A demand payment was made to Macair one month before they collapsed. It was a Singaporeon leasing company that then called ASIC to liquidate same company
Hardly any surprises - cash reserves down to 526 m. Profit for 6 months to 12/2007 was 113.3 m. Corresponding period to 12/2008 - (101.4) m. A downward change of 214.7 m
And when did the Global Economic Downturn start to bite.....around October 08.
"Ineffective cash flow hedges and non-designated derviates" totall $(114.5) million. Foreign Exchange Losses total $(54.6) million.
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Of that grand total of $170 million $141 million is unrealised which could potentially turn around, it could also potentially worsen given what has happened with the market since 31DEC08.
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I hope those incharge of that have been sacked and someone hired to fix up that mess. As BG has been at the helm through all of this you would have to say its time to move on. However who is going to want to take on this mess as it does appear that things will only get worse before they get better.
As zero has said someone might call ASIC and make a grab for whats left over. I hope that BG and RB will talk anyone out of that as I don't want to see 5000+ people looking for a new job.
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As far as assets to liabilites go have VBA written down the value of the aircraft yet or are they valued at purchase price? You would hardly pay full price at the moment for used 737's.
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These financial statements offer more questions than answers. Smarter people than I will work through them.
take away all the non reportable off balance sheet liabilities and any money that is left should be spent on recruiting a new CEO, CFO and Treasury committee on the the board.
A plan for VB would be good .........
Hope it gets back to being a great LCC and forget about all the other stuff that buggered its potential to ride out tough markets.
Could someone more financially savvy than me explain what this all means.
From what i can see, the VA startup and the fuel hedging are one off costs, therefore whilst the average loss maybe 4mil per month, that should not carry forward as these costs have already been written down. It looks to me that the underlying 60m profit and forecast 50m for the full financial year are valid assessments.
The bleeding of cash through VA will make the startup costs pale by comparison. You still have to run the thing. If I won a million dollars tomorrow, and then went out and bought my dream boat, I would still go broke because my income would not allow me to run anything except the Gen' set!
I think 6100 is right.
I think if you take out the cost of V-Australia set up it looks reasonable, but certainly nothing to be proud of. Pax numbers have been heading south for awhile now ie at least for a third of the 6 month reporting period to end of 08So it is not that bad. Virgin is doing the right thing by cutting routes, parking aircraft and trimming staff (unless you are one of the staff trimmed of course), they have to; unfortunate as it is.
The market as of midday had the shares unchanged, so the market had factored all this in. The clever boffins as one poster said will poor over these results but I think they are not surprised by it all, even the lack of interim dividend, I suppose this was to retain cash on hand for the old war chest.
The next 6 months now that could be ugly for Virgin and indeed everyone. We seem to lag behind the rest of the world by 6-8 months so whatever you see happening there now will be going on here around September; and that is all rather nasty. Guess it is a case of wait and see.
Cash flow increased, underlying net profit fell nearly 70 per cent to $60 million.(excluding Vauz) so the business is ok its making money.It spent rather than lost due to economic factors. For the bears here hold the receivers for now.
Is it really that bad?? I dont know much about the business world, but the company has so much market share in Aussie, new planes, and a very cheap share price.
When the end is in sight of this economic down turn, wouldnt there be a long queue of large companies wanting to snap them up???
rumour has it the fuel companies wont sell to vb on credit can anyone confirm??
I think its funny they are reducing their hedging from 80% at present and when fuel was at its historical high, down to 30% for 2010 when fuel is at its historical lows, they still havent quiet grasped the concept of hedging have they.
I think its funny they are reducing their hedging from 80% at present and when fuel was at its historical high, down to 30% for 2010 when fuel is at its historical lows, they still havent quiet grasped the concept of hedging have they.
Perhaps the fuel suppliers won't accept or even offer to hedge at current prices. In order to hedge there must be a point at which both sides of the table see some value in fixing a price. Usually the buyer hedges to provide some cost certainty and teh seller to lock in some guaranteed level of production.
Very rarely does the agreement have to do with the actual price because if that was the case then one side or the other would be locking in a less than optimal position because both parties generally have access to the same information and forecasts and react accordingly. Hedging is a "certainty" strategy, the ariline knows how to budget for fuel costs, the oil company builds in a baseline volume and price and knows what it has to achieve for the time period.
Interesting to see what the papers will make of the VBA results. I was surprised the market didn't punish them, but maybe Simon Bartholomeusz is on the money in his item in Business Spectator.
Crikey quoted Godfrey as saying he didn't think all 400 jobs would go but from what others have said here a fair few of them might have gone already so that might be window dressing.
I still think Qantas was mad not to get 777s and that Virgin's biggest mistake was stuffing around for several years longer than they should have to get theirs.
I reckon V Australia would have made a great head start if they had done this in 2007.
"Oh, look, we've said that - we've said that the guidance we've given right back in August of last year, reaffirmed in November and still in play today, is that it will be a challenge to make a profit this year for us, primarily because of the $65 to 70 million attributable to V, which was always planned, even at inception, to lose money for some 18 months. It's a heavy investment. It's an investment that we believe will still pay off for us. But it may not pay off in the next 12 months. It may be 18 months down the track before we start to see that really work. I think it'd be nice if you're trying to get me to say let's turn back the clock, absolutely. But we'd do a lot of things differently if we had that advantage of hindsight."
.....And on further capital raising
"Oh, look, there's a shareholder out there who holds over 25 per cent of the shares. He's made it very clear that he's not interested and doesn't believe that we need to look at a capital raising. I think I share that view. I certainly share it today. There are other avenues that are in train to ensure that we build on that cash position which, you know, is still fairly healthy. So, from our point of view, a capital raising is not on the backburner as we speak today. But, you know, to your point, I can assure you that if we see substantial and continued market redeterioration, every airline, every airline in this country will be looking to do the same thing again."
I think its funny they are reducing their hedging from 80% at present and when fuel was at its historical high, down to 30% for 2010 when fuel is at its historical lows, they still havent quiet grasped the concept of hedging have they.
Yesterday 10:03
As i understand fuel hedging, which is in effect an insurance policy, much like options in the equity market, BG had no choice. If he had not hedged, and oil had continued to rise, as just about every analyst and CEO in the world predicted, then VB would be dead in the water as we speak, due to unsustainable fuel prices.
As it turned out, oil dropped, against all expectation and the hedge (insurance) was not required. But that is no different to the insurance most of us pay on our houses. For most it is a waste of money (in hindsight) but in the event that your house burnt down and you were uninsured, your personal company would left with a huge debt and no asset, therefore insolvent.
Hedging guards against this possibility, and it is expensive. Airlines are in the business of making money from flying aircraft, not hedging. Once management start factoring hedging in as a profit centre rather than an operating cost, you will know the company is in deep trouble.
6100, if hedging is like insurance perhaps you can explain why vb reported a $200mil mark to market loss against there fuel hedging positions, according to your definition they should have only lost the premium, the setup of the hedge was very cheap maybe even free or maybe even gave them a net credit in exchange for increased or all of or even multiples of downward market risk!
anyhow fuel hedging is not an insurance policy, its about fixing and smoothing the cost of fuel, not freaking out and locking in when fuel gets unbearably expensive and throwing the strategy away when its not, for it to work your hedge has to be consistent throughout the price cycle.
Last edited by im sparticus : 24th February 2009 at 10:00.
Remember having the conversation with me about hedging on the 'VB, how low can they go' thread'.
We were prattling on about options, swaps and collars. I thought collars were odd then and still think so. For VB, they didn't use them but swaps and the the swaps have come home to roost.
That is why there is such a dramatic loss on the hedged positions. Swaps = an unproteced short or long but with No premium. Massive downside if you get it wrong.
To get naked with shareholder funds in this way is about as bad as what happened over the road with the Allco deal.
tsalta
Last edited by tsalta : 24th February 2009 at 11:57.
Reason: grammar
Arrogant - crew lose wages to pay for harbour party
It's one thing to hedge fuel - it's another to do it so late in the game at a level significantly higher than others - the other 'miscalculations' again prove that fiscal responsibility and governance are not attributes of Godfrey & the VB Board.
I have a family member who next month has been forced onto leave without pay ....in order to help "save the business".......
In receiving this news she also rec'd yet another "message from Brett" playing down the company's financial situation. Then she had the delight of watching the ferret Branson chirp in with his mindless meanderings ....[quote] ..."what recession"
To top it all off, while VB drivers and crew are hammered daily about cost cutting, taking leave without pay and the need for financial prudence ahead of more big losses - Godfrey & Co are spending up big hiring Cockatoo Island in SYD for a launch party tomorrow night.
Maybe the first of the 400 to go should be Godfrey.
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