Originally Posted by
T-Vasis
14 of the past 20 half yearly EBIT outcomes for Virgin Australia International have been negative. This is not sustainable. The international business is a significant contributor to the poor performance of the Virgin Australia Group (VAG) over the past decade, culminating in a 2019 loss at the PBT level for VAG of A$472m. The domestic business is holding VAG together with an EBIT of A$70m over 2019. Despite the string of poor financial outcomes, the international business represents almost 40% of VAG available seat kilometres and likely to tie up more than 40% of the aircraft assets of the business. The advocates for the international business will talk about the benefits it provides the domestic business in terms of network effects. Only Virgin will know what these look like but at the market level, around 10% of domestic PAX either take an international flight after or before a domestic flight. These positive effects are unlikely to dominant the negative. The bottom line is that it is extremely difficult to make money in the international business because it is far more competitive than domestic. While the domestic market is a duopoly, international markets can have up to 6 aggressive, high quality, lower unit cost players that are very difficult to compete against.
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It should be carved off and sold to the highest bidder... sell it to Qantas for $1 or Air NZ or Delta... they'll at least know how to run it at a profit... VA is not an international business, it can't even manage to orchestrate sustained operations to DPS by one of it's subsidiaries. Time to stop pretending to be an international airline.