Patience my friends... patience.
The "break-even" point for
VB's expansion programme is 18 to 24 months. The share price, now, is a creature of the economic Apocalypse... not Virgin Blue. The share price is beyond Absolute Bargain levels and has achieved Once-In-A-Lifetime-Opportunity-For-A-Rediculously-Easy-Money-To-Be-Made-On-This-One-If-You-Get -Off-Your-Posterior-And-Open-A-Comsec-Account-And-Buy-Them... status.
Mind you... the price of several Australian companies outside of aviation have achieved this status as well... BHP and CSL are two that come to mind.
Yes, there will be a downturn in the economy that will hit all of the companies in some way... but the share prices are now well below that level and there will come a time... whenever that will be... that the current trading behaviour will pass.
People have rather short memories for cataclysmic events that ensure that, as a species, we keep making the same mistakes throughout history... war... stockmarket crashes... financial disasters... other economic oblivions. We have them, they pass with time, we get drunk on the rise to success... blind ourselves to the possibility of failure... and then make the same mistakes again.
The future of Virgin Blue is looking good for the following reasons...
- Virgin Blue has cash.
- Virgin Blue has cash flow.
- Virgin Blue has assets of considerable value.
- Virgin Blue's main competitor is suffering.
- Virgin Blue has an expansion programme that can gain market share.
- Virgin Blue has secured debt instruments to cover their expansion programme.
The day before yesterday, CNN broadcast a short piece by one of their business presenters that speculated on the future of the travel industry. Whilst he believed that there would be an increase in the number of airlines failing as businesses, he also made the comment... business people are still traveling... they're just traveling economy instead of business class and staying in three star hotels instead of five star hotels.