As mentioned before, I like to use the HNZ Group as a good benchmark with which to compare Discovery Air's relative performance.  HNZ has just released its December 2012 year end statements, and I have taken the following numbers from them (see


Remember that the overall revenue for HNZ is $256 million,certainly higher than DA.A but not by very much.  HNZ had $38 million in Long Term debt outstanding to support their top line revenue number,whereas DA.A had, at the end of October 2012, had $161 million, over 4 times as much. More critically, the annual interest burden on the HNZ debt was just over $1.4 million, whereas the DA.A annual interest cost will be somewhere north of $17.5 million, as our average debt cost is over 10% compared to HNZ's credit facility cost of about 1.25%.


The continued growth of the long term debt at Discovery Air, especially with the $7 million plus automatic annual addition as the Clairvest interest is capitalized and new debentures issued to "pay" for the interest, it in my opinion the number one problem facing the Company.  We need to hear from the Board and management a sound, long term plan and commitment as to how this debt will be brought under control and will gradually be repaid.  Renegotiating more beneficial rates along the lines of those secured by HNZ should also be a priority.


This issue is already on our list of questions for the Analysts call at the end of April.