After years of waiting to get FAA approval for certification, fledgling Baltia Airlines(OTCPK:BLTA) has finally taken off. On April 10, 2013 the FAA approved Batia's application to become an international airline. Once Baltia completes the certification process the FAA shall grant them a license under 14 CFR Part 121 to fly between JFK in New York and St. Petersburg, Russia. They already have route authority granted by the DOT for service between the two cities. They will become the only airline to fly non-stop between the two cities. There are other airlines that fly between the two cities but they must stop at their home countries. This will result in less time spent flying for passengers who use Baltia Airlines. Perhaps to the tune of 8 hours per trip. Business travelers will be extremely pleased with this event
Over the years that Baltia has been trying to obtain certification there have been numerous stumbling blocks; from problems obtaining funding for an IPO to DOT revocation of their route authority. But recently, Baltia moved its certification application from the New York office to the Michigan office of the FAA. It was reasoned that New York lacked the resources to complete the work appropriately and Michigan could finish faster. The gamble to move its application seems to have paid off, as well as overcoming all the other stumbling blocks throughout the process. Now, Baltia seems to be on course to takeoff within months as "Americas Newest Airlines" according to Baltia's website(baltia.com).
Baltia has had its financial ups and downs. In the end their ability to obtain financial backing for an IPO did not fly. This may have been a blessing in disguise. Baltia obtained financing by private stock sales as well as being relegated to the bulletin board. Over the years the stock has been diluted with additional authorized shares to cover operational costs. This has held down debt for Baltia since they didn't have to borrow money. When they begin revenue flights their debt load could be less than $2 million. This is an amazing number for a startup airline. However, authorized shares are high but the cost of financing money would probably be much higher.
There are 2.85 billion shares authorized and much of this is put into paying the management team and employees. The float is under 800 million and represents a reasonably small percentage of the total. There are many shareholders that have been holding this stock for years. Some as high as 13 years. You could say they are determined investors. In recent years the stock has fluctuated between a penny and fourteen cents. The market cap hovers around $80 million. The Board of Directors recently approved a resolution that management would not sell shares of stock until revenue flights began and they may extend that agreement. This is good news for shareholders who fear that further dilution would harm the share price and their holdings.
Igor Dmitrowsky, company CEO and President, had a vision some 23 years ago and found a niche market flying from JFK to St. Petersburg non stop, thus saving travelers hours of time. It was and is a great idea. Can it be profitable? Perhaps. But if his tenacity to bring this airline to fruition is any indication you can bet that this airline has a great chance to get off the ground.
Now may be the time to get your ticket and get on board. Baltia owns a 747 and leases engines. They use fuel efficient, updated engines to lower operating costs. This is a smart decision in an environment of rising oil and fuel costs. Baltia is in the process of hiring and training pilots, crew and support staff during phase 2 of certification. Phase 2 is probably the most important aspect of getting started. Also, the most costly.
With many shares locked up by long term investors, management agreements not to sell large blocks of stock held by management and a low debt load, Baltia looks like it's positioned to be profitable for even most prudent investor of speculative stocks. First year revenue could make Baltia profitable once the FAA issues a license. If this happens shareholders will be flying high with this stock.
Disclosure: I am long OTCPK:BLTA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.