Originally Posted by
BNEA320
you misquoted me. I gave an example of 50% of workforce at 75% of what they were getting at VA, not 50%.
As little as a 1% change here, a 1% change there, can make a huge difference, when margins are so small.
Read about Southwest, I think it was in the book NUTS
It said, working backwards, their average annual profit over many years, equated to 1 passenger per flight. In rough terms, that implied 1 less passenger per flight on average, no profit. 1 more passenger per flight, huge profit.
Obviously, if certain flights full, cannot get another passenger on board.
It just highlighted, how little things can make a huge difference.
BNEA320,
You're comparing apples and oranges while also making comparisons that aren't correct. Yes small changes in % can make a big difference but only if everything else remains the same (in your pie chart). Consider the grocery industry, huge turnover and wafer thin margins, anything goes wrong and the shtf. The grocery industry back 20-30 yrs ago was a crap business till the ACCC allowed the consolidation to what we have now; Coles & Wollies, forget IGA, of little consequence. They control everything now all the way up the chain. The same can be said when it comes to fuel retailing (tho a little different), back in the 90s Caltex was a dog, again industry consolidation and margins are nice and fat.
Comparing SWA to the position of VA is utterly ridiculous. SWA has had long term stable and excellent management, while also always having been in a strong financial position (very few loses reported), whereas VA is debt loaded and while Admin will resolve some of that not enough to challenge QF in any real way. I doubt VA will do nothing but fluff around the margins, enough maybe to crimp QF returns, but not challenge it or provide any real competition.
VA will be faux turnaround and then offloaded to unsophisticated investors via an IPO with the investment house making money on the IPO, the sellers a nice tidy return with the new shareholders likely to be holding a dog of an investment.