Baltia: America's Newest Airline By TheBrainiac
Post# of 41414
Posted On: 02/15/2014 7:59:40 PM
Baltia: America's Newest Airline
By TheBrainiac | Posted February 12, 2014 145
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In the ever-consolidating airline industry, smart investment options are becoming increasingly difficult to find. As corporate holdings of US carriers become limited to just a handful of entities, the need for a new international airline to rejuvenate the industry is greater now than ever before. While several companies have sought international air carrier certification over the past two decades, only one – Baltia Airlines - has been able to survive the grueling certification process, and has aptly been deemed “America’s Newest Airline.”
Baltia was granted an exclusive route from JFK International Airport to Pulkovo Airport in St. Petersburg, Russia, by the DOT several years ago. Since then, the company has been preparing to fly passengers direct to St. Petersburg, cutting travel time from JFK down to just eight hours, from the current time of nearly eighteen. But this is simply their market. The million-dollar question is: what makes Baltia an attractive investment?
The adage “numbers don’t lie” is arguably the easiest selling point for the company. For their first year of flights, with just one Boeing 747 aircraft (which they already own), the company should expect at least $30 million in net profit. Here’s the breakdown:
• Total revenue for first year of flights, at 64% capacity, is $120 million. Realistically, their capacity will be closer to 90%, given that current non-direct flights to St. Petersburg get an average of 85% load capacity. Revenue should thus be closer to $180 million.
• Fuel is their highest cost, and the company over-projected this cost by approximately 20% (projected $51 million, actual cost will be about $40 million). As fuel prices continue to decline, Baltia’s profits will increase.
• Conservatively, Baltia will generate a profit margin of 25%, which is 1,000% higher than JetBlue’s margins.
One of the most lucrative aspects of Baltia is their current market cap of just under $40 million. With an industry EBITDA valuation multiple of 6-8 for the largest companies, and 10-15 for the smallest ones, Baltia will soon be trading at least 1,000% higher than its current valuation by its first flight. However, that is not the only thing that will attract institutional investors over on Wall Street…
Now to the most imperative fact about Baltia’s growth potential: each aircraft will generate $30 million or more in annual income. As America’s newest international airline, Baltia will be doing everything within its financial limit to purchase additional aircraft, which saves them money on leasing costs. The engines may then be leased at a much cheaper price than purchasing them. The company’s current goal is to acquire one 747 every 3-4 months, which will establish a fleet of over a dozen planes within 5 years of flights. Collectively, these will generate upwards of $400 million in annual income.
There is not a single airline in the United States that can remotely match the kind of growth Baltia will see over the next five years. To reiterate: with a trading multiple of at least 10, Baltia should easily see a minimum of $1.00 per share within the coming months. The institutional investors will arrive once the company is certified, and once that happens, the sky is the limit.
By TheBrainiac | Posted February 12, 2014 145
Share
In the ever-consolidating airline industry, smart investment options are becoming increasingly difficult to find. As corporate holdings of US carriers become limited to just a handful of entities, the need for a new international airline to rejuvenate the industry is greater now than ever before. While several companies have sought international air carrier certification over the past two decades, only one – Baltia Airlines - has been able to survive the grueling certification process, and has aptly been deemed “America’s Newest Airline.”
Baltia was granted an exclusive route from JFK International Airport to Pulkovo Airport in St. Petersburg, Russia, by the DOT several years ago. Since then, the company has been preparing to fly passengers direct to St. Petersburg, cutting travel time from JFK down to just eight hours, from the current time of nearly eighteen. But this is simply their market. The million-dollar question is: what makes Baltia an attractive investment?
The adage “numbers don’t lie” is arguably the easiest selling point for the company. For their first year of flights, with just one Boeing 747 aircraft (which they already own), the company should expect at least $30 million in net profit. Here’s the breakdown:
• Total revenue for first year of flights, at 64% capacity, is $120 million. Realistically, their capacity will be closer to 90%, given that current non-direct flights to St. Petersburg get an average of 85% load capacity. Revenue should thus be closer to $180 million.
• Fuel is their highest cost, and the company over-projected this cost by approximately 20% (projected $51 million, actual cost will be about $40 million). As fuel prices continue to decline, Baltia’s profits will increase.
• Conservatively, Baltia will generate a profit margin of 25%, which is 1,000% higher than JetBlue’s margins.
One of the most lucrative aspects of Baltia is their current market cap of just under $40 million. With an industry EBITDA valuation multiple of 6-8 for the largest companies, and 10-15 for the smallest ones, Baltia will soon be trading at least 1,000% higher than its current valuation by its first flight. However, that is not the only thing that will attract institutional investors over on Wall Street…
Now to the most imperative fact about Baltia’s growth potential: each aircraft will generate $30 million or more in annual income. As America’s newest international airline, Baltia will be doing everything within its financial limit to purchase additional aircraft, which saves them money on leasing costs. The engines may then be leased at a much cheaper price than purchasing them. The company’s current goal is to acquire one 747 every 3-4 months, which will establish a fleet of over a dozen planes within 5 years of flights. Collectively, these will generate upwards of $400 million in annual income.
There is not a single airline in the United States that can remotely match the kind of growth Baltia will see over the next five years. To reiterate: with a trading multiple of at least 10, Baltia should easily see a minimum of $1.00 per share within the coming months. The institutional investors will arrive once the company is certified, and once that happens, the sky is the limit.
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