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Monday, October 18, 2021

Harbor Diversified Inc (OTCMKTS: HRBR) Air Wisconsin RM; the Wholy Grail of Reverse Mergers – Anatomy of a MicroCapDaily 1,000% Winner

Harbor Diversified Inc (OTCMKTS: HRBR) is an exciting stock that loves to make huge moves and massive gains for its shareholders. June has been an exceptionally explosive month as the stock has nearly doubled to $3 from its $1.50 lows back in May. Mircocapdaily was there the moment HRBR started to run back in November of last year stating on November 10, when HRBR was priced at $0.26 per share: “Harbor Diversified Inc (OTCMKTS: HRBR) is making an explosive move up the charts on a massive surge of volume quickly emerging as among the most exciting stories in small caps. HRBR is quickly getting noticed by top traders and the stock has exploded northbound off its $0.05 base. HRBR is listed as dark/defunct on OTCMarkets Group however the Company’s filings are up to date with a recent 10Q and 10k filed. HRBR is doing spectacular numbers thanks to Air Wisconsin Airlines recently reporting $67 million in revenues for the 3 months ended March 31, 2020 as well as $4.4 million net income for the quarter. 

As we have been saying for a while now reverse merger plays can be more explosive than biotechs when the incoming Company has real value but is undiscovered to investors as was the case when Air Wisconsin quietly took over the HRBR shell late last year. Air Wisconsin owns and operate a fleet of 64 CRJ-200 regional jets and solely serve United Airlines. It’s the 8th largest regional airline group in the US. It flew 4 million passengers in 2019 and operated routes in 36 cities serving solely to United Airlines (NASDAQ:UAL). Seeking Alpha has recently reported on the Air Wisconsin RM stating on the Company’s financials: Harbor Diversified generated revenue of $185.9 million in 2020, dropping 30% from 262.61 in 2019. This was primarily due to Covid. Q1 2020 revenue grew 9% (just before the Covid hit) relative to Q1 2019. Net earnings were $39.7m; however, on a like-for-like basis, if you deduct the CARE ACT payroll support program of $42.2 mln, which was used to facilitate wages – the company was in a net loss. The company will be getting $60mln in support from the government till 2022. Even during a pandemic, the company was able to generate a 14.5% EBITDA margin and unleveraged Free Cash flow Margin of 11.6%. The company has $130.4 million in cash and a net cash position of $6.8 million after paying all debt as of end-2020. It also has $19.1 million of deferred tax assets. 

Air Wisconsin Airlines (@airwisconsin) | TwitterHarbor Diversified Inc (OTCMKTS: HRBR) is the parent Company of a consolidated group of subsidiaries, including AWAC Aviation, Inc. which owns and operates Air Wisconsin Airlines LLC; a regional air carrier that, as of December 31, 2019, provided scheduled passenger service to 81 cities in 31 states with an average of approximately 284 daily departures under an agreement with United Airlines, Inc.. Harbor Diversified, Inc. is also the direct parent of three other subsidiaries: (1) Lotus Aviation Leasing, LLC which leases flight equipment to Air Wisconsin, (2) Air Wisconsin Funding LLC which provides flight equipment financing to Air Wisconsin, and Harbor Therapeutics, Inc. which is a non-operating entity with no material assets. s of May 31, 2020, Air Wisconsin employs around 1,308 full-time employees and 24 part-time employees, of whom 1,057 were represented by unions, and the remainder were not. Air Wisconsin has never been the subject of a labor strike or labor action that materially impacted its operations.

W6390 Challenger Drive, Suite 203 • Appleton, WI 54914-9120 Phone: 920-739-5123 • Fax: 920-739-1325 Manager, last fall.Air Wisconsin operates a fleet of approximately 64 CRJ-200, 50 of which are owned by the Company and the rest are leased. The Airlines has a significant presence at both Chicago O’Hare and Washington-Dulles, two of United’s key domestic hubs. All of Air Wisconsin’s flights are operated as United Express pursuant to the terms of the United capacity purchase agreement.  The CRJ-200 regional jet offers many of the capabilities and amenities of larger commercial jet aircraft, including flight attendant service, a stand-up cabin, limited overhead and under seat storage, a lavatory and a galley that allows for in-flight snack and beverage service. The CRJ-200 regional jet has a speed comparable to larger aircraft operated by major airlines and has a range of approximately 1,585 miles.

 

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HRBR

The Company’s business strategy consists primarily of serving United and its customers through Air Wisconsin’s provision of regional airline services. We strive to serve as an efficient and reliable provider of flight services to United and to provide a high level of service to United and its customers in accordance with the United capacity purchase agreement. The Company also seeks to maintain a competitive cost structure. We focus on a disciplined cost control approach through responsible outsourcing of certain operating functions and diligent control of corporate and administrative costs, implementing company-wide efforts to improve our cost position.

On January 17, 2020, the Company completed an acquisition from Southshore Aircraft Holdings, LLC and its affiliated entities of three CRJ-200 regional jets, each having two General Electric engines, plus five additional GE engines.  On May 22, 2020, Air Wisconsin acquired eight additional CRJ-200 regional jets in a single transaction for an aggregate purchase price of $3.0 million. Air Wisconsin had leased each of these regional jets prior to the acquisition.

On June 1, 2020, Bombardier consummated an agreement with Mitsubishi Heavy Industries, Ltd. pursuant to which Mitsubishi purchased Bombardier’s regional jet program, including all aspects of the CRJ-200 regional jet, including type certificates, maintenance, support, refurbishment, marketing and sales activities. Air Wisconsin does not have any existing arrangements with Bombardier or Mitsubishi to acquire additional aircraft.

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Harbor Diversified is an exciting stock that loves to make huge moves and massive gains for its shareholders. June has been an exceptionally explosive month as the stock has nearly doubled to $3 from its $1.50 lows back in May. Mircocapdaily was there the moment HRBR started to run back in November of last year stating on November 10, when HRBR was priced at $0.26 per share: “Harbor Diversified Inc (OTCMKTS: HRBR) is making an explosive move up the charts on a massive surge of volume quickly emerging as among the most exciting stories in small caps. HRBR is quickly getting noticed by top traders and the stock has exploded northbound off its $0.05 base. HRBR is listed as dark/defunct on OTCMarkets Group however the Company’s filings are up to date with a recent 10Q and 10k filed. HRBR is doing spectacular numbers thanks to Air Wisconsin Airlines recently reporting $67 million in revenues for the 3 months ended March 31, 2020 as well as $4.4 million net income for the quarter.  As we have been saying for a while now reverse merger plays can be more explosive than biotechs when the incoming Company has real value but is undiscovered to investors as was the case when Air Wisconsin quietly took over the HRBR shell late last year. Air Wisconsin owns and operate a fleet of 64 CRJ-200 regional jets and solely serve United Airlines. It’s the 8th largest regional airline group in the US. It flew 4 million passengers in 2019 and operated routes in 36 cities serving solely to United Airlines (NASDAQ:UAL). Seeking Alpha has recently reported on the Air Wisconsin RM stating on the Company’s financials: Harbor Diversified generated revenue of $185.9 million in 2020, dropping 30% from 262.61 in 2019. This was primarily due to Covid. Q1 2020 revenue grew 9% (just before the Covid hit) relative to Q1 2019. Net earnings were $39.7m; however, on a like-for-like basis, if you deduct the CARE ACT payroll support program of $42.2 mln, which was used to facilitate wages – the company was in a net loss. The company will be getting $60mln in support from the government till 2022. Even during a pandemic, the company was able to generate a 14.5% EBITDA margin and unleveraged Free Cash flow Margin of 11.6%. The company has $130.4 million in cash and a net cash position of $6.8 million after paying all debt as of end-2020. It also has $19.1 million of deferred tax assets.  Microcapdaily first covered HRBR to the investment community when it was $0.26. We will be updating on HRBR when more details emerge so make sure you are subscribed to Microcapdaily so you know what’s going on with HRBR.

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Disclosure: we hold no position in HRBR either long or short and we have not been compensated for this article.

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