single dime between now and then, then possibly they could have a successful IPO. Maybe.

I'm just saying there's simply no way in hell it's going to happen in 2013 or even 2014. The fact that the company would even suggest it is a possibility is a huge red flag to me. The numbers say it's not even anywhere close to being feasible.

 

[fam62c]

Any private company that wants to go public has to demonstrate a track record of profitability along with other criteria. Not going to happen with VA for a while. Fact remains since their first revenue flight on August 8, 2007 VA has not made money and has had to borrow cash just for day to day working capital.

Nah, plenty of dotcoms did IPO's in the 1990"s without ever earning a penny. However, from a practical standpoint what you say is true if they want to have any chance of generating enough money to make an IPO worth it. To have a successful IPO you need either a very successful business or a very "hot" category like tech or social media at the right time. VA is neither, it's a money losing company in a troubled industry. They wouldn't be able to generate much capital from an IPO, the company isn't worth anything unless maybe fuel prices crash in a huge way. The current investors are stuck and are throwing more money into the fire to fund losses. I'm not sure what they think is going to happen here but who knows if they can wait it out long enough.

 

[Chronic Jetlag]

Nah, plenty of dotcoms did IPO's in the 1990"s without ever earning a penny. However, from a practical standpoint what you say is true if they want to have any chance of generating enough money to make an IPO worth it. To have a successful IPO you need either a very successful business or a very "hot" category like tech or social media at the right time. VA is neither, it's a money losing company in a troubled industry. They wouldn't be able to generate much capital from an IPO, the company isn't worth anything unless maybe fuel prices crash in a huge way. The current investors are stuck and are throwing more money into the fire to fund losses. I'm not sure what they think is going to happen here but who knows if they can wait it out long enough.

Yep, the current investors are from private equity firms with put options just like the initial private equity firms that originally funded VA from day one. They already exercised their put options and got their money back plus %. VA is borrowing $ for day to day working capital at a very expensive rate, the full terms do not have to be disclosed because they're private..

 

[Flyer1015]

I love the analysis by pilot financial gurus. Thanks!

 

[jayme]

VA is borrowing $ for day to day working capital at a very expensive rate, the full terms do not have to be disclosed because they're private..

Really? What's the "expensive" interest rate? What's your source?

I call BS.

 

[Pogue Mahone]

I love the analysis by pilot financial gurus. Thanks!

No kidding. If pilots they were smart they wouldn't be pilots, they would be CEOs, but they are not, so they are pilots. Thanks goodness they have web boards so they can post things that make them feel smart.

It's a great job but pilots are among the biggest bunch of self-aggrandizing, wannabe CEO, CFO, investment banker, hedge fund analyst (insert professional) dipsh1ts in the world.

I have read the same bullsh1t from the same web tards about so many different topics over the years, I am amazed I ever login. It's the same conversations and arguments over and over and over.

I remember was United was "going to liquidate" and Dal, and Cal and you name it. Who gives a sh1t.

Quit having the same conversations would ya?

 

[ualdriver]

No kidding. If pilots they were smart they wouldn't be pilots, they would be CEOs, but they are not, so they are pilots. Thanks goodness they have web boards so they can post things that make them feel smart.

It's a great job but pilots are among the biggest bunch of self-aggrandizing, wannabe CEO, CFO, investment banker, hedge fund analyst (insert professional) dipsh1ts in the world.

I have read the same bullsh1t from the same web tards about so many different topics over the years, I am amazed I ever login. It's the same conversations and arguments over and over and over.

I remember was United was "going to liquidate" and Dal, and Cal and you name it. Who gives a sh1t.

Quit having the same conversations would ya?

Actually, I think if many pilots weren't pilots, they would probably hold leadership positions like the ones you mention. Most pilots are pretty smart, educated, work hard to get to where they are, and certainly capable of holding positions of responsibility.

That having been said, you don't have to be a genius to look at the numbers VA has made public and see that something is terribly wrong.

 

[slavenaway]

Ya think?

 

[Flyer1015]

Actually, I think if many pilots weren't pilots, they would probably hold leadership positions like the ones you mention. Most pilots are pretty smart, educated, work hard to get to where they are, and certainly capable of holding positions of responsibility.

That having been said, you don't have to be a genius to look at the numbers VA has made public and see that something is terribly wrong.

If things were terribly wrong, this place would have imploded already. But every year since VA operated, there have always been predictions that it was going away 'very, very soon.' You, nor anyone else here, do not know what goes on in the minds of the investors of this airline. One thing that is fact is that the airline is making money on its matured routes. If they wanted to just post a profit, we'd stop growing (defer deliveries), stop new city growth, and focus only on mature markets and post a profit. But the Board and the investors have a vision for this airline, have the financial analysis done to support the ideas that they have for this place.

 

[ualdriver]

If things were terribly wrong, this place would have imploded already. But every year since VA operated, there have always been predictions that it was going away 'very, very soon.' You, nor anyone else here, do not know what goes on in the minds of the investors of this airline. One thing that is fact is that the airline is making money on its matured routes. If they wanted to just post a profit, we'd stop growing (defer deliveries), stop new city growth, and focus only on mature markets and post a profit. But the Board and the investors have a vision for this airline, have the financial analysis done to support the ideas that they have for this place.

Got it. Your Board and its investors have a vision so everything is OK. Thanks for straightening things out for me.

 

[Chairman]

Got it. Your Board and its investors have a vision so everything is OK. Thanks for straightening things out for me.

Sure hope things work out for you....Delta has a TA regardless of UAL's BK rates and years without a contract. I would not be so quick to keep throwing pies and the clown....For years now we have said if your right you have nothing to worry about as we will be out of business and it's such a bad place to work everyone will leave when my UAL recall comes. I will love to come back to the bottom feeding $32hr I was making..

 

[ualdriver]

Sure hope things work out for you....Delta has a TA regardless of UAL's BK rates and years without a contract. I would not be so quick to keep throwing pies and the clown....For years now we have said if your right you have nothing to worry about as we will be out of business and it's such a bad place to work everyone will leave when my UAL recall comes. I will love to come back to the bottom feeding $32hr I was making..

Chairman

Maybe this new UAL contract needs to keep those bottom feeding $32/hr rates so that we can better compete with nonunion, undercutting carriers like VA and others that will pop up in the future?

Let me ask you a question as a United furloughee who I assume is looking at the rates offered at airlines like SWA and Delta (and hopefully United)...... Knowing that VA is using undercutting, nonunion wages to help subsidize their low fares in an attempt to gain market share, do you hope that VA is successful in this undertaking? Do you hope that VA is successful in their new DCA route where it will compete directly against United? If you did come back to United or get hired at one of the better airlines out there, would you be OK with VA pilots coming in at payrates significantly lower than this round of pattern bargaining will likely yield for all of us? What if airlines like VA grew at your new airline's expense and that six figure narrowbody first officer job disappeared because your airline couldn't compete with an airline like VA and their discount airline wages?

I think we both know the answers to the above questions. Perhaps you shouldn't be attacking a guy who may be going out on strike (hopefully) in a few weeks in an attempt to raise those wages you are criticizing while your peers at VA sit on their collective butts and do nothing to further the profession?

 

[Tomct]

Chairman

Maybe this new UAL contract needs to keep those bottom feeding $32/hr rates so that we can better compete with nonunion, undercutting carriers like VA and others that will pop up in the future?

Let me ask you a question as a United furloughee who I assume is looking at the rates offered at airlines like SWA and Delta (and hopefully United)...... Knowing that VA is using undercutting, nonunion wages to help subsidize their low fares in an attempt to gain market share, do you hope that VA is successful in this undertaking? Do you hope that VA is successful in their new DCA route where it will compete directly against United? If you did come back to United or get hired at one of the better airlines out there, would you be OK with VA pilots coming in at payrates significantly lower than this round of pattern bargaining will likely yield for all of us? What if airlines like VA grew at your new airline's expense and that six figure narrowbody first officer job disappeared because your airline couldn't compete with an airline like VA and their discount airline wages?

I think we both know the answers to the above questions. Perhaps you shouldn't be attacking a guy who may be going out on strike (hopefully) in a few weeks in an attempt to raise those wages you are criticizing while your peers at VA sit on their collective butts and do nothing to further the profession?

And YET, once again UAL continues to talk out of his other HOLE! With your "All mighty knowledge" I thought for SURE you would know that a Union Drive is currently underway at VX. But of course, you are too stubborn and foolish to look much further than the end of your nose. I can't wait for the BS to start then....WHEN are you guys going to get a contract....blah....blah....blah! If the UNION (ALPO) had been doing its job in the first place, it would have become a NATIONAL Union for ALL CARRIERS and created ONE seniority list, but instead, just likes taking everyone's money (mine included at previous carrier) and NOT working for the pilots! It has become a business to them and nothing more. 8-10 times they are siding with mgmnt of the airlines and continually screwing with the pilots! I hope DALPA leaves and creates it's own union and lets ALPA fall into the fire! There needs to be a house cleaning at that place and a new and different Union started! One that actually works for the PILOTS!
Now....Back to your regularly scheduled "Pitty Party!" :crying:

 

[ualdriver]

And YET, once again UAL continues to talk out of his other HOLE! With your "All mighty knowledge" I thought for SURE you would know that a Union Drive is currently underway at VX. But of course, you are too stubborn and foolish to look much further than the end of your nose. I can't wait for the BS to start then....WHEN are you guys going to get a contract....blah....blah....blah! If the UNION (ALPO) had been doing its job in the first place, it would have become a NATIONAL Union for ALL CARRIERS and created ONE seniority list, but instead, just likes taking everyone's money (mine included at previous carrier) and NOT working for the pilots! It has become a business to them and nothing more. 8-10 times they are siding with mgmnt of the airlines and continually screwing with the pilots! I hope DALPA leaves and creates it's own union and lets ALPA fall into the fire! There needs to be a house cleaning at that place and a new and different Union started! One that actually works for the PILOTS!
Now....Back to your regularly scheduled "Pitty Party!" :crying:

The industry looks forward to VA showing us all "how it's done." I won't hold my breath.