Toll grits teeth as VB shares head south
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Sorry, AL, I must agree with Wellconcerned
QF need DJ as much as DJ need QF.. the duopoly re-visited.
If DJ fell over tomorrow (or in 2 weeks, if QF wanted it...) then QF could not possibly service the marketplace. Unfortunately, the 2 carriers have created a beast (low cost/thong wearing/first time fliers) that they cannot now jettison. The expectation is that mr and mrs bloggs can fly from x to y for less than they can drive or travel by train..I think that its time that the 2 companies at least decided on the "floor" price ..what is the point of discounting for discounting's sake? It becomes a situation of who's got the biggest #@#@.
BTW, Bransons been v. quiet recently, hasn't he?
QF need DJ as much as DJ need QF.. the duopoly re-visited.
If DJ fell over tomorrow (or in 2 weeks, if QF wanted it...) then QF could not possibly service the marketplace. Unfortunately, the 2 carriers have created a beast (low cost/thong wearing/first time fliers) that they cannot now jettison. The expectation is that mr and mrs bloggs can fly from x to y for less than they can drive or travel by train..I think that its time that the 2 companies at least decided on the "floor" price ..what is the point of discounting for discounting's sake? It becomes a situation of who's got the biggest #@#@.
BTW, Bransons been v. quiet recently, hasn't he?
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It appears from media reports that Virgin Blue has contracted the airline 'death smell'. Ansett got it about 12 months before its collapse.
Staff used to get shirty that the media never gave us a fair go, in retrospect they were probably kind. Nevertheless staff exised in denial until the bitter end.
I am not saying DJ will die, however if I was an employee I might just start reading Flight International again, from the back forward.
Staff used to get shirty that the media never gave us a fair go, in retrospect they were probably kind. Nevertheless staff exised in denial until the bitter end.
I am not saying DJ will die, however if I was an employee I might just start reading Flight International again, from the back forward.
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The fact of the matter is that at current fuel prices a lot of airlines, aircraft and routes are simply unsustainable........ drastic times requires drastic measures. You just need to look at what has been announced by United
I think similar capacity cuts will be required almost everywhere in order to counter fuel prices. Ticket prices will also need to be raised by 10-20% immediatley. No airline is safe from the carnage that is about to unfold, the ones that will come out the other side are the ones that are in-touch with market change and react accordingly.
United said it plans to ground its entire fleet of 94 Boeing B737s as well as six of the company's 747s - its oldest and least fuel-efficient planes
Chicago-based carrier will cut mainline domestic capacity by 17 to 18 percent in 2009, while also scaling back international capacity by 4 to 5 percent
What you failed to mention SkySurfin was the rest of that press release.
United are closing down "Ted" their LCC, and are bringing all the A320s into Mainline United colours to replace those 737s you speak of, as they have identified a weakening in the low cost end of the market. Makes perfect sense really, especially if those Ted pilots are on a lower rate of pay (i.e. Jetstar v. Qantas).
United are closing down "Ted" their LCC, and are bringing all the A320s into Mainline United colours to replace those 737s you speak of, as they have identified a weakening in the low cost end of the market. Makes perfect sense really, especially if those Ted pilots are on a lower rate of pay (i.e. Jetstar v. Qantas).
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Quote
I believe that BG has told all team members that there is a major announcement coming next week
Unquote
DJCCGuy could it be Toll is going to convert the DJ fleet into freighters?
I believe that BG has told all team members that there is a major announcement coming next week
Unquote
DJCCGuy could it be Toll is going to convert the DJ fleet into freighters?
In todays paper, there is correction made by JP Morgan in relation Virgin Blue becoming insolvent if fuel prices continue to climb.
JP Morgan expects Virgin Blue to report a fiscal profit of $82 million in 2008, $19 million in 2009 and $133 million in 2010.
JP Morgan expects Virgin Blue to report a fiscal profit of $82 million in 2008, $19 million in 2009 and $133 million in 2010.
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JP Morgan expects Virgin Blue to report a fiscal profit of $82 million in 2008, $19 million in 2009 and $133 million in 2010.
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At the risk of stating the obvious, in addition to all the doom and gloom about soaring fuel costs, it's times like these that I can't help but feel the irony when so many on this site were getting all excited about Tiger, or the maybe/maybe not entry of Lion into the Oz market. "Jobs Jobs Jobs" is the catchcry from the drivers. "Competiton and greater choice" is the catchcry from the SLF. Well guys, how about this: "Flooded market," "over capacity," "supply exceeding demand," I could go on...
As has been said, be careful what you wish for.
As has been said, be careful what you wish for.
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JP Morgan REJECTS Virgin insolvency talk
Here is the complete story;
JPMorgan rejects Virgin insolvency talk
Email Print Normal font Large font June 6, 2008 - 2:14PM
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Investment bank JPMorgan has clarified a report that led to suggestions Virgin Blue could be at risk of insolvency if jet fuel stays at current levels.
JPMorgan analysts Matthew Crowe and Russell Crichton-Browne wrote in a report on Thursday that "if jet fuel stays at current levels for several years and Virgin Blue cannot significantly increase fares it would not survive, according to our scenario analysis."
Mr Crowe wrote in a client note that "press reports incorrectly interpreted one of several scenarios featured in a research report as suggesting Virgin Blue is at risk of insolvency".
"This scenario does not represent our view of Virgin Blues future earnings," he said.
JPMorgan expects Virgin Blue to report fiscal 2008 profit of $82 million, followed by $19 million in fiscal 2009 before rebounding almost 600 per cent to $133 million in fiscal 2010.
"The scenario in question reflected an unlikely combination of factors, including permanently high fuel prices and no increase in airfares or any other revenue or cost saving measures," the finance house said.
"Our actual forecast for Virgin Blue, which form the basis of our neutral recommendation, reflect very different assumptions including higher air fares over several years and lower jet fuel costs."
JPMorgan expects Virgin Blue to increase fares by three per cent in fiscal 2009 and 1.5 per cent in fiscal 2010.
Over this period, its analysts expect jet fuel prices to fall from a current $US156 per barrel to $US98.
"If fuel prices stay high we would expect further fare rises by all carriers including Virgin Blue," it added.
JPMorgan said Virgin Blue recently announced an increase to fuel levies "that we expect to boost fares by about 3.5 per cent".
Recent domestic capacity cuts by Qantas are expected to tighten domestic supply conditions assisting airfare growth, they said.
"If Virgin Blue also cuts capacity soon, we would expect a similar positive impact on yields."
Virgin Blue has recently flagged it is considering a range of initiatives to combat the jet fuel prices, including cutting capacity, redeploying planes to more profitable markets, delaying arrival of new aircraft and selling existing aircraft.
JPMorgan has a December 2008 price target is of 85 cents per Virgin Blue share, "which is 34 per cent above the current share price".
"Risks to this price target include fuel costs, capacity and inadequate yields," they said.
Virgin Blue shares were steady on 63.5 cents at 1411 AEST
JPMorgan rejects Virgin insolvency talk
Email Print Normal font Large font June 6, 2008 - 2:14PM
Advertisement
Investment bank JPMorgan has clarified a report that led to suggestions Virgin Blue could be at risk of insolvency if jet fuel stays at current levels.
JPMorgan analysts Matthew Crowe and Russell Crichton-Browne wrote in a report on Thursday that "if jet fuel stays at current levels for several years and Virgin Blue cannot significantly increase fares it would not survive, according to our scenario analysis."
Mr Crowe wrote in a client note that "press reports incorrectly interpreted one of several scenarios featured in a research report as suggesting Virgin Blue is at risk of insolvency".
"This scenario does not represent our view of Virgin Blues future earnings," he said.
JPMorgan expects Virgin Blue to report fiscal 2008 profit of $82 million, followed by $19 million in fiscal 2009 before rebounding almost 600 per cent to $133 million in fiscal 2010.
"The scenario in question reflected an unlikely combination of factors, including permanently high fuel prices and no increase in airfares or any other revenue or cost saving measures," the finance house said.
"Our actual forecast for Virgin Blue, which form the basis of our neutral recommendation, reflect very different assumptions including higher air fares over several years and lower jet fuel costs."
JPMorgan expects Virgin Blue to increase fares by three per cent in fiscal 2009 and 1.5 per cent in fiscal 2010.
Over this period, its analysts expect jet fuel prices to fall from a current $US156 per barrel to $US98.
"If fuel prices stay high we would expect further fare rises by all carriers including Virgin Blue," it added.
JPMorgan said Virgin Blue recently announced an increase to fuel levies "that we expect to boost fares by about 3.5 per cent".
Recent domestic capacity cuts by Qantas are expected to tighten domestic supply conditions assisting airfare growth, they said.
"If Virgin Blue also cuts capacity soon, we would expect a similar positive impact on yields."
Virgin Blue has recently flagged it is considering a range of initiatives to combat the jet fuel prices, including cutting capacity, redeploying planes to more profitable markets, delaying arrival of new aircraft and selling existing aircraft.
JPMorgan has a December 2008 price target is of 85 cents per Virgin Blue share, "which is 34 per cent above the current share price".
"Risks to this price target include fuel costs, capacity and inadequate yields," they said.
Virgin Blue shares were steady on 63.5 cents at 1411 AEST
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RedTBar If JP Morgan knows what the price of fuel is going to be in 6 months let alone 2 years they have one hell of a crystal ball.
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My insiders in the legal fraternity at QF, have said that they are seriously looking at the buying of over 80% of Toll shares.
There is one very large flaw in this possibility and it is called the A.C.C.C. There would have to be legislative change in parliament to allow such a monoplisation of domestic air travel. Regardless of what spin mangement at QF may try t put on it, JQ is a wholey owned subsidiary and that will form a serious part of the consideration and approval process undertaken by the ACCC.
Any such legislative change is highly unlikey to occur in consideration of the fact that the current levels of fuel prices have widely been stated as being over inflated due to speculators aiming to cash in on the coat tails of a weak US dollar together with an unfounded sentiment of current demand exceeding supply. High oil prices are a nasty beast but one that, from time to time, helps to tame the worlds unquenching thirst and addiction for it.
There is, simply put, too much emotion involved in the market of commodities and energy stocks and when people in the market take a chill pill, and the oil speculators pull their heads in i have little doubt that the oil price will stabilise and return to the long term projected $80-$100 per barrel.
I am certainly no expert on the matter and have gained a very basic understanding of the oil market through online research. I for one hope that things calm down soon, all of this talk of bankruptcy / insolvency is not good for sound sleeping and if it deosn't correct soon the next epidemic in the pilot fraternity will be ulcers.
The most noteworthy statements are those that say "if Virgin do nothing", now i know that management incompetency is not exactly in short supply within the entire Australian aviation community but i would think it nigh on the impossible that Virgin management will 'do nothing' in the face of current market pressures. Especially when the CEO has a personal stake of wealth in the success of the company..... after all it is rare that motives are unselfish in some way.
I for one do not have the expertise to speculate on what the future of any airline will be... i am just a pilot, but one thing i will definitely NOT do is panic before the relevant information has been presented in its entirety, that is not to say that i have not dusted off the CV yet but it would take something cataclysmic for it all to fall apart tomorrow, or even in the next 6-12 months.
Lets just focus on flying safe for now!
Ratter
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Oh come on Ratter ,you cant bring rational theory into this , who will everyone bash and speculate over now until some sensationalist journo spews out some more factless gibberish about another airline !!
Ratter ,thanking you for your articulate and informed view....
Ratter ,thanking you for your articulate and informed view....
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Is it a possibility at all that DJ could remodel itself as a full service carrier? The only way they are going to get the market they are chasing is by doing exactly that ... just a thought....
as an employee I'm very anxious to find out what the announcement is brett has promised next week!
as an employee I'm very anxious to find out what the announcement is brett has promised next week!
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I wish to God they would, instead of hanging around no-man's land like they are at the moment.
...."right, we'll charge as much, if not more than Qantas for a seat, then tell the passengers they need to pay for a coffee in a paper cup. That'll improve our market share....."
...."right, we'll charge as much, if not more than Qantas for a seat, then tell the passengers they need to pay for a coffee in a paper cup. That'll improve our market share....."
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Thylacine, I'm not at all getting exicted.Takes alot more that that these days.
I certainly don't want another company to go to the wall but the market is overserviced.
IMHO, VB is a major player in a small market. It was helped greatly by the misfortunes of another airline.
I believe that they could be sunk very quickly , if it were in QF's interest.
Current CEO appears overconfident in his abilities yet, has positioned the airline between a rock (QF) and a hard place (the bottom line).
There is no where to move and he admitted only looking at fuel at $100 but did the calcs at $80.
Did a good job selling the float though. Glad I didn't buy.
Major shareholder wants out, doubt they will want to spend more money when the share price is heading south.
To change to a full service operation will cost them more than they can spend, I think. In anycase, you need expertise and experience to serve customers at the level that they expect on a full service carrier. QF has a hard enough time and has spent bundles to get there.How can VB hope to even approach that level. By the way AN service was certainly better than the current QF product.
Wish them more luck cause they will need more, much more.
Remember only IMHO
I certainly don't want another company to go to the wall but the market is overserviced.
IMHO, VB is a major player in a small market. It was helped greatly by the misfortunes of another airline.
I believe that they could be sunk very quickly , if it were in QF's interest.
Current CEO appears overconfident in his abilities yet, has positioned the airline between a rock (QF) and a hard place (the bottom line).
There is no where to move and he admitted only looking at fuel at $100 but did the calcs at $80.
Did a good job selling the float though. Glad I didn't buy.
Major shareholder wants out, doubt they will want to spend more money when the share price is heading south.
To change to a full service operation will cost them more than they can spend, I think. In anycase, you need expertise and experience to serve customers at the level that they expect on a full service carrier. QF has a hard enough time and has spent bundles to get there.How can VB hope to even approach that level. By the way AN service was certainly better than the current QF product.
Wish them more luck cause they will need more, much more.
Remember only IMHO
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DJCC Guy, I've been discussing this with colleagues for a while now, and I've yet to speak with anyone at the coalface who doesn't agree that the company needs to make up its mind, once and for all, whether it's going to continue as a LCC or make the full transition to a genuine business product - instead of trying to please everyone whilst ultimately satisfying no-one. The new comfy red chairs at the front of the cabin are a perfect example: In essence it's a great idea and could really work well, if not for the fact that no-one wants to pay a premium for the red seat when they still have to pay for the coffee and nibblies. What little advertising I've seen for it so far, is clearly trying to target the business traveller - but when all is said and done, it's not Premium Business but still Premium ECONOMY. Seriously, I mean would it really break the bank to offer premium guests free live-to-air, free drinks and a few other value add-ons?!? In that sense, it seems to have missed its mark. Nevertheless VB is much better positioned to tackle QF head-on with a genuinely viable alternative for the business traveller (i.e. the aforementioned red chairs, The Lounge, etc), if they'd just make a few tweaks and adjustments - and leave Jetstar/Tiger to cater for the thongs-&-singlet brigade. But hey, I'm just a dumbass driver, so what would I know!
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Bunglerat I agree with you 100%. There has been some talk about the premium economy product changing to be all inclusive...would be interesting to see then if they can sell it...as since they've launched it, on my flights I would of had no more than 3-4 pax in it. Talk amongst management for a while has been that we will be going more 'corporate' as thats where the money is... now they just need to do it. Spend some to make some.
Yes they do have lots of things already in place that would be expected of a full service carrier; i.e The Lounges, Velocity, the IFE is in place etc etc...they'd need to change the ridiculous habits of some crew making jokes on PA and just being immature too
I'm a little grey on this, but is it true that QF has never said what their cost per seat is? Apparently it's only about 1 - 2cents higher than what DJ's currently is? Anyone know anymore on this?
Yes they do have lots of things already in place that would be expected of a full service carrier; i.e The Lounges, Velocity, the IFE is in place etc etc...they'd need to change the ridiculous habits of some crew making jokes on PA and just being immature too
I'm a little grey on this, but is it true that QF has never said what their cost per seat is? Apparently it's only about 1 - 2cents higher than what DJ's currently is? Anyone know anymore on this?