Originally Posted by
machtuk
"IF" VA comes back under some sort of guise they will come back in a very fragile market! The whole country has been decimated on so many fronts (forget the world) so yield will be low at least in the foreseeable future.
To make any attempt work the new "Co" will have to be a very lean operation. Now what can be cut!
Leasing? Hardly!
Maint? Nope!
Fuel? They wish!
Airways charges? Hardly!
Airport leases and associated costs? In yr dreams!
CREW/personel? Exactly!
The hunan element is the only area that can be squeezed & they will come flocking!
Interesting times ahead! If the flying game returns anywhere near pre the CV BS then it won't return for everyone!
Well actually....
- Leases: Good chance the leases will actually be cheaper - and if the leasors dont come to the party in any new business, they can have their aircraft back, because all won’t be required. And as an aircraft owner, you would not want to own second hand jets at the moment.
- Fuel: Not sure if you have seen the price of oil at the moment. But in a soft economy, that price of fuel isn’t going up in a hurry any time soon.
- Maintenance: You’re quite possibly right here. But less flying means less maintenance overheads.
- Airport leases: Yup fair enough.
- Staff wages: Again you are probably right. Having said that, if the airline is sold as a going concern, all employee EAs remain in force. That of course doesn’t stop a new owner from shrinking the workforce, or unions negotiating with new owners to keep more people employed but on lower Ts and Cs.
Very simplistically airline costs are 1/3 fuel, 1/3 employee costs and 1/3 fixed overheads. Those fixed overheads also include real estate leases etc etc. All of which you’d expect to be up for renegotiation.
This certainly doesn’t mean things will be fine and beaut. Obviously things aren’t going to be great at Virgin for quite a while. To start from an almost $0 revenue position is going to be very very difficult.
Once travel restrictions are lifted, I am planning on being on 50% salary for 12-18 months. From that point who knows - but any serious buyer of VA would (you would hope) understand the market they are getting themselves into. And assuming it’s not bought by private equity with the intention of chopping it up, or flicking it in 3 years time, within the medium term, it COULD be a profitable business.