Originally Posted by
markontop
I would say that post Carona there will be no need for the capacity from pre Carona from even one airline.
QF will have way more aeroplanes than the market needs.
Other people’s money;
Creditors (please help, national interest, keeping the air fair- twenty years old now)
Tax payers (that would be Airnav charges)
Staff (leave without pay, that would be yours)
Playing would be the newspaper ads.
Finally do VA have the money to last for how long?
Sorry mate, totally missed this reply. Thanks for clarifying. I do somewhat understand the thinking in a roundabout way but in reality, engaging with any business as either a consumer, employer or creditor, you're taking a risk they won't collapse before the service is provided. For example, when you purchase a ticket to a football game, you assume the institution will be viable by the time the date of the game comes around. As a creditor, generally you provide a product or service and send an invoice for post-payment. Obviously there are plenty of examples like this as essentially all businesses work this way, even in the very short term (pay for a property report online and hope it lands in your inbox within 5 min for example). If this is playing with other people's money, then yes, sure. However, I think it's fair to say that it's the way free market capitalism works overall. We would have a very different system if it didn't.
I'd like to make another point for those reading and citing Virgin's losses over X amount of years as a reason not to bail them out. For essentially any business to grow, it's very hard not to operate at a loss during this growth - it's common, almost necessary and well accepted. This is why loss making businesses have value and why people continue to invest in loss making businesses (contrary to those asking why would anyone do it). This is because provided revenue is increasing, the business will reach a point where it transitions. This was happening at VA right before this mess and here are the numbers to demonstrate why:
1. Qantas - since 2008 on a total revenue of $168b, with a profit of $2.1b The dominant market player, over the twice the size of VA). Revenue since 2008 has increased by
15%
2. In the same period, VA has grown revenue by
135%.
The reality is that QF has barely grown while VA has had massive growth and I can tell you first hand that growth of a business costs money, and lots of it! Successfully managing the transition from growth to stabilization (breaking even then turning a profit) is where the management comes in and what PS was well on his way to doing this. Once again, very normal and generally part of a plan. Has VA perfectly managed the situation and made all the right moves and decisions? Probably not! However for anyone reading their balance sheets watching the cash balance steadily increase and observing the statutory vs underlying figures, it was reasonably clear on why the shareholders were not kicking up a big fuss.