A spoof e-mail sent to all staff yesterday
Press Release
London, 29th March 2001 - Virgin Express Holdings, pie [NASDAQ: VIRGY - Brussels: POX]
Virgin Express Holdings Plc
Announces 4th Quarter
and Full Year 2000 Results
Highlights
• Virgin Express on track for breakeven in 2001, following years of pissing around.
• Refocused on scheduled flights from Brussels hub (The one loosing the MOST money).
• Shannon, Gatwick and Berlin stations closed (Naturally you guessed it, the ones making money)
• Total loss of EUR 65.2 million. - oh dear.
• Restructuring costs of EUR 17.5 million (EUR 2.8 million in 1999).
• Operating losses of EUR 46.7 million (EUR 4.9 million in 1999).
• Results hit by high fuel prices and US dollar strength... hmm, we never saw THAT coming.
• Yields and load factors growing 100% in 4th Quarter 2000 and 1st Quarter 2001. (10 pax to 20pax)
Chairman's Statement
Year 2000 was a year of refocusing and restructuring, as signalled in my Chairman's report of last year.
I've already been at the helm of the VEI screw-up so you ain't seen nothing yet! We completed the year
with a much-simplified business, focussed on scheduled passengers for a change, from a Brussels hub,
to eight European locations, although how Ryanair manage to expand to that many routes each season is
beyond me. This completes phase one of three phases to return our company to anything like a profit.
Phase two will concentrate on improving the quality of the product (by wast er spendin er investing
resources) and delivering profits, ready for expansion in phase three, into a rapidly growing European
market for lower fare travel. Of course by the time you belgians stop arguing and decide how to get
around to this, Easyjet and Ryanair will have put us out of business.
Results
Results for the year showed a total loss of EUR 65.2 million (EUR 5.7 million for the year 1999). This was
made up of restructuring costs of EUR 17.5 million and operating losses of EUR 46.7 million. What the
heck. Richard's a sporting kind of bloke.
Restructuring costs
In March 2000 we announced that we would not be renewing our unprofitable time based charter contract
from winter 2000/2001, as Neckermann was riding us just that little bit too much. In December 2000,
following a strategic panic attack, we announced we would concentrate on our Brussels hub. The Irish
airline, Virgin Express Ireland that we'd convinced ourselves we owned, would be sold or closed down
and our stations in Shannon, Gatwick and Berlin would be closed. The profitable flights from these
airports have now been stopped. Of our fleet of 22 aircraft Boeing-737s, 11 were surplus to our
operational fleet requirement. Four have been returned successfully to lessors (more money in penalties)
and seven subleased to third parties - at a loss, of course! This sort of consistency will form part of our
new image.Operating losses
Eh - sorry about that.
Yield, load factor and distribution channels
We're having someone look into exactly what these mean - Yields and load factors. We've heard other
airlines banging on about them for years but we seem to have survived perfectly well (losses aside)
without them. Still, we'll give anything a try once.
Sabena
We are concerned about the uncertain future of Sabena and the rumoured intention of its 49.5% stake
shareholder, SAirGroup, to dispose of its investment. We might actually have to put some effort into
sustaining ourselves. We have also ignored the tremendous expansion of the Brussels based airline
activities over the past number of years. This has led to significant excess capacity on our flights and we
have an idea that this may be contributing to losses for all other significant operators in Brussels.
Sabena's losses have been unfairly subsidised by the Belgian State, (unlike our losses being subsidised
by Branson - that's different) delaying the need for them to restructure. Independent airlines, operating
out of Brussels, many of them, like Virgin Express, low cost operators, are heavily loss making or have
gone out of business. Hang on a minute - did I say low-cost airlines -(plural)? This unfair subsidy must
not be allowed to continue. To this end, we have made strong representation to the Belgian Government
and to European Union Commission, asking that WE get some handouts too. This sound financial
approach has worked well for Sabena in the past and we are hoping for similar success.
Perspectives
Year 2000 has been a very difficult year with both the restructuring of our business and the exceptionally
high fuel and dollar costs. However, we have emerged with one airline operating from a Brussels hub on
a much-simplified route structure, even though everyone around us is expanding, more passenger
business now and then, and a strong, determined management team in place for more than a month now
- a new company record.
In year 2001 we will concentrate on improving the quality of the product we offer our passengers, and on
delivering a close to breakeven result with positive cash flow on our ongoing business. That few bob from
the government should just tip us out of the red. We have started the year well, (well as in-a deep hole)
with improvements to both yields and loadfactors, ada much more favourable fuel and dollar rate< now
hedged respectively 75 % and 69 %. Naturally we won't bother factoring a cushion for the dramatic fuel
increases which happened last year, 'cos it wasn't our fault.
I feel confident that we are now building the foundations of a low fare scheduled business that can grow
profitably into what's left of a rapidly expanding European market, after all the serious players like Easyjet
and Ryanair are done.
Michael D.Hoare
Executive Chairman
(I know, I get a laugh out of that title too! )