Originally Posted by
BNEA320
& how do you arrive at that idea ?
50% of the workforce at 75% of VA pay would make a huge difference(that's 37.5% of current staff costs), especially now fuel is so cheap, especially if any fuel hedging at low prices can be achieved.
With the new worldwide glut of aircraft, any sort of decent negotiator would be able to get a massive discount on aircraft leasing costs.
Airport handling would also be negotiated downwards.
Okay, I'll bite! You're playing with percentages to make your idea look better than it is. First off, lets forget the headcount cut and look at your savings on the wages bill. It stands at 15% (according to the pie chart) and you get a 25% cut. 25% of your 15% is 3.75%, so your wages bill drops from 15% to 11.25% of Total Op Costs. WOW! Now lets cut staff numbers. You now have 50% less staff, are you seriously suggesting that VA was overstaffed by that much? No, I didn't think so, so your revenue has gone down substantially as well as your other costs, so therefore your claim to have reduced your wages component as a % of T.O.C only stands if their is no change to the rest of the pie chart. Are you seriously contending that VA will continue to do what it was doing prior with 50% less employees?
Now fuel, yeah really cheap, but there's a reason for that.
"The earnings forecast, which was revealed byStreet Talk on Monday night, said Virgin expected to record about $5 billion revenue in 2022, back to 2015 levels and about 15 per cent less than last year." Now if they're back to this revenue level I'd say fuel won't be sooo cheap, I know if fell out of bed earlier this year with the Saudi/ Russia dispute, but it literally fell down the elevator shaft when Cov19 appeared, so my guess is it would recover somewhat as well.
Fuel Hedging: must admit I know very little about it. The little I think I understand is that hedging isn't a game of locking in low costs otherwise CX wouldn't have hedged at massive prices some yrs ago, I understand it's to lock in your costs at a point you're happy with, if your competitors don't and prices fall they'll increase their profits or lower fares and take market share off you, if they increase well it's the opposite. I know now is not the time to compare short and long term bond rates, but usually the longer the period the higher the prices. I'd be surprised that you could hedge fuel at todays prices out a few yrs. I'd have though Shell, BP etc have a good idea where demand will go and price accordingly, and if that's low it'll be because demand is low therefore traffic will be low!
I also wouldn't expect lessors to just hand over their a/c for nothing either, not saying they're won't agree to a reduction, but I bet nothing like what you appear to have in mind. Perth Airport also isn't just going to cut their charges as well, I wonder what QF would say on that. Nah, nothing I guess as they're more than happy with Perth Airport right now; they're having a love-fest. Compare a/c leases with commercial property, it's valued by a large part on the rent and when an owner takes a rent cut they're telling the market that the property they own is now worth less. You'll see commercial property empty for months before they cut the rent.
In the meantime the new VA is competing against a QF that has just lost most of it's international market for a good 18 mths. They've had their foot on VA's throat for a long time and I doubt they're going to remove it anytime soon.
I wish the employees all the best, but I think the new VA will be pushing the proverbial up hill.
Btw, "Originally Posted by
Icarus2001 View Post
Well it certainly was not crew wages that drove them into administration". Icarus only claimed that crew wages didn't crash the company and nothing you've mentioned proves otherwise.