Originally Posted by
Dragun
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.
I see this from a quite different perspective.
VA, initially under BG and then accelerated under JB, has bought market share. Yes, you are correct, it costs a lot of money to buy market share.
Meanwhile, whilst VAH were booking massive losses as they bought market share (especially premium / corporate), QF were still maintaining profitability (FY13 excepted).
Clearly this strategy has failed.
Why should the Australian taxpayer fund VA’s failure?