HermannGraf

In Europe it takes at least 5 years operating with loss before even thinking about making a profit when starting an Airline and these first 5 years are seen as normal investment time.

Virgin america is showing better than expected numbers and the budget is if I recall to make a yearly $250 million loss per year the first 3 operating years. I dont know in what fiscal year they are at the moment.........

Loadfactor numbers is extremly important in a startup even if operating with loss. This to establish the brand and get the operation going. Growth and more effective operations gives the profit after a few years if loadfactor numbers are good........ticket prices etc can always be changed when the brand is established but if you do not have the loadfactor you cannot do anything........

The Duke

I agree w/ you that the business models are different but I could have sworn that SkyBus had quite a bit of start-up capital...maybe even more than JetBlue if I remember correctly. Even w/ the high-paying transcon consumers, I wonder if this economy will sustain the sort of demand necessary to keep so many transcon flights in operation...what are the load factors looking like @ VA? Will they be able to compete w/ other carriers offering transcons w/ the same points of origin? Why did VA try to keep certain financial data private while other, similar carriers made the same data public knowledge?

Moose

That is insane. I cannot see how a budget or business plan could sell itself on losing 3/4 of a billion dollars in three years on the "hope" it will become profitable. Also, if VA is successful it would take well over a decade plus to make that money back.

cal73

I remember hearing the same "plan" when independence started ops. Something to the effect of " a loss for 1-2 years is expected".

Fred Flintstone

Well well, at least our loss reporting puts us in the majors board...

alvrb211

European airlines have much higher labor costs per ASM than US airlines!

Apples and oranges!

AL

JetFlyer06

Skybus had over $160 million in startup capital...

Skybus Airlines Completes Second Financing Round; Startup Has Raised 0 Million+ As It Nears Launch - Business - redOrbit

Posted on: Monday, 2 April 2007, 18:00 CDT

COLUMBUS, Ohio, April 2 /PRNewswire/ -- As it prepares to start operation this Spring, Skybus Airlines has completed a second round of financing of $72.7 million, bringing to approximately $160 million the total amount raised by the Columbus-based startup airline. This is in addition to the previously reported $57 million of state and city funding and incentives.
"The confidence shown in Skybus by the business community in Columbus and major financial institutions in New York and Boston is a terrific endorsement of our business model - which uniquely focuses on delivering great destinations at extremely affordable prices with brand new aircraft and non stop flights, " said Bill Diffenderffer, Skybus CEO.
Josh Connor, a Managing Director at Morgan Stanley specializing in Aviation Banking, said, "Skybus has been remarkably successful at raising its initial startup capital. The company has raised more than $160 million in equity capital, which is among the highest of any independent airline startup in history.
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"Skybus was fortunate to be raising its latest round at a time with robust investor interest in the airline sector," Connor said "Also, investors like that Skybus has done what they said they would do: create an extremely efficient operating model and a great value proposition for travelers. They have an A+ group of investors."
Funds in the most recent round of financing came primarily from a large number of institutional investors with multi-billion dollar portfolios. Several of the principals of these institutions are members of Skybus' Board of Directors. Skybus Chairman Bob Kidder, a former CEO of Duracell and Borden Chemical said of Skybus' Board, "We are fortunate to have so many very talented and successful business leaders willing to sit on our Board - we all know we have an unusual opportunity to create something special."
Skybus - the next generation of low-fare airlines - plans to begin service from its Port Columbus International Airport base later this spring. While specific destination cities have not been announced, Skybus will fly nonstop flights on full-size Airbus A319 jets to markets on the East Coast, the West Coast, the Southeast, the Midwest and the Pacific Northwest.


Skybus Airlines
CONTACT: Bob Tenenbaum for Skybus Airlines, +1-614-573-1377,[email protected]

IndyAir Guy

independence air was the most heavily funded start up airline in world history with $400 million and we did expect to operate at a loss for several years. We thought we had enough cash to last long enough. Also we thought United would have no choice but to keep some of our RJs flying for them. We where wrong. When oil went up to the ungodly high price of $40 a barrel we just couldnt afford it. Our load factor for the first year was also extremely low due to operating 300 flights daily on day 1.

I think VX could make it in a different economic environment. Now is the time to invest in raw materials, oil, steel, minerals, ect. You buy it and it will go down in value but thats it. When the world's economy turns around you then sell it to the Chines and make a killing. With an airline you buy it, it goes down in value and then they want another $100 million and then another $100 million ect, ect. Your investment is not a fixed cost. For almost a decade now investors have been dumping money that they will most likely never see again into the airlines. Darwin has eliminated most of these investors and the oasis has dried up. If an airline needs more cash and they have nothing to sell it will be a difficult time for them.

Best of luck to Sir Richard and his boys

tsquare

Remember.. Outsourcing is good for America... THAT is the ultimate cherry on top of his sundae.