Virgin blue's future

[airbusa330]

Is Virgin's future blue?
Now that things are heating up in the Australian aviation market, which seems to be a cyclical market, and as more players are entering the fray, my question is where does the future lie for Virgin Blue?
Jetstar has the backing of the QF group, Tiger seems to be a speculative move initially (operate at a loss initially so as to have a good case to lobby the local govenment for rights to international routes because they are here to stay, they employ locals, all that is good for the local economy etc) and are backed by a bigger group, where does this leave VB? After all The Toll Group have indicated that they are looking to offload their VB holding whilst the going is good.
Interesting times lie ahead.

[pilotdude09]

If Virgin Blue keeps on top of its game, has a good product, offers what the consumer wants as it has been doing there is no reason why it cant suceed.

The business model they use works and thats whats important, its competed against Jetstar pretty well.

But the thing with Tiger is the planes arent exactly comfortable and they are appealing to the leisure market and that is obvious as per their released destinations. Thats all they will be able to appeal to. Virgin Blue appeals to Business flyers and leisure flyers.

They are introducing V Australia which should be very successful if run well, they have new E-jets, entering the New Zealand domestic market, most likely entering WA regional by the end of the year.

If you ask me they are doing pretty bloody well, they have a pretty good management team which seem to be keeping it on track.

If they do get put on the market, then things may change if it happens.....

:ok:

[captwawa]

i guess if they keep their pilots happy they will go along way

[AIRWAY]

The future is bright... The future is Orange... :}:E (Joking).

[Out-of-balance]

Is Virgin's future blue? Are you serious?

AB 330 - VB made $216 mil profit last year :ok:- Current load numbers indicate that that numbers will improve again this year - If QF had the management team of DJ (including Little & Co) last years fiasco would never of happened. Take Toll's team away and I think BG will continue to do an amazing job.

As I've said previously on this matter Toll have said they'll vacate DJ's share-register in part or in whole by years end. I believe this to be true - AGM this Wed & maybe we'll get an indication. Regardless these guys are tuff business people and they are NO DOUBT in talks with private equity regarding the sale. PE will be good for pilots!!!!!!

Let's be honest the Australian Domestic market is a duoploly. You can wrap up JQ anyway you like but a domestic boarding pass with QF printed on it will be worth money in years to come.

Tiger, Air Asia & Bla Bla Bla - CAVOK VBA:D

[Skystar320]

Regional in WA with EMB :=:=:=

Hope they are not thinking of going into Kalgoorlie again. Anyway between QF, XR, Skippers they pretty much have the market all glued up. Room for another?

[priapism]

Virgin Blue are here to stay. Trans Pacific runs will hurt Q.F badly and they seem to have developed a quite loyal customer base.

The big losers over the next few years will be Q.F long haul operations. With competition trans Pacific and Cathay now commencing a 3rd daily mel to H.K to both compete at the same time as the daily Q.F direct flight, and to offer a streamlined connection Hk to Heathrow, Q.F may find itself losing a lot of market share. Let alone the "trojan horse" type threat that Tiger pose via their owners.

That said , I feel the biggest threat to all airlines is an oil crisis. It can happen. Oil is not a renewable resource. While cars and other machines can be run on alternative fuels , I haven't heard much about a viable alternative fuel for a jet engine.

If fuel surcharge levies continue to rise , there is a real chance that passenger numbers will fall all around - that is when the weak will not survive.

[Kiwiconehead]

Can Tiger, as a foreign owned but Australian based airline, actually start international ops?

To gain access to say the transpac routes which provide the gold to QF must the entity be majority Australian owned or merely Australian based?

[muttly's pigeon]

What if one was to suggest that in the long term it will be the LCC's who miss out and the full service airlines are the ones that survive?
If over the next 20 odd years oil prices triple and ticket prices double I would speculate that the leisure travellers will be the first to stop flying..... Those buying first and buisness class tickets today will be less phased about handing over $900 for a MEL-SYD.
Full credit for the LCC's giving the industry a shake up but how many around Australaisa have operated through a decent economic recession?

[teggun]

Fair comment, however I believe if fuel prices increase that much the airlines will increase the service on the LCC and still retain a cheaper cost base.

They can do anything they like now, eg EAA are now flying Dash 8 400's on SAA AOC.

Therefore whats stopping Jetstar flying 787's or any other type on mainline's AOC.

Cheers :eek:

[UrlocalAZn]

priapism:
I haven't heard much about a viable alternative fuel for a jet engine.

Air NZ with their 744s would think otherwise :ok:

[1279shp]

Virgin Blue's future? A Koru on the tail? :cool:

[pilotdude09]

Hope they are not thinking of going into Kalgoorlie again. Anyway between QF, XR, Skippers they pretty much have the market all glued up. Room for another?

Most defintley room for DJ and they will force their way in any how. Karratha, Broome and Kal-Bouler can support the services. Geraldton also wants another airline and the Government has opened PER-GEL for another airline to come in.

So plenty of space!

[Hawk777]

Yes but PER-GER is only a turbo-prop route and Virgin don't operate turbo-props so they won't be on this route in the forseeable future.

They already operate on PER-BME on a limited schedule so the Embraer may allow more flexability here.

[Led Zep]

Hawk777,
It is at the moment. I know from a source at GEL that there is a strong chance that the next RPT operator will be flying in jets. That hasn't gone down well with some of the GA locals as they will be forced to go through screening during certain times.

[Skystar320]

PER-GET: If my memory serves me right XR ran morning F100's in last year?


It would be intresting to see if any EMB are based in perth, who will do the crewing/maintenance?

[Out-of-balance]

Lets hope Muttly stays a pigeon and dosent turn into a bear...:uhoh:

If oil triples the business sector will be the 1st to jump to LCC's - sadly the pain will be spread over everyone not just airlines. The bigger problem with a recession is not just for pax in the leisure market, its for all of us trying to pay our mortgage. 50% cut in traffic = ? (i'll let you take a guess)...

I'd rather own/operate a lean business in a recession than an estblished old one with lots of overweight baggage.

[wirgin blew]

I have heard numerous times that VB has a very large bank balance and can operate with no revenue for quite a period of time. I would be more interested to see what happens when and if Tigger gets its AOC how long SA will be prepared to back them.

[airbusa330]

Be it a recession or high oil prices, the Australian economy and those that belong to D privileged G8 group, are not as resilient as some of the neighbouring economies. Take Hong Kong for example. During the financial crisis they had the worst run ever for the books, but only shortly thereafter i.e months rather than years they were on top again. Sars came and went, first half down X percent, second half record profits, just like nothing has happened, again the time frame months not years. The western economies are for most part less resilient during a downturn, and senior managers are quick to blame rather than except responsibility. We can still hear about September 11 in some corners of the world except in Asia. Asian mentality runs on the premise for building for the future, the western counterparts only worry about now and profits only, hence the premise’’you can only profit if you expand’’. Never mind the greater implications on society when it all goes T*ts up.(a visual demostration from a vb hostie?)After a record earnings year, the so called tough managers might have an inclination that the same performance may not be achieved. So better offload whilst the going is good rather than stick around and perhaps expand the business further. And we all know what private equity is all about = profits, get a business and cultivate it rather than develop it. I wonder why Richard has not been as loud as he recently was about his so called baby. Maybe because the so called guru is great at conjuring up votes, clean up in the midst of all the hype and then remain a minority stakeholder, just like in most of his businesses. Private equity can’t be that bad really, can it? Not if you are watching the world from the Virgin Islands sipping gin.
Our expats over there, might complain about their managers but they can rest assured that their jobs will be around for a long long time.

[Out-of-balance]

WB

Cash reserves currently stand at 140 days approx. That's up from 124 the previuos year.

Not sure about Tigers AOC but I reckon SA is waiting to ponce like one when the For Sale sign gets hund out on VB shortly. DONT believe what you read when they say there're not interested - Why wouldn't they be? It's the answer to all there prayers......

[Paper Planes]

So does anyone know if it is worth hanging onto VB shares? Should we be buying or selling them?

[Out-of-balance]

:=Don't sell them @ $2.20

We are not brokers and should not give advice on buying shares; however if you own them look at QF share price & performance and work out if DJ has had its value increase over the same period. Becasue the stock is controlled by 3 shareholders (90%) institutional support is low. Toll will sell there stake very soon (or a big % of it) so the next buyer will pay more than the current price. It's going up but when and by how much is for someone else to call.

Good luck!

[mmciau]

I'd be surprised if Toll sold so many shares that they would dilute their current level of control of the airline.

I foresee DJ being an important cog in Toll Freight nationally and internationally.

Mike

[cnsnz]

EK have brought shareholdings in several Aussie Companies lately including catering and Toll Airservices, Maybe they will be interested in VB shares ?
Would provide them with AU domestic carrier and like SQ a stepping stone for flights to the US direct from AUS?

[Out-of-balance]

EK, like SQ have both publicly said they're not interested in DJ. Why would they when Toll hasn't delared there hand.:mad:

mmciau maeks a valid point regarding the freight; however Toll has already announced that they have secured the belly space available for there freight operations. Does that include International with V Australia? Im not sure, but I reckon they would have and are probably waiting for the US to rubber stamp the agreement. V will quickly become DJ when/if SQ decide to sell there VS stake.

DJ AGM today - Let's wait & see if they turn on a light....

[Paper Planes]

According to the business news EK & SQ have no intentions of taking a stake in VB. I guess if the price was right they could change their mind.

[Out-of-balance]

Page 1 of 3
Chairman’s Address
Overview of the 2007 Financial Year
(for the period 1 July 2006 to 30 June 2007)
Good morning Ladies and Gentlemen thank you for your time and interest today.
During the 2006-2007 year Virgin Blue recorded a strong performance for its
shareholders as the company continued to move towards its vision as a New World
Carrier airline group.
All three of our airlines Virgin Blue, Pacific Blue and Polynesian Blue returned positive
results, contributing to a net profit after tax of $216 million for the year ended 30 June,
2007, a record result for Virgin Blue Holdings Ltd.
This was a 92.9% improvement on the previous year, achieved in an environment of
determined competition, continuing record fuel prices and despite $23 million of pre-tax
non-recurring expenses. Net profit before these expenses was $232 million.
Our revenue at $2.17 billion increased 16.3%. Yield increased by 8.1% to 11.57 cents.
The average price paid for jet fuel oil again increased by 7.9% to over $81 a barrel,
which increased our total fuel bill for the year to $489million,and increase of $38million
on a production adjusted basis for the year.
The Company has continued to implement its hedging policy and for FY08 has in place
currency hedging covering 77% of requirements and fuel hedging covering 55% of fuel
requirements.
During the period under review Virgin Blue incurred non-recurring pre-tax costs
associated with preparations for our long haul international airline
V Australia, the purchase of 20 Embraer E-Jets for our Australia domestic growth project
and a write-off related to cancellation of a reservations project.
Capital expenditure for the year totalled $317 million, which included the purchase of
three new Boeing 737-800 aircraft, and advance payments on a number of future aircraft
deliveries.
Our average days operating cash reserves improved from 124 to 139 as at 30 June
2007. Our cash balances increased $131 million to $704 million.
The Directors declared a fully franked ordinary dividend of 2 cents per share, (payable to
all shareholders recorded on the register at 5pm (AEST) on 5 September, 2007),
bringing the full-year dividend to 4 cents per share.
Looking forward, the next 12 months will be a period of exciting growth for Virgin Blue as
we extend our operations across Australia, New Zealand and the South Pacific andPage 2 of 3
commence long haul international flying with the launch of V Australia in the fourth
quarter of 2008.
Next month we enter the New Zealand domestic market for the first time, flying
New Zealand’s main trunk routes between Auckland, Christchurch and Wellington, this is
an exceptional opportunity for us and demonstrates the array of profitable growth
avenues available to us.
Yesterday the first of our new Embraer aircraft entered service in Australia, it is a 78 seat
Embraer E-170 and its first flight was Brisbane to Cairns. As the next 19 of these planes
enter the country in rapid succession, we will open a new era in Australian aviation,
expanding our Australian domestic network, and introducing superior services and
product to existing and new regional routes. We anticipate a high level of market
support for the Embraer services including from the Government and business sectors.
Both the new Embraer and Boeing 737 aircraft will be fitted with adaptable
configurations to allow maximum flexibility from single class to high density seating.
Across our airline businesses Virgin Blue will continue to introduce product innovations
designed to appeal to corporate travellers. Brett will introduce an exciting enhancement
shortly and we are confident of continued strong revenue and yield improvement over
the short to medium term.
Next year Virgin Blue will launch V Australia’s first Boeing 777-300ER international
flights to and from the USA, adding a fourth airline and long haul international feed to the
current network of Virgin Blue, Pacific Blue and Polynesian Blue. We expect the V
Australia operations to be highly successful with an excellent service offering.
Your Directors believe that significant value creation will be derived other from key
strategies which are already well progressed;
The velocity frequent flyer program has exceeded our expectations with membership of
over 1 million and an established network of partners, this program has the potential
over time to contribute significantly to earnings and cash flows.
In addition, the continued development, in conjunction with Toll, of our air freight
operations also represents a significant opportunity for additional earnings.
In its eighth year, the Company has never been better placed to drive further
shareholder value..
Financial performance is strong, our outlook is positive and among the world’s airlines,
Virgin Blue’s margins now rank among the top few most profitable carriers in the world.
On behalf of the Board I would like to congratulate the management and team members
of Virgin Blue on their achievements, which are the result of creativity, commitment to
their low cost carrier business principles and adherence to the New World Carrier
strategic direction.
Page 3 of 3
I would now like to call on Brett Godfrey, Virgin Blue’s Chief Executive Officer to
elaborate on the past twelve months, and importantly the outlook for the Company, in
greater detail.
Thank you

[joepatroni]

If this ever happens then Vtech will do maintenance as they have been training for best part of a year for it. Engineers from Perth have part of this.