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Flybe-9

Old 12th Jan 2019, 08:08
  #1361 (permalink)  
 
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Virgin

So Flybe lives on.

On a strategic basis orientating the airline to add value through feeding long haul services that Virgin has will be no.1 priority. Collaboration with AFKL will be big, given their influence. Then Stobart's desires. Then a pruned back network focussing on the top performing routes.

Given Stobart's success with Aer Lingus Regional model and now the placement of Embraer for BACF, will the future shape and size of the new Flybe include a large focus on ACMI?

Substantial changes to the operations at airports like SOU, BHD and NQY would inevitably have huge implications for those airports.
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Old 12th Jan 2019, 08:18
  #1362 (permalink)  
 
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On a strategic basis orientating the airline to add value through feeding long haul services that Virgin has will be no.1 priority.
That would seem to be the case, but:
  • LHR is slot constrained, so how much more than can they do there?
  • At MAN there is the issue of hubbing from a "challenged" T3 over to T2 for the Virgin LH
  • BE already collaborate with AFKL. Certainly there will be slot issues with increasing ops to AMS, and aren't there union agreements at KLM which limit the number of code-share flights that BE can operate?
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Old 12th Jan 2019, 08:35
  #1363 (permalink)  
 
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I don't think many of us saw Virgin coming along at the 11th hour in a rescue deal.

Lots of froth on the web and on here as to the future strategy and operations of the new Company Connect Air, including my tuppence below.

Too early to say on where and on whom the hatchet falls, and where the golden chalice lies.
The existing routes structure and fleet is rather messy for Virgin to comprehend,
Virgin Red didn't last long feeding into LHR thus I don't see at the moment how the new Connect helps to strengthen VS's (and Delta's) L/H Ops at LHR even if NQY ABZ and EDI to/from LHR remain as existing.
(or helping those L/H from Manchester Glasgow or Belfast)

Anyway, interesting times - my thoughts with staff - awful uncertainty for many of them.
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Old 12th Jan 2019, 09:59
  #1364 (permalink)  
 
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Originally Posted by inOban View Post
Two thoughts.
1. What do people think that the Virgin brand brings to any enterprise in 2019? To me it's redolent of a generation ago. No-one would choose it as a brand name now. As I see it, Branson's involvement with the businesses is limited to collecting the license fees for using the name.
I think you are absolutely correct that nobody would come up with Virgin as a brand name today, it belongs in the 70's. Now it would be offensive regardless of the context. But, because it is so established as a brand when someone says Virgin, we think airline. Others may think radio / leisure centre / holiday / TV / mobile etc. That is its strength. No-one responds with a schoolboy blush to the name, because the first definition in the dictionary isn't what comes to mind.
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Old 12th Jan 2019, 10:39
  #1365 (permalink)  
 
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Originally Posted by B Fraser View Post
Would you not have expected Virgin to halt the sale as a condition of buying the company ? After all, Virgin will be more interested in feeding customers into a major hub rather than flying oil rig workers between SOU and ABZ. The slots are of more immediate value to them than any other asset. The timing of the announcement just before the market closed is obviously deliberate so you have to ask why ? The market reaction on Monday morning will be very interesting, especially given that Mr Tinkler is stoking the bonfire. I haven't worked that one out just yet but one trader described it to me as "ballsy".
If a company owns 90 % of a listed PLC then it has the right to acquire and cancel the other 10% of shares it doesn't own. This happened years ago at Manchester United and at other companies. Only reason for buying 10% at this later stage is to require the buying company to buy the 10% at a higher price than everything else or to get some concessions elsewhere. There is a word for this but will avoid using it.

Having reread the Sky article it appears Mr T is using this for leverage elsewhere.
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Old 12th Jan 2019, 10:49
  #1366 (permalink)  
 
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Originally Posted by rog747 View Post
I don't think many of us saw Virgin coming along at the 11th hour in a rescue deal.
Nobody undertakes a rescue in business unless there is a massive and substantial financial return for doing so.
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Old 12th Jan 2019, 11:26
  #1367 (permalink)  
 
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The share price just before this was announced was about 12p. That was what the market thought the airline was worth with all the bad news in the public domain. Markets are efficient here, it's not like someone knew something the rest didn't. And then the board/management do a deal for 1p? Are they saying the market had them overpriced 12 times?
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Old 12th Jan 2019, 11:55
  #1368 (permalink)  
 
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Originally Posted by NickBarnes View Post
I use the NWI-EXT route often, loads often 80% plus nowadays, of course that still doesn't mean it makes money, I fear that regional connection will be lost now and the 6 hour car journey will return.
Perhaps Loganair might pick up some of the routes that *may* fall away. They have picked up Derry-Glasgow after Ryanair pulled out and Glasgow-Düsseldorf next year once Eurowings stops. They have also announced fleet replacement to ATRs from Saabs and may want to increase the amount of rotations each plane does as one would hope reliability increases and less contingency is required.
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Old 12th Jan 2019, 12:58
  #1369 (permalink)  
 
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Originally Posted by True Blue View Post
The share price just before this was announced was about 12p. That was what the market thought the airline was worth with all the bad news in the public domain. Markets are efficient here, it's not like someone knew something the rest didn't. And then the board/management do a deal for 1p? Are they saying the market had them overpriced 12 times?
Clearly there was information that wasn’t in the public domain and that was probably the extent to which the card processors were turning off the cash. The directors will run around pointing at this unique set of circumstances that all other airlines have to cope with but the true story of flybe is incompetent management replaced by even more incompetent management that didn’t even have the competence to recognise that they had a business model that didn’t work. There were many opportunities to address this and shareholders have been poorly served.
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Old 12th Jan 2019, 13:36
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Couldn’t have put it better myself, Runway30.

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Old 12th Jan 2019, 14:54
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Couldn’t have put it better myself, Runway30.
Except that I am not sure what that business model was. Was it "to profitably fly smaller aeroplanes on routes (or on routes that require more frequency) that cannot be flown profitably by airlines who operate bigger aeroplanes." That is reasonable but they couldn't do it profitably. And then we have had

"To fly aeroplanes we shouldn't have on routes because no one will take them off our hands"

"To try to replace our franchise partners on routes they know so much better than us"

Any one got a better idea of what they were trying to do.
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Old 12th Jan 2019, 15:01
  #1372 (permalink)  
 
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Clearly there was information that wasn’t in the public domain and that was probably the extent to which the card processors were turning off the cash.
Article in today's Times where BE make it clear that this is what was happening.
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Old 12th Jan 2019, 15:57
  #1373 (permalink)  
 
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There is an interesting story here which is how some city institutions who had built stakes in the company as the price dropped took the decision to sell at the end of December. It will always be the case that city investors can put more resources into analysis than retail investors and in that sense can maybe price a share better than the rest of the market. However, was it the case here that information about the view of card processors was circulating amongst institutional investors giving them inside information compared to retail investors?
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Old 12th Jan 2019, 18:15
  #1374 (permalink)  
 
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Old 12th Jan 2019, 20:35
  #1375 (permalink)  
 
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Originally Posted by 22/04 View Post
Except that I am not sure what that business model was. Was it "to profitably fly smaller aeroplanes on routes (or on routes that require more frequency) that cannot be flown profitably by airlines who operate bigger aeroplanes." That is reasonable but they couldn't do it profitably. And then we have had

"To fly aeroplanes we shouldn't have on routes because no one will take them off our hands"

"To try to replace our franchise partners on routes they know so much better than us"

Any one got a better idea of what they were trying to do.
Good summary and in truth nobody has an idea.

Which gets to next question.

What exactly are new owners going to do to drive profitability, over something that has been shown by both BA Connect and Flybe not to work. Slash and burn is the only option with a high % of the portfolio of routes.
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Old 12th Jan 2019, 21:02
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The fact that credit card payments were being withheld would have been common knowledge in the investment industry. As I said previously, it is efficient, news is out in seconds. But they still valued the shares at 12p. They closed yesterday about 3.5p. Who arrived at the 1p valuation/offer? I have read The Times article. One processing company had started to hold back more than normal.
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Old 12th Jan 2019, 21:17
  #1377 (permalink)  
 
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Originally Posted by racedo View Post
Good summary and in truth nobody has an idea.

Which gets to next question.

What exactly are new owners going to do to drive profitability, over something that has been shown by both BA Connect and Flybe not to work. Slash and burn is the only option with a high % of the portfolio of routes.
Costs will be increased to provide Virgin service standards and pay fees for using the Virgin name. Anything that doesn’t feed Virgin or contribute to the growth of SEN must surely be at risk.
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Old 12th Jan 2019, 21:25
  #1378 (permalink)  
 
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Originally Posted by True Blue View Post
The fact that credit card payments were being withheld would have been common knowledge in the investment industry. As I said previously, it is efficient, news is out in seconds. But they still valued the shares at 12p. They closed yesterday about 3.5p. Who arrived at the 1p valuation/offer? I have read The Times article. One processing company had started to hold back more than normal.
Well the shareholders can reject the 1p offer if they wish but clearly the directors don’t think it is possible to carry on as an independent company. Andrew Tinkler must have paid more than 1p per share for his 10% stake and so won’t be very keen to sell.
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Old 13th Jan 2019, 04:29
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Originally Posted by runway30 View Post


Costs will be increased to provide Virgin service standards and pay fees for using the Virgin name. Anything that doesn’t feed Virgin or contribute to the growth of SEN must surely be at risk.
I personally doubt they'll go from the buy onboard model to full service and feeding Virgin will be very limited as at Heathrow they can't get the slots and at MAN they aren't that large ( Virgin that is) though they could in the long term build MAN up especially if they looked at the A321NEOLR for secondary cities. Personally I think Flybe will continue much as they are but a bit more streamlined. As for SEN well what are they going to introduce that won't effect LCY or Ryanair?
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Old 13th Jan 2019, 08:19
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Originally Posted by runway30 View Post


Costs will be increased to provide Virgin service standards and pay fees for using the Virgin name. Anything that doesn’t feed Virgin or contribute to the growth of SEN must surely be at risk.
There will be a training element to the virgin customer service standards, that will simply replace the current BE training. BE rarely get criticised for their customer service, more so their operational performance.
Costs will be saved by transferring to current VS call centres and streamlining the whole process. Feeder Airlines are often marginal but provide much needed feed to the parent airline. That's why keeping the profitable domestic and european routes that don't feed into the hubs will boost financial performance.
If VS uses this as an opportunity to expand from MAN it will likely mainly be USA routes, which normally depart before lunchtime. That means anyone connecting onto those flights will need to arrive in MAN between say 0800-1000, if not earlier. With the US arrivals being between say 0500-0800, pretty much only one bank of flights being needed, so say any feeder flights arriving and departing between 0900-1000. It depends how VS can work the long haul arrival and departure times. They will need to do something with the aircraft the rest of the day. VS have shrunk their Asia and Africa flights from LHR over recent years so its unlikely to see any from MAN in the immediate future. Most feeder Airlines feed into big hugs with short haul and long haul flights throughout the world, operating all day long. AF/KL, BA, LH, IB. VS don't have short haul to feed into or with the exception if some LHR flights, hardly any in the afternoon from other bases.
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