Originally Posted by
virginexcess
I don't think anyone is suggesting it will be bigger. But I don't think you need to be an accountant to work out that if there's maybe $3bn less debt ($240m saved in interest payments). 330 leases wiped. I don't know the figure on that but I've heard they lose the company in the vicinity of 30-40m per year. 1300 employees redundant already, another $13m on the bottom line. Maybe 20 x 737 airframes gone with the axing of VANZ. A320 fleet gone from Tiger. Pretty easily you can see $300m in savings straight up. Scurrah has been talking between 300 to 400m in cost reductions are possible. Yep, there will be less airframes, but will there be an equivalent drop in revenue. I suspect not. Unprofitable routes will also be axed. The company had already withdrawn from Hong Kong, so it's not as if there isn't already a deep understanding of where the problems are and a fair bit of action has already been taken. In fact pre 'rona predictions were for a return to profitability despite having the current debt burden.
It's pretty easy to present a cogent argument that resturctured and unburdened from a significant amount of debt, Virgin will absolutley be profitable. I would like to say "and quickly" but that will be dependent on how the climb out of lockdown is managed, along with the publics appetite to be jammed into an aluminium tube with 180 other Covid-19 transportation units..
The question is probably not if it will be profitable, but more likely will the profit be well managed, or pissed away on McLaren's, as it has been in the past. And that wasn't even profit.
Counter that against Qantas who will have a very large wide body fleeet sitting around idle for 12 months hoovering up spare cash, and you can also see pretty easily that if domestic airtravel doesn't return to normal quickly, and the borders remain shut for 12 months, Qantas could very easily be in a cash poor position, and the topic of administration could be more than just a thread on Pprune. Elaine didn't run straight to the market and borrow a billion for the fun of it. He thinks he might need it. And of course you're aware that billion is debt. The same sort of debt that Virgin has. Just not as much of it. Yet.
The most likely outcome at this stage is, barring mass stupidity from the australlian public, a controlled return to the new normal over the next 6 months, with a competitive Virgin lite keeping the incumbent market leader honest.
Well said.
And therein lies the issue for the little irish, international borders remaining closed will be a FAR greater issue for the Q group going forward. Suppose it's why the POS has been so hell bent on destruction of VA.