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Breakingviews: Virgin America's sky-high optimism

Friday, August 08, 2014 - 03:33

The airline reckons it should be worth $1 bln after its IPO. Antony Currie and Christopher Swann explain that'll require impressive growth in an industry with a penchant for losing money.

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So virgin America is the latest of Richard -- and -- a look at doing public. It's recently filed excuse exchange commission it's not the best looking for album -- -- I just won a profit it's. Pretty cool I just ten million. Chris you've been -- -- -- actually that it's not quite sponsorships but nonetheless some of the companies expecting action he would have been in doubles the -- of enormous stretch. So this really about how does the company look at the moment. Well like you can make a billion dollar valuation -- you need to be extremely. Optimistic about the outlook. Think at the moment they have about that 95 that million dollars of ebitda that was last. They need really to get -- about a 164. Billion. Millions are not like -- 20% increase the yet so what didn't -- -- nation and as a tool handles both the great fight it out. Well they've managed to grow revenues by about 25% say at anything's possible look at that and -- -- like yes -- I'm gonna point about the problem is that it has slowed in recent years. But they are they are arriving next -- it's not. Possibly out of the question is just rather unlikely. And then you have the additional problem that even if you assume they can meet -- rather lofty goals they still need to be given a multiple -- Sky high it's it's it's how much much higher than the group -- -- activists and it was really one hand basket and southwest Caesar ruled that since last week -- ignoring that the cynical thing guys that yes you get the unites until it's good to perpetual -- yes. Thank you believe these of the guys you made fairly consistent profits -- amount of welding that lucrative in the ship roots. That -- the best thing cops without even if you compare that in America that the very top of the tall. You still need to assume they're going to be slightly better and that's knuckles that there's some reasons and it's it to be a bit more optimistic guys because those those three nonsmoking event. They grind it cooler innings in pop like cutting costs. Whereas if we see divisions the most -- company's growing more quickly assuming -- -- -- to that will pick up. It could dribble with. You like it's its new wrinkle this it must get the types of the year increasing -- innings getting ready on multiple I've not seen nothing else -- Robinson once is that it's actually risky sect yeah say the the airline industry can look at it -- since. And in 1978. Its loss that's the eight million dollars. And metabolic problems that they -- if any had six years of consecutive profit. Once since the area since 1990 and -- we will know if we if we get to the issue without any losses we're looking at what we learned the fiftieth or against pretty place that radical Dahlia Apple's economy looks. On UV accident in the Haas and maybe it's the yes -- sect has consolidated -- there was a lot of optimism about the sect about the company. And also Branson's. Companies had a very technical. -- he's very good it says. That being entrepreneur I mean come easy no pretty lonely it is just -- comes to being public companies I -- -- -- a couple of writes it's a straight. Said in Australia that's not -- company -- down 8% since it listed about a decade ago. Victory very short lived the vaccine group itself with -- in the stock market two years it's not a good -- -- What Chris actual mystery that will be keeping and I own vision America is not yet -- -- vaccine more break.

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Breakingviews: Virgin America's sky-high optimism

Friday, August 08, 2014 - 03:33