Virgin results Vs BA
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Virgin results Vs BA
A direct comparison is unfair given the relative size of companies but there are a few reasons to be concerned about BA's long term future.
Virgin report an INCREASE in premium pax while BA record that economic conditions have had a significant impact on this market segment and record a significant REDUCTION in premium. Undoubtably Virgin have more leeway to adjust margin as their overheads are proportionatley lower than thos eof BA who have failed to successfully restructure and are lumbered with a historically expensive business model.
I would seriously question whether BA will be able to claim back those premium pax that have apparently switched allegiance - perhaps that's why they are removing First and reducing the size of premium section in all new A/C.
Could BA still become the Aeroflot of the western world?
Virgin report an INCREASE in premium pax while BA record that economic conditions have had a significant impact on this market segment and record a significant REDUCTION in premium. Undoubtably Virgin have more leeway to adjust margin as their overheads are proportionatley lower than thos eof BA who have failed to successfully restructure and are lumbered with a historically expensive business model.
I would seriously question whether BA will be able to claim back those premium pax that have apparently switched allegiance - perhaps that's why they are removing First and reducing the size of premium section in all new A/C.
Could BA still become the Aeroflot of the western world?
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Look into it a little more - VS have said that the majority of their results was down to good hedging, plus an increase in premium sales (which is largely due to grabbing some BA share after the T5 opening fiasco.)
Virgin has themselves admitted that "it will be almost impossible to make a profit this year", and if you look at the IATA passenger numbers then all airlines are losing premium traffic.
BA`s reduction in premium capacity is a prudent move during the downturn, as passengers downgrade.
BA will survive as they have a dominant market position within the UK.
Virgin has themselves admitted that "it will be almost impossible to make a profit this year", and if you look at the IATA passenger numbers then all airlines are losing premium traffic.
BA`s reduction in premium capacity is a prudent move during the downturn, as passengers downgrade.
BA will survive as they have a dominant market position within the UK.
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BA will survive as they have a dominant market position within the UK.
dominant market position
The economy is one factor and I would agree with VS that a profit in the forthcoming year will be nigh on impossible - which is exactly what I forecast about BA in the year ahead. The VS results help illustrate that BA is suffering from a series of very poor management decisions - of which the organisation and timing of the opening of T5 is only one. Poor Willie Walsh will have run out of apologies before the city wake up and smell the over brewed galley coffee.
There is no use tinkering around the edges of BA. This is the time to completely restructure the business. And no, I don't mean paint the flipping tail fins again!!
Controversial, moi?
We wouldn't like facts to get in the way of a chance to gloat over BA now would we?
FT.com / Companies / Airlines - UK rules help Virgin Atlantic profit
FT.com / Companies / Airlines - UK rules help Virgin Atlantic profit
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I was listening to the Today programme on Radio 4 yesterday and they were talking to someone from Virgin about the results (it wasn't Branson) and I was surprised the Virgin guy wasn't gloating more about the comparision with BA. The obvious reason is they din't want BA to come out pointing out the different firgures!
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Munnyspinner : The ( Billed ) Wisdom of Scottish Bankers
Munnyspinner your anti BA rants since they refused you the special treatment of post deadline boarding boarding after you couldn't be a***d to turn up on time at T5 are becoming tiresome. If you had any idea what you were on about you would know that Aeroflot are actually pretty damn good these days, but you know "facts" and "stories" are a bit of an old muddle....
There is a good article in todays Times on this today. Worth a look.
There is a good article in todays Times on this today. Worth a look.
Controversial, moi?
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From my own experience and and confirmation in Skytrax postings, Virgin service has declined steadily over the last few years especially in terms of on board service by cabin crew and quality of on board catering service. yet how is it doing so well?
Is it all down to cheap seat prices? it is interesting to note the airlines doing well such as Ryanair, Flybe and Virgin are all playing the mass market, less service/ low service and potentially cheap price whilst those trying to retain quality of service (BA) are suffering and are unable to compete. I suppose the pool of premium passengers is shrinking and hence the economics of catering for this decreasing pool are becoming less viable.
I personally think BA are high quality but its a shame its route network is shrinking especially within the UK.
Sad for those who are trying to perpetuate the golden days of flying.
There is a great article in Airliner world this month about the 25 years of virgin. It makes impressive reading. Is the brand and former reputation good enough to keep its prospects up?
Interesting times!
Is it all down to cheap seat prices? it is interesting to note the airlines doing well such as Ryanair, Flybe and Virgin are all playing the mass market, less service/ low service and potentially cheap price whilst those trying to retain quality of service (BA) are suffering and are unable to compete. I suppose the pool of premium passengers is shrinking and hence the economics of catering for this decreasing pool are becoming less viable.
I personally think BA are high quality but its a shame its route network is shrinking especially within the UK.
Sad for those who are trying to perpetuate the golden days of flying.
There is a great article in Airliner world this month about the 25 years of virgin. It makes impressive reading. Is the brand and former reputation good enough to keep its prospects up?
Interesting times!
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From another broker
\Virgin Atlantic underlying result very similar to BA - Yesterday Virgin Atlantic announced that pretax profits nearly doubled during YE Feb 2009 despite high fuel and the economic slowdown. Pretax profits doubled to £68.4m from £34.8m. Having seen the P&L, we now know that the continuing operating result of the company actually fell from £44m in FY08 to £25m in FY09. Moreover, Virgin;s FY09 result was boosted by a £68m exchange rate gain on retranslation of USD balances held in the short term to meet future USD obligations. In FY09 there was a £2m loss in this line. Stripping out this non-cash item, which we would not describe as operating, yields an underlying operating loss in FY09 of £42m (-1.6% margin) compared to an FY08 operating profit of £46m (+1.9% margin). This tells us that Virgin;s FY09 margin is only very slightly better than BA;s which we would put down to the timing of the year end, missing out March, which demonstrated weaker trading than Feb for the quoted airlines and which also lacked Easter.
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Chris - Virgin timed this announcement perfectly.
It was the first working day after BA announced its biggest losses (for the year ended March) since privatisation and yesterday was a slow news day. Virgin's "profits" for the year ended February was the lead story on the business section of the BBC News website for most of the day. The story, on the face of it, gave the impression that Virgin was outperforming BA and tried to allay any concerns the public may have about Virgin's financial performance.
Whilst most newspapers eventually managed to get to the bottom of the story, BBC News should frankly be ashamed of itself for, once again, reproducing Virgin spin.
It's all absolutely typical of Virgin's spin doctor Paul Charles.
I would like to think that Virgin's credibility with the media is shot to pieces after this episode, but given how they know to feed the media a good story, I doubt it.
It was the first working day after BA announced its biggest losses (for the year ended March) since privatisation and yesterday was a slow news day. Virgin's "profits" for the year ended February was the lead story on the business section of the BBC News website for most of the day. The story, on the face of it, gave the impression that Virgin was outperforming BA and tried to allay any concerns the public may have about Virgin's financial performance.
Whilst most newspapers eventually managed to get to the bottom of the story, BBC News should frankly be ashamed of itself for, once again, reproducing Virgin spin.
It's all absolutely typical of Virgin's spin doctor Paul Charles.
I would like to think that Virgin's credibility with the media is shot to pieces after this episode, but given how they know to feed the media a good story, I doubt it.
Last edited by LD12986; 27th May 2009 at 21:20.
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An analysts in TheTimes (27/5) pointed out that last year's reported profits did not include the £32m they put aside for fines associated with the fuel collaboration with BA. Therefore their actual profits last year were similar to this years. No big increase. Also, they have released this year's results 2 months earlier than last year's - a day or so after BA's announcement!
Furthermore, any improvement in profits is likely to have been achieved through cost cuttings, according to the analyst, which would explain why the company is continuing with its redundancy plans.
Still, it's a commendable achievement that helps to show the fundemental structural problems dogging BA.
Furthermore, any improvement in profits is likely to have been achieved through cost cuttings, according to the analyst, which would explain why the company is continuing with its redundancy plans.
Still, it's a commendable achievement that helps to show the fundemental structural problems dogging BA.
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Skipness One Echo
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VS would look better if their chaps could be a little less perfidious - or at least don't get caught.
Pretty much supporting Da Dog's quotation.
Chief financial officer Keith Williams has laid bare Virgin Atlantic’s financial results in his BA News weekly column, saying the results were not as spectacular as they might seem.
Keith writes: “Since Virgin Atlantic is a private company, it enjoys the luxury of limited disclosure, so tells us only what it wants. But because the airline is 49 per cent owned by Singapore Airlines – which, as a publicly listed company, has to use international financial reporting standards – we get a much clearer picture.”
According to Chan Hon Chew, senior vice-president finance at Singapore, the group’s fourth quarter losses of £45.9m “largely” come from its share of losses at Virgin. And Keith writes: “It was pleasing that yesterday’s broadsheet media identified this lurch into Virgin accounting territory.
“When we look at the figures, Virgin’s profit is attributable to one accounting item. They bought some dollars last year to cover off the dollar expenses that they will incur this year. Given that the dollar strengthened, they booked this as operating profit – £68m out of the total £68.4m profit.
“At February 2009 – Virgin’s accounting date – it was only a paper profit.
Whether it turns out to be a real profit or not will depend on the dollar rate when the expenses are incurred. And given the recent weakening of the dollar, it may have largely reversed this year.
“If we remove the profit they made on currency exchange, Virgin actually broke even during the 12-month period, and on the same basis made a loss of £42m at the operating level on turnover of £2578m – an operating margin of minus 1.6 per cent.”
Keith writes: “Since Virgin Atlantic is a private company, it enjoys the luxury of limited disclosure, so tells us only what it wants. But because the airline is 49 per cent owned by Singapore Airlines – which, as a publicly listed company, has to use international financial reporting standards – we get a much clearer picture.”
According to Chan Hon Chew, senior vice-president finance at Singapore, the group’s fourth quarter losses of £45.9m “largely” come from its share of losses at Virgin. And Keith writes: “It was pleasing that yesterday’s broadsheet media identified this lurch into Virgin accounting territory.
“When we look at the figures, Virgin’s profit is attributable to one accounting item. They bought some dollars last year to cover off the dollar expenses that they will incur this year. Given that the dollar strengthened, they booked this as operating profit – £68m out of the total £68.4m profit.
“At February 2009 – Virgin’s accounting date – it was only a paper profit.
Whether it turns out to be a real profit or not will depend on the dollar rate when the expenses are incurred. And given the recent weakening of the dollar, it may have largely reversed this year.
“If we remove the profit they made on currency exchange, Virgin actually broke even during the 12-month period, and on the same basis made a loss of £42m at the operating level on turnover of £2578m – an operating margin of minus 1.6 per cent.”
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Hang on - BA are the dominant player here. Why are they so conceredn about what the competition does or says?
VS put a glossy announcement on their results. Are BA embarrassed that their results 'looked' proportionately worse? Surely they are big enough to brush that off?
VS put a glossy announcement on their results. Are BA embarrassed that their results 'looked' proportionately worse? Surely they are big enough to brush that off?
Last edited by Munnyspinner; 28th May 2009 at 22:12.
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Munnyspinner - Virgin did more than "put a glossy announcement" on its results. Believe me, if a public company tried to mislead the City over its financial performance in that way heads would be rolling.
As above, Virgin deliberately timed their announcement to make BA look bad by comparison and most of the media initially followed this line. The free publicity Virgin initially received must have been worth tens of thousands of pounds.
As above, Virgin deliberately timed their announcement to make BA look bad by comparison and most of the media initially followed this line. The free publicity Virgin initially received must have been worth tens of thousands of pounds.