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Thanks for the post, Tim. It was good to see First Call's earnings projections for the various airline stocks. The combination of rising fuel costs and the reintroduced excise tax are simply an unfortunate coincidence, but they will hurt VJET for the next couple of quarters. However, Kiwi's announcement that they are going out of business rather than seeking Chapter 11 bodes well, since VJET has apparently targeted many of Kiwi's routes. The unionized maintenance staff will take a nip out of results, but there was really no choice in this matter. Since management has announced charges in both the 3rd and 4th quarters, it will be the 1st quarter of 97 before profitability can be expected in all likelihood, even if they have said the charges will be less than that generated in the 2nd quarter. The 37 cent loss projected by First Call gives a target so that insiders will not be disappointed if the loss is realized, but the public will just see the loss and it is highly likely that the stock will drop further when the earnings are announced. It is possible, however, that if the company can do better than the First Call estimate (even by a few cents) that insider buying will pick up and sustain the market without much more downside. Long term, though, assuming the formula employed prior to the crash remains intact (marketing, cost controls, etc.), and provided there is no unionization of the flight crews, VJET has to be a very solid prospect for substantial growth, and a strong, if speculative investment over the next couple of years. Once the shakeout over the insider selling stabilizes, the stock should too. I'd project a realistic possibility of a price in the mid-teens by late 97. |
