Virgin Blue floundering about (AFR) - Conventional wisdom last May said Geoff Dixon was risking the Qantas (QAN-HOLD) franchise by starting Jetstar, but as of yesterday all the internal corporate confusion was centred in the Brisbane headquarters of fellow duopolist Virgin Blue (VBA-ADD). The company's major shareholders are at war. The company is
undergoing a hostile takeover from within. There is an internal fight over strategy; question marks over who is running the shop; basic mismanagement to leave a fuel bill unhedged; and a fundamental question of just what sort of airline it wants to be. The latter issue was the one supposed to dog Qantas, with conventional wisdom saying discount carriers and mainstream
carriers can't lie in the same bed. Dixon has so far proved the naysayers wrong by turning potential adversity into a big plus for Qantas by using the low-cost carrier as leverage to lower costs across the board in what must rank as one of the most successful management strategies in recent corporate Australian history. Instead of the internal culture clash
predicted at Qantas, it is Virgin that doesn't seem to know whether it wants to be a business airline, a discount carrier or both. The only thing we know for sure is Chris Corrigan from Patrick is in control and, for his own sake, the sooner he starts to pull the levers the better it will be for his shareholders. Oil price rises simply don't explain the full extent of the losses indicated by yet another profit warning, this time by 15 per cent to $135 million. External problems have maximum effect when the
internal machine isn't running well and that is what is happening at Virgin.
Argh..they be storm clouds gathering...