Just a few to start;
- Increased crew training requirements
- At the start of it, they had a lot of crew sitting around for many months, doing absolutely nothing (still do. I know of some pilots who went for a nice paid holiday to Florida to do their type rating at the start of it all, and haven't even flown the thing yet!)
- Increase in management positions (you've got a position duplicated twice in a few cases, one for Airbus and one for Boeing)
- Decrease in aircraft utilisation, but many of the overheads are still there (leases, maintenance, etc.)
And that's just what I can come up with looking outside in. Many crew left when they could see the boat had lost it's way. They needed to be replaced, so that goes with your increased crew training requirements.
Existing Tiger crews were never bonded either. That was part of the agreement between the pilots and management.
There will always be an increase in training expense. This is short-lived and will not impact on future profitability. I doubt there are any crew sitting around doing nothing. A few additional heads in the business will not impact profitability. I suspect the airline is already extremely lean. Do you have evidence of the reduced utilisation? What is the current aircraft utilisation for the A320 and 737 fleet?
Depreciation is the biggest killer. Fleet transition charges 20million last FY and similar figure this year.
Virgin owns the 737s so not sure how that works as the rental expense is dropping but how they are being charged for them is anyone’s guess. Nothing on the financials in regards to Tiger owning them.
As every half passes, depreciation is increasing, engineering increasing, fuel bill increasing wage bill increasing and margin is continuing to go backwards.
Margin was increasing right up until they sent the 737 across. They had the right mix about 3/4 years ago with a sole Airbus fleet with Fuel rising but revenue/yield/margin climbing which covered the fuel problems. Then some idiot floated the 737 idea.
Depreciation is a non-cash expense. It has no impact on cash-flow. It is irrelevant to airline profitability. Virgin does not own all of their 737's. I will assume the ones going to Tigerair are owned and the purpose of accelerating the depreciation on these aircraft is to clear the books for Virgin and Tigerair of this expense. Rental expense decline would reflect the removal of A320's from the fleet as I assume these are all leased. In FY18 Tigerair increase rASK, yield and RPK's on the back of ASK reductions (two aircraft). They're all positive movements, not negative. cASK increases are likely a result of uncontrollables e.g. fuel expense. Other cASK increases would directly link to activity. Tigerair's cASK would be the lowest out of all airlines.