Merged: Virgin Blue Share Price - how low can it go and for how long?

[SOPS]

VB shares must be taking a beating...they even got a mention on CNN in the States!!!:bored:

[Keg]

$0.89...down two cents (or nearly 2.2 percent) for the day. Down about 40 cents in the last three or four weeks? Personally I reckon that's underdone but I don't have enough spare cash to put my money where my mouth is! :(

[wirgin blew]

Can someone tell me how it is even possible that the limited amount of shares on the market can make much of a difference to VB.
Toll own 62%
Virgin Group own 20%
Brett has say 5%

Leaving only 13% actually traded on the market. This would have to be one of the lowest actual amount of shares on any of the companies on the stock exchange. Even if Toll are selling off whilst talking about holding VB shares they would surely reach a point where they would have to tell the market that they are doing this.

Perhaps someone with more knowledge about the stock exchange than myself can explain?

[international hog driver]

Time to watch the wave people, peaks and troughs here they come.

Listings as of some time ago..

Toll 62%
Virgin Group 25%
BG 3%(ish)
Market 10%

At listing in 2003 VBA was worth an estimated $2.3 Billion, today it is likely about 1.1 (or less).

Tricky Dicky sold down to Patrick for a fortune, not bad for $10 million in seed money.

Now BG who has 3%(ish) has gone from a reported $85M down to $30M(ish) so whatever happens I will not be shedding a tear because it was only ever worth the paper the documents were signed on. Don’t forget that.

BG will stay, Toll will hold on, end of the day they are very well run and are proactive if anything, see the “cutting flights” thread.

As to Tricky the windbag coming back in, doubtful. Little has piddled on his shoes before and there is no love lost between the two and although VBA is “non-core”, belly cargo in V-Aus is definitely core. Meaning Tricky cant get his hands on more than 49% of an Australian Company operating internationally (Stands to be corrected on this bit), which would then kill V Aus, similar vein to why SQ cant/wont pitch the pacific.

Watch this space, money and debt are harder to come by right now at the right price so whomever is contemplating needs cash/equity and deep pockets.

The key will be the mums and dads who bought into windbags’ hype and paid double for what their shares are worth now. So whoever panics and and dumps there will be some interesting buyers (sharks) that will bounce in the future.

From scuttle but around our office some one was crunching the numbers to see if they could raise the $1bn plus just to get their hands on the outstanding VB 737 purchase rights that they have at a very very good price and turnover the airframes for the cash.

Watch this space there is word out

[dirty deeds]

Hog,

I don't think there are many airframes that VB actually own. Its only about 10 aircraft. The rest are leased and the firm orders are for EMB's and some 777, they are not even here yet. If they are buyin the stock for firm order options, well thats different. VB owns nothing, no terminals, no assests, just the rights to Bransons name. About the purchase rights to the 737's, I don't know how many they have on order. Interesting times ahead myfriend.

Either way, I think this company is a slow sinking ship! I give it 12-18 months and it won't exsist in its current form. Two airline Aus, here we go again.

[coaldemon]

So we are talking about a company that makes $100 million every year with debt only associated with assets shutting down in 12 months. Sure that makes sense. :} Ansett only made one profit in two years of the last ten ( and those were only after Big Ed did some asset sales) and had 2 Billion in debt when it tanked. Can't see the comparison although if pax numbers dive it could be a different story.

[Ratter]

Hi Deeds,

Either way, I think this company is a slow sinking ship! I give it 12-18 months and it won't exsist in its current form. Two airline Aus, here we go again.

The company made $215 million last year and is expected to make $100 million this year which includes the capital outlay for a major expansion.

If i were in a company making $100 million i am not so sure that i would be calling it a sinking ship? The share price has tanked because the market, which is already a very nervous one, does not like to hear profit downgrades. Nevertheless, i would think that comments like yours would be more appropriately reserved for when there is $0 profit or an overall loss.

Regards

Ratter :ok:

[Section28- BE]

Fuel at $113.91/Barrel overnight- as quoted on Nine News this morning, a new high apparently.

[Betsy]

If i were in a company making $100 million i am not so sure that i would be calling it a sinking ship?


If you've been following it closely, VB announced 1st half profit of $113m for FY07/08 back in Feb, and last week said full year profit would not exceed $140m. So the company turned from $113m in 1st 6months, to possibly nothing or even a loss in 2nd half. It may even run at a huge loss in 2nd half of 08 with more E-jets and startup of V Australia.

The Australian economy has only just started to slow down, and there's already a sharp profit dive. How could the share price not have slumped?

[Skystar320]

So we are talking about a company that makes $100 million every year with debt only associated with assets shutting down in 12 months. Sure that makes sense. Ansett only made one profit in two years of the last ten ( and those were only after Big Ed did some asset sales) and had 2 Billion in debt when it tanked. Can't see the comparison although if pax numbers dive it could be a different story.

Beep WRONG! how about looking at the facts before you post mate

[hoss58]

Morning all

Coaldemon and Ratter

Would have to agree. I would'nt mind owning a couple of companies each making a profit of 100M plus each year.

If DJ or any company for that matter makes 100M plus profit each year then their not going the gurgler any time soon.

Also i reckon i can think of several American legacy carries who would be happy to be in that position.

Skystar320.

I was witn AN mks 1 and 2 to the end and i don't think coaldemon is too far from the mark.

I don't think any shareholder and/or employee likes to see their company downgrading profits, but these are trying times for a lot of companies and not just in aviation. 100M plus in the bank after all the bills have been paid is not a bad result.

And let's not forget that a number of factors affecting DJ are affecting other airlines.

Fly safe and play hard.

Regards to all.

Hoss 58

[Capt Kremin]

One of the truisms of the sharemarket is " The market is always right." It's a warning about buying against the trend.

The price is going down for a reason. Anyone thinking of buying VBA shares when the trend is down needs their head read because there are very good reasons for it. These reasons may only be short term, such is the nature of the sharemarket, but they are compelling for the analysts and institutions nevertheless.

[HF3000]

And one of the falsehoods of the sharemarket is "The market is always right".

A lot of astute investors make a lot of money taking advantage of "opportunities" that arise when the believe the market has undervalued or overvalued a stock. The market always overreacts. The market sometimes panics. The market often gets greedy. The market is, actually, a bunch of fools...

[Sue Ridgepipe]

And let's not forget that a number of factors affecting DJ are affecting other airlines

So true Hoss58. Back in October 2007 when the market was riding high, QAN was trading at $6.00, REX was around $2.70 and VBA was $2.30.
Compare these to today's prices - QAN $3.56 - down about 40% since October, REX now $1.16 down 57% and VBA 90c down 61%.

So whilst VBA might have their problems at the moment they are not alone.

[DJCCGuy]

Brett sent an email out to all staff saying that the company needs to cut $100m in costs and information to staff on the first cuts will be within weeks... any ideas on what they might cut ?

[Capt Kremin]

Tell you what HF3000, you buy some 1000 shares now and I will short 1000, and lets compare notes in a month or so.

[HF3000]

I would take you up on that with the exception that I wouldn't expect to see a profit in a "month or so". But I reckon you'd see a significant opportunity to sell those shares for a good profit some time in the next few years. Aviation is cyclic - the risk is when an airline doesn't survive a downturn. I think DJ will survive this downturn, and so will Qantas. I would buy shares in both airlines at the current prices. DJ may be a bigger risk, but also might turn out to be a bigger reward.

I wouldn't be taking out a margin loan on those shares though, so I suppose that means I confess there's a good chance of more loss before there is gain.

I also wouldn't commit more than a small percentage of my portfolio to airline stocks!

[Section28- BE]

They bounced along at .89/.90c for most of the day and softened to .88c at the end, on a volume of 1,131,865.

Link to the chart for today ex the ASX website- below:

ASX Chart- VBA 16/04/08 (http://www.asx.com.au/asx/research/chartsSearchResult.jsp?asxCode=VBA&TimeFrame=D6&compare=index&indices=XJO)

[Betsy]

The recent collapses and mergers in the airline industry imply survival is becoming increasingly difficult. Sadly history tells us only the strongest will stay.

With a population of only 22 million I can't see all OZ airlines cruise through the upcoming economic downturn, exacerbated by the subprime crisis. Banks are not as willing to lend money to keep you above water, and personally I think only QF/JQ will be around in a few years' time.

[HF3000]

Hmm, I wonder what the Qantas share price will hit when they are the only airline left in the country?

BUY BUY !!

[priapism]

And I wonder what qantas's share price will hit if they announce a profit downgrade????

The increasing price of fuel will have a major impact on airline revenues over the next year or 2 .

OPEC has the world by the testicles and it seems every 10 years or so it gives them a good squeeze.

[Capt Kremin]

HF3000, you actually prove my point. The trend on VBA shares is down. In the short term world of the sharemarket they are more likely to be down than up in a months' times.

I speak as a trader, not an investor... two very different things. The trend is your friend.....(until it bends...)

[dirty deeds]

Ratter,

$215m then $100m then what is next? Its like a QF physc test question!

This is what Shares in Virgin Blue Holdings fell 18.5 percent to a record low on Monday after Australia's second-biggest airline warned its profit would more than halve as it faces higher fuel costs and competition.

Virgin Blue, in which transport group Toll Holdings owns a 63 percent stake, said after the close of trading on Friday that its net profit would drop to around A$100 million (US$93 million) this year, from A$216 million a year earlier.

It could also incur an extra A$120 million in fuel costs next year and faced an increase in capacity as new carriers enter the market.

"It is sobering to note the guidance implies the business just breaking even in the second half," said a research note from analysts at UBS, who cut the stock to sell from neutral and lowered their forecast for next year's earnings by 36 percent.

Virgin Blue stock, which traded above A$2 in February, was down 18.5 percent at A$0.91 in the morning session. Shares in Toll were 12 percent lower at a 19-month low of A$8.31.

UK entrepreneur Richard Branson's Virgin Group owns about 25 percent in Virgin Blue.

The carrier, which competes with Qantas Airways, appointed Goldman Sachs JBWere in February to review its future amid reports it could sell a controlling stake to another airline. On Friday it said buyer interest did not reflect the airline's underlying value and it was reviewing alternatives.

Separately, Qantas said on Monday that Pacific Airlines, Vietnam's second largest carrier in which Qantas has an 18 percent stake, will be renamed Jetstar Pacific.

Jetstar Pacific planned to introduce up to 30 Airbus A320 aircraft by 2014, Qantas said. The first A320 is expected to start in August, initially growing services within Vietnam, before international expansion from late this year into markets likely to include Thailand, Singapore, Malaysia and Cambodia.

Qantas will increase its stake to 30 percent in 2010.

The numbers don't lie!

[Dunnybudgee]

"Shares in Virgin Blue Holdings fell 18.5 percent to a record low on Monday after Australia's second-biggest airline warned its profit would more than halve as it faces higher fuel costs and competition." :{

I thought that one day this might happen. IMHO a few basics;

1. VB based its initial model roughly on Virgin Express; THE loser in the Euro LCC wars and now quoted by experts as how NOT to set up an LCC.
2. VB is no "miracle" of OZ aviation. It looked very shakey until by pure luck Ansett fell over and created massive market space.
3. VB grew and succeeded for a while because the only competition was QF (High cost legacy carrier). That was tempered by Joke* (IMHO a subsidised LCC) and now will be squeezed by Tiger (A hard core Ryanair style LCC with mondo backing).
4. VB's response has been to break every rule in LCC cost control; multiple aircraft types, lounges, multiple products (inc a quasi biz class) etc, etc.
5. From what I've read here and the opinions of mates inside VB the past strength of its once great esprit d'corp and positive relationship with management has gone. That kills productivity. Well known fact - just ask South West (USA) and their legendary President / CEO Herb Kelleher.

To me its like BG is trying to make VB all things to all people (LCC & Legacy) and not surprisingly failing at both (not as cheap or simple as a real LCC nor offering the network, luxury or prestige of a legacy carrier).
I was once told; "theres no such thing as compromise, only sacrifice".

In my view VB now has none of the strengths of an LCC or a legacy giant. IMHO its lost direction and is easy meat, lacking the support of mega carriers like QF or SIA and facing mega oil prices and stiff (and likely increasing) competition.:sad:

In my view its pretty simple; VB's strengths in the market are percieved by the players as almost nil, (cute F/A's perhaps? :)), its strategy is unclear and so guess what; Toll can't sell its stake for any decent return; (What serious player would want it?) and the market knows it. Result - shares plummet! Not rocket science.

Mind you QF's board might not be laughing too hard. Their oil hedge is rumoured to run out soon and then their shares will be under pressure too...

Maybe if Tricky really can buy back in and give some pizazz and leadership its stands chance as a reborn "value" carrier a'la Easyjet UK. But even then their current op is way off that mark too... Remodelling required IMHO... ;)

I for one hope they sort it out. Lotta good people's jobs and families depend on it! :ok:

[markontop]

As Ansett administrators have just paid some more redundancy money ( now to a total of 92c in the dollar ) do VB have a similar EBA? Or perhaps there are really no assets to speak of anyway. So what's the point?

[HF3000]

Kremin - I agree with you entirely, it's just that our outlooks are different - I am a long term investor. I woudn't seek to short-term profit from further decline in DJ's share price, rather commence a gradual buy-in with a long term outlook for a $1.60 - $2.40 selling price in the future for a 100-200% profit. Might take time, and involves some risk, but here's my risk assessment.

VB's B737s consume as much fuel as QF's B737s, and about as much fuel as Tiger and JQ's A320s.

The increasing fuel price will only have one impact - each of the above 4 carriers will have to raise their prices (by the same amount) to sustain their businesses.

This means that no carrier will sustain a market advantage over any other carrier in the Aus domestic market (due to fuel prices). The only thing that will happen is that overall price rises will eventuate and the travelling public will fly less.

However the demographic of the travelling public that will fly less will probably be the leisure sector (the main bread and butter of the LCCs).

So DJ's decision to be less of a LCC and more of a business oriented carrier will probably end up proving a good decision in the developing climate.

The other difference is that Tiger has backers that won't LET it fail, and JQ has a parent company that won't let IT fail either.

DJ is a bit alone here - no cashed up parent Company that can cross subsidise. How much or long will Toll/Tricky etc support it until it can reform itself into a good profit making entity?

Toll have a lot of money tied up here, as does Tricky... It will be interesting to see if DJ respond by reinventing themselves as a LCC, or taking on the big QF and REALLY trying to get the good high yield business. I agree, they probably need to go one way or the other, not waffle around in the middle.

For example, I have a business traveller friend who tried DJ - he booked a 6 o'clock flight with them on the phone. Turned up at 5.15pm and was told his 0600 flight had departed 12 hours ago. He tried to explain that he had booked a 6 pm flight - they said oh must have been some confusion, but bad luck, not refundable, you'll have to buy another ticket (at last minute rates: some $350). He was dumbfounded, refused on principle, marched over to the QF terminal and bought a last minute ticket for about the same price. He explained the situation he had just experienced with DJ to the ticket agent at QF and they assured him that that would not happen with QF. He will never fly DJ again. That is the sort of thing they need to fix if they want to play with the big boys.

But, I digress. I think they will fix it, and I think they'll recover, and the current share price might prove a good investment for the long term investor.

And when I refer negatively to the comment that "the market is always right", the market may think it's right on the basis of the news stories currently on the headlines, but don't invest long term on this basis. Short term traders trade on news. Long term traders pre-empt the news. You need to speculate on next year's news headlines - eg "DJ upgrades profit forecasts due increasing yield - share price soars" - it'll be too late to buy shares after you read this news story, all the guys "in the know" will have already pumped up the share price. That's when I would SELL! :)

[Section28- BE]

Last at .89c: - ranged .885-.895 most of the day.

On a volume of 506,907 or about half of yesterday's volume.

Chart (6 mth) ex the ASX website:

http://www.asx.com.au/asxcharting/CisServGif?RequestType=ByName&UseSession=False&GifResponse=image&fresh=false&extgif=true&caller=sharenet&volval=VOL&periods=D6&spread=LAST&siafsec1=S&sec1=VBA&divn1=0&siafsec2=I&sec2=XJO&divn2=0&siafsec3=I&sec3=MA&divn3=0&extcsv=false&reducefact=80&fromdate=17/10/2007&todate=17/04/2008

ASX excludes all liability arising out of any inaccuracies in this Chart, except where liability is made non-excludable by legislation.
Chart values may be adjusted for changes in a company's capital structure or to link historical values that represent the company's primary equity security.
Moderators: Feel free to dump the chart if it causes you grief- it is a public site and have referenced it???- the sticky ten thingies has moved on???

[international hog driver]

Put your money where your mouth is, people.

I did,

5K into vba today.

Lets see if I blow my holiday money or double it over time....;)

[Enema Bandit's Dad]

Dunno if that's clever or silly! :cool:

[Betsy]

Put your money where your mouth is, people.

I did,

5K into vba today.

Lets see if I blow my holiday money or double it over time....


I put my 5k on a 6-month term deposit with the NAB.. 8.2% p.a. interest, almost completely risk-free.

Let's see how we do in mid-Oct.

[coaldemon]

DJ is a bit alone here - no cashed up parent Company that can cross subsidise. How much or long will Toll/Tricky etc support it until it can reform itself into a good profit making entity?

It still is making a profit and has done for most of its life. There is no need for any cross subsidy:rolleyes:

[coaldemon]

If you read the ASX release they will still make over $100 million for the financial year. I would call that a profit. We will see about next year...

[international hog driver]

So Betsy,

Back of the napkin figures here basically says that your NAB punt is worth about $200 gross.:hmm:

To match or beat that, the shares have to climb above $0.92 (once again just over $200 gross):E

See you here in 6 months:ok:

[cjmalon]

Why would you buy Virgin Blue when you can buy into undervalued fertilizer companies like MAK and RWD, everyone has to eat, even pilots.
Agriculture is the hottest sector in the market right now.

[The Bunglerat]

Regarding airlines as a business venture/investment, there was certainly one comment by BG that was on the money: Airlines are not for the faint hearted.

I've devoted most of my adult life to committing acts of aviation, and I'm with Ratter on this one. However, if I was looking to invest any amount of money on something, aviation would be the last thing on my mind. Even if an airline were turning a record profit, there will always be better ways to make money. As the saying goes: If you want to make a small fortune from aviation...

[jatayu]

I travel on VB twice, sometimes thrice a month and I find the product suited to my needs like the proverbial T. Clean, modern aircraft at convenient times. The Mel-Per sector has more legroom than a Qantas flight I had used. Mostly I book the cheapest outgoing fare, and a fully flexible return fare, and the total is nearly half of what Qantas charges. That is unbeatable value not considering promotions, travel to Avalon etc.

A few people agree with me, as the flights I have been on, are nearly always full.

To an earlier post, the real early flights are often at a very low price, which cannot be achieved on an evening fare.

In my opinion it is not going to be easy for Vb, as anyone else, but they do have the right product to survive the great upheaval that is predicted.

[dirty deeds]

Jatayu,

Ansetts flights were full up to the day they crashed, it means nothing. Its about cost structure and yield. Even though VB made 100m, it equates to an almost even turnover if you look at it in real economic returns. It has no assets, is trying to save money yet spends $60m on a new head office with WIFI and new office furniture etc etc.

"Rome is falling Cesar", "Well lets throw a party, wine for everyone"

"But the masses are hungrey your Majesty", "Well feed them some Cake"

[Higs]

I have a question. With the current, lets say "uncertainies" in the market. Where is the money (or support) coming from for the LA start?
With fuel running US$ 110 or so it's a lot different than running 5 or 6000kg on a 737 between SYD & MEL and 120,000 on LA.
:confused:

[Going Boeing]

Put your money where your mouth is, people.

IHD, I think that you bought in a little early - I have a buy rating on vba stock when they hit 5c per share. :)

[LetsGoRated]

A buy at 5 cents! Charming GB...:hmm:

[Going Boeing]

Sorry LGR, just a poor attempt at humour. :O

[Heavy Cargo]

Don,t VB rent everything ? Cant be worth that much.

[radaz]

What will the VB share price be when finally QANTAS decides to sue for the use of its paint scheme.
Just saw a billboard for V Aus and it looked like the big Q....Not to mention the VB rip-off contrast of the big Q..
There could be a reason for it though..

[yellow rocket]

From what I've read here and the opinions of mates inside VB the past strength of its once great esprit d'corp and positive relationship with management has gone. That kills productivity. Well known fact - just ask South West (USA) and their legendary President / CEO Herb Kelleher.

...and that is exactly why Virgin is really in the position that its in.

Many of the founding staff, who were the most passionate, and productive, have turned their backs on the place and what is left are a legion of micro-managers who have no interest in Virgin values, strategy or entreprenurial teamworking.

When BG wakes up and starts to demand the 'Virgin' being put back into managerial performance then maybe there will be a long term future.

:(

[greenslopes]

If Vb is such a good product then why hasn't the market spoken and bought all the good valu shares at $0.85.
Scratch and sniff.....................starting to smell pretty bad!

[TIMMEEEE]

With the VB share price below 50 cents (after floating at close to $2.40) how low can this share price plummett before the inevitable?

I spoke recently with an analyst with Standard and Poors who by the way give companies their credit ratings worldwide.
He stated that unless VB cuts something like 35% of its fleet, concentrates on primary trunk routes primarily with a higher yield and/or raise their prices by up to 30% they wont survive.

Also suggested was the idea of dumping the B777's to the USA which would incur losses for a few years that VB just cant afford.
Those preliminary figures were apparently costed at a jet fuel price of US$95 per barrel and the losses to the USA could skyrocket even further with jet fuel at around US$160 per barrel!

To make matters worse Mr Godfrey recently purchased a large number of shares at around 75 cents per share.
His vote of confidence didnt seem to impress anyone else.

Any takers?

[In The Sky]

It begs the question, What is going to happen in the Australian aviation industry in the near future?:hmm: Or is it just another one of lifes speed bumps?

[desmotronic]

The bogans are going to have to get used to paying more for air travel, most of them make more $$ than pilots anyway these days.

[denabol]

I know a lot more about finance than piloting and this is such a dumb question to ask about a company which has so few shares available for trading that it ought to be delisted from the ASX.

These sort of bleatings about VBA have been going on since they were listed. Every single analyst projection about the company, for which one of my family flies, has proven dead wrong or turned out to be a Qantas inspired wet dream.

A year from now there will still be a Virgin Blue. The flights will still be chokka. It might even make money. It will have at least half a billion left in cash. Get over it.

[SilverSleuth]

I agree, with such a small proportion of the company listed the share price doesn't effect the company directly as much as others, like Qantas. The fact is they do have quitea large cash reserve. There loads are as good as any other carrier. Like ALL airlines high fuel will mean lower profits. However overall the business model is sound. The EMB will help manage low yielding routes. They have most of the terminal/gates locked up in most capitals. Like all airlines they Are deferring planes where they have too. They will be around in a year and more. Low share prices like for all us (as in supers etc) only are bad if you need to sell now. Which most people wont.
A bigger question is how long tiger will keep going. Yes singapore backed however losing nearly $1 mil a week as I have it on very good word even they wont back something like that forever. I know many of the tiger guys moving to jetstar recently are very relieved and happy to get out now.

[LetsGoRated]

He stated that unless VB cuts something like 35% of its fleet, concentrates on primary trunk routes primarily with a higher yield and/or raise their prices by up to 30% they wont survive.

With all due respect, your mate is an S&P analyst (i presume), what would he know about running an airline! Cut 35% of the flleet? Big call from a speculator!
Half of these clowns wouldnt know if their rear ends were on fire.

[CheckEssential]

Onya Silverslueth! - 'Many of the Tiger pilots', Crikey! I know of two such people, doesn't sound like MANY to me!

[Server too busy]

A little off topic there Silversleuth but in answer to your comment about the Tiger pilots, I've heard that they only moved for personal reasons. They didn't want to leave, but Jet* offered them the base of their choice. Something Tiger cannot do at the moment.
The other thing I heard is that they are not making as much money because of the cost of fuel, not as you say losing nearly $1 mil a week .

Have a nice day :ok:

[Split Flap]

This would be the same standards and poors that gave most of the credit and finance companyies in the US AAA ratings just before the Credit Crunch? They deserve to be in jail!

[rodney rude]

Silversleuth

".....losing $1m per week, I have it on very good word....."

FROM WHERE MATE, do you have it on very good word?? Since people inside the company get told nothing, cannot find out anything, including where the next base will be, how the hell would you know??!!

Nice try mate, but very transparent.

[boardpig]

I wouldn't have believed it as I'm moving there at the end of the year (US), but AA will cut 7000 jobs by the end of the year and United have binned 750 pilots. Yes there will still be an AA and United, but what will it mean for those working for them.

Why then would VB be any different?

I fear the good times might be over for this industry. I hope I'm wrong.

American Airlines to cut 7,000 jobs - Times Online (http://business.timesonline.co.uk/tol/business/industry_sectors/transport/article4260034.ece)

950 pilots at United Airlines to lose their jobs in layoffs - USATODAY.com (http://www.usatoday.com/money/industries/travel/2008-06-23-pilot-cuts_N.htm)

[Icarus2001]

Why then would VB be any different? Beacuse they are trading profitably!!

There is a WORLD OF DIFFERENCE between what the share market values the shares at and whether the company is profitable. Many of the rising stars of the share market disappear in a blaze of (in)glory.

FMG shares were going ballistic before one shovel of iron ore had been exported. The share market deals in perceptions and clearly people are worried about VB. As they are worried about QF also.

The VB share price (50c today) is certainly taking a battering but THIS HAS NO BEARING on the short to medium term viability of the company.

Those old enough to remember the stock market "crash" of 1987 will know that the media were fortelling the end of the world as we knew it. It rapidly became apparent that the sharemarket and real world economy are very much disconnected.

VB continue to pack aircraft with us, the great unwashed and so long as costs remain less than incomes then all will be fine.

As to whether their shares are a good investment...remember that for every seller getting out at 50 cents, someone is buying in because they thing it is a good buy...perhaps undervalued. What is break up valuation anyway?

[strobes_on]

Beacuse they are trading profitably!!

Really ???

[flyer_18-737]

Guys,
Regarding that 1mill TT loss, well that might be TR, but not TT. TT are doing much better than TR, mainly cause TR has long and horrible flights, not 1hour lengths etc....

Shelly starts at TT next week, so mabye they are heading for the better

And yes, SQ wont keep funding Tiger if they keep recording loses, abit like QF with JQAsia. Its been 4years before $5mill profitability is announced, so god help us whats next:eek:

[Wod]

From today's Oz


Virgin Blue facing $75m loss: analysts | The Australian (http://www.theaustralian.news.com.au/story/0,25197,23984894-23349,00.html)

:eek:

[halas]

A well presented fella walks into a village in the jungle and announces that he will gladly purchase any monkey for $10. The villagers were thrilled and rounded up the nearest monkeys and sold them to him.
The next day the same fella offers $20 a monkey, and after much searching the villagers managed to find more monkeys.
The next day he offered $30 but only a six turned up. The next day $40 with only one or two, and the day after $50 until he had all the monkeys in the region in his cage.
Then he announced that he had to leave on business for two days but his assistant would purchase any new monkeys that were presented for $100.
After he left the assistant told the villagers that if they bought the monkeys in the cage from him for $35, they could sell them back again to the fella for his asking price of $100.
The villagers couldn't have bought the monkeys off him any quicker than they did. And they bought all the monkeys back.
That night the assistant too had to leave on business for two days.
And neither he nor the well presented fella were ever seen again.

You now have a thorough understanding on how the stock market works.

halas

[porch monkey]

Brilliant. In a nutshell. Pretty much sums up most of the "reports" that come out of the market too. If you take the time to actually read the so called reports, you see that they are full of "maybes" "ifs" and "might" and "based on this scenario" They are simply predictions, and generally no more accurate than your average Tarot card reader!

[Metro man]

Same thing with oil as well. Get in early and buy huge quantities cheap. Talk the price up with reports of supply shortages, "peak oil", instability in producing countries etc. Lead the market along by placing a few contracts to buy at high prices. Sit back and watch the price rocket ahead as everyone else tries to get in. Sell out just before the bubble bursts and count your profits. :rolleyes:

[Icarus2001]

The other thing to remember is that if these "analysts" are so freaking clever why do they work for wages for someone else? Why aren't they all retired at 35 and rolling in money?

[carbon]

Why aren't they all retired at 35 and rolling in money?

Yep, rolling in bs just gets messy!:ugh:

[trommel]

Most airlines based their basic model (equipment,routes,frequency,staffing levels etc) on oil prices about $90 per barrel one year ago. Fuel then was around 25% of operating cost for a large operation with jets.

Oil is now approaching $150 dollars a barrel, if you have not hedged prices fuel has jumped 10-12% as a percentage of operating cost to 35-37%.

Depending on the airline this will erase profit and in some cases put you into the red.

A model that worked one year ago will not work now without major adjustments. Oil prices may come down, but if they do not all airlines (including Virgin Blue) will have to make large adjustments to their basic model to survive.

If you work for an airline that is not changing at the moment it is either being subsidised by the share holders in some way or it is going to go broke.

[desmotronic]

A year ago AUS$1 would buy US$0.70, now US$0.95.

So 1 year ago US$90 barrel of oil = 90/.70 = AUS$128
Today oil $145 barrel = 145/.95 = AUS$152

The sky is not falling for australian airlines.:ugh:

[wirgin blew]

If you work for an airline that is not changing at the moment it is either being subsidised by the share holders in some way or it is going to go broke.

I would have to say that all the Aussie carriers are doing that. They have been very tight fisted when giving out pay rises and will certainly use the high price of oil to continue on with that. VB has put a pay freeze on middle management something that QF could announce to help with there continuing and upcoming EBA negotiations.

VB has a very low cost model, don't forget last year they made over 200M profit so they certainly have the costs they can control sorted out.

QF has palmed off the no so profitable routes to its LCC to do the same.

The situation on Australia is certainly no different from the rest of the world with regards to the price of oil but the US economy is in much worse shape than ours at the moment and you can't compare the two.

Australia still continues to be in demand by countries such as China and India and that may be the difference in the coming months or years.

I read yesterday that the price of oil is also being affected by the weak US dollar. I wonder if anyone can chart the two to see if there is any correlation in that.

[oldhasbeen]

sorry Desmotronic , but anybody who gets paid in $USD will tell you that a year ago the xchange rate was around 80 - 83c and dropped to a low of 78 in August. It has not been as low as 70c since 2005. It's just a minor point, but if we're going to put up stats, let's get 'em right.

[desmotronic]

Fair enough if you want to be precise, 71c low in march 2006, at that time oil hit a low around US$60. Illustrates the point though. Currency movements have offset more than 50% of the rise in the local fuel cost assuming nil hedge. With partial hedging the cost change is even less.

How about 6 months from now... AUD$1 = US$1.05 - $1.10 ?

Even if oil holds at these levels with an appreciating AUD$/US$ , we could easily see falling local fuel costs. This scenario seems likley since the aussie is rising against almost all other currencies (on the back of the biggest mining export boom in history) while US$ is doing exactly the opposite. ie it's not just a unilateral case of a weak US$.

What to do in your position oldhasbeen...? Buy gold with your greenbacks... :E

[Betsy]

Fact: on 20 Feb, DJ announced first half-year profit of $113m (source: DJ website)

Fact: on 11 Apr, DJ issued a profit warning that 07/08 full-year profit would not exceed $100m (source: The Age, Virgin Blue shares head for a tailspin | theage.com.au (http://business.theage.com.au/virgin-blue-shares-head-for-a-tailspin-20080413-25uv.html))

Already we're talking about a second half loss, the question is how much. I guess we'll find out next month.

At 50c a share, DJ is worth A$525.6m. And for every 1c drop, the company loses $10.5m in value. If it comes to a point where the company's assets are worth more than its shares, wouldn't it make sense for the shareholders to just sell everything off and call it a day? DJ owns about 20 737's, and their list price is US$57-79m (source: Boeing website). Let's say they're sold off at half-price, or for argument's sake A$25m a frame, you'd get A$500m. And there's those brand-new E-jets.

If I was Toll Holdings I'd shut it down. Shareholders don't like bad investments. How much more money could you pour into it?

Those financial analysts may know f**k-all about the airline business, but I wonder how much the DJ management know it either. The Embraer was a big mistake, and they're pressing ahead with a new airline flying to a country whose economy is yet to hit rock bottom.

[desmotronic]

if you look at VB price chart with the axis set to log scale it is starting to look sexy at 50c... :8

[Icarus2001]

If I was Toll Holdings I'd shut it down. Shareholders don't like bad investments. How much more money could you pour into it? Gee I wish I had a BAD INVESTMENT that returned over $200 million last year and about $90 million this year!

The Embraer was a big mistake, and they're pressing ahead with a new airline flying to a country whose economy is yet to hit rock bottom.

How can you say the E Jet was a mistake, based on what?

Yes and when the US economy tanks and AUS$1 is buying US$1.10 then doesn't that make it attractive to AUSTRALIAN travellers?

[Thylacine]

The Embraer was a big mistake
One can presume that analysts within VB ran the ruler over the operation, costs per seat/km, capital or leasing costs, break even point per pax load, route evaluations before the H/O bean counters had a say. I doubt if BG decided to have a few "coz they looked nice". I have no inside knowledge but perhaps some credit is due to VB for being able to evaluate the options. If you reckon they were wrong then let's hear why.

[flyer_18-737]

If you work for an airline that is not changing at the moment it is either being subsidised by the share holders in some way or it is going to go broke.

Lol, I work for a airline like that:)

[XRlent100]

Betsy,

You have to own the aircraft outright to make that work. I'm not sure about the 737's but I don't think VB would have paid cash for the E-Jets.

[Dehavillanddriver]

None of the E Jets are leased from a leasing company

[Betsy]

How can you say the E Jet was a mistake, based on what?

The E-jets have been plagued with technical problems. Yesterday alone VH-ZHB was broken all day in Sydney. 11 flights got canned.

Yes and when the US economy tanks and AUS$1 is buying US$1.10 then doesn't that make it attractive to AUSTRALIAN travellers?

If A$ reaches that level, it'd mean the US economy being in a deep recession, or the RBA official rate much higher than current 7.25%. Could many Aussie travellers really affect overseas holidays when their mortgage rate is 10%+, or Yanks visit down under?

[DJCCGuy]

I've been hearing rumous that SQ could possibly buy out DJ ... does anyone else even think this is a possibility?

[Taildragger67]

Like any company, the lowest this company's shares can go is zero.

I'm not trying to be 'funny, but that is a risk inherent in stock market investment.

[alangirvan]

If you think the E-jets are plagued with technical problems, you might wonder how people would describe the 737-400s used on Qantas services within NZ, which people do not use if they need to get somewhere on time.

[KittyBlue]

11 flights got canned? Im a bit confused. DJ have 3x170 based in Syd and on alternate days a 190, 1x190 in Mel and the 2xBne.

How can 11 of the 170 services be cancelled with 1 of 3 a/c going tech?

May need to check on your stats!

[Betsy]

How can 11 of the 170 services be cancelled with 1 of 3 a/c going tech?

May need to check on your stats!

And I did check the stats as follows. DJ operates the E170s on these flights:

SYD-CBR: DJ906/910/920/924/930/934/938/942
CBR-SYD: DJ901/907/913/917/921/931/937/945
SYD-ABX: DJ1170/1176
ABX-SYD: DJ1171/1177
SYD-PQQ: DJ1183
PQQ-SYD: DJ1182
SYD-ROK: DJ461
ROK-SYD: DJ462
SYD-MKY: DJ453
MKY-SYD: DJ454
CBR-OOL: DJ769
OOL-SYD: DJ768

Total 28 flights on weekdays.

And I even went into the trouble of looking up all the dep/arr times on the DJ website to show you how these three frames rotate:

Plane A: DJ901-DJ906-DJ913-DJ461-DJ462-DJ1176-DJ1177-DJ938-DJ945 (9 sectors)

Plane B: DJ1170-DJ1171-DJ1183-DJ1182-DJ920-DJ921-DJ924-DJ931-DJ934-DJ769-DJ768 (11 sectors)

Plane C: DJ907-DJ910-DJ917-DJ453-DJ454-DJ930-DJ937-DJ942 (8 sectors)

The AOG A/C was in SYD, which was supposed to do the plane B line of flying, ie 11 sectors. Although I was told actual cancellations on the day were mostly SYD-CBR vv.

Maybe you need to check how much you know before questioning others.

[KittyBlue]

All E70 services are backed up mostly with 73NG replacements. Albeit 2 services are always amalgamated for CBRSYD services as the sectors have to be seen as available to our guests. I and the flight ops manager made those descisions. SYDMKY & ROK services were cxl and sent via BNE.

Also the introduction of the EJET actually at present is a saving grace. There are several routes being ultra profitable including the use of PE seating aswell. Flying a full E90 to ROK, ADL actually is financially saving those routes and inturn placing 738's on the more need routes. Additionally some day MELSYD services are to be converted to E90 services as well this month.

If each 50 of the 737 were to complete another sector a day then this will eliminate 3 aircraft. Hence the removal of 4 or possibly more to international ops and returning leased ended planes.

[dirty deeds]

Maybe no training Captains around?

[desmotronic]

14/07/2008 08:53AM AEST
MELBOURNE (Dow Jones)--Toll Holdings Ltd. (TOL.AU), Australia's largest logistics provider, said Monday it will pay a special dividend of one share in its Virgin Blue Holdings Ltd. (VBA.AU) airline unit for each ordinary share held.

Toll, which holds a 63% stake in Virgin Blue, will distribute 648.1 million shares and continue to hold about 11 million shares in the Brisbane-based airline, it said in a statement.

A special share sale facility will be established to help the disposal of small holdings, Toll said.

After the special dividend, British businessman Richard Branson's Virgin Group (VGN.YY) will become the largest shareholder in the airline, holding 25.5%, Toll said.

There will be no change in Virgin Blue's management or strategy, the company said.


-By Andrew Harrison, Dow Jones Newswires; 61-3-9671-4323; [email protected]

[desmotronic]

TOLL ANNOUNCES PAYMENT OF AN IN SPECIE DIVIDEND TO TOLL SHAREHOLDERS, SATISFIED BY DISTRIBUTION OF VIRGIN BLUE SHARES
Virgin Blue is supportive of the announcement by Toll Holdings Ltd (Toll) that Toll intends to distribute 98.3% of its 62.7% stake in Virgin Blue to Toll shareholders by way of an in specie dividend.
Virgin Blue shareholders will benefit from the significantly increased liquidity in Virgin Blue shares, and in addition will have more certainty around its long-term ownership. Following Toll’s distribution, Virgin Blue should qualify for inclusion in the ASX 300.
Virgin Blue looks forward to a continuation of the strong relationship and support from the Toll Group built up over the last two years, together with the on-going freight arrangements in place between the two companies.
Chief Executive Officer, Brett Godfrey, said “we see Toll’s exit as an opportunity to introduce long term investors to the company. Despite the difficult trading environment that we are facing at the present, the longer term outlook for the Group is very strong, and we have a number of new products that will be launched in the coming months, including VAustralia.
With regard to the ongoing strategic review of the business, further initiatives will be announced in the near future concerning capacity management and new revenue initiatives.”
Co-founder of Virgin Blue, Sir Richard Branson, said, “Virgin Group has enjoyed working alongside Toll over the past 2 years. Virgin Group remains a long-term committed cornerstone shareholder in Virgin Blue and has a high degree of confidence in Virgin Blue’s business model and future.”
Toll has advised that its nominated Directors Messrs Little, Ludeke, McInerney and Mallon will resign from the Virgin Blue Board following completion of the in specie distribution. In addition, Mr Bob Watson has resigned as a Director. Current Chairman, Neil Chatfield will continue in the role until the Annual General Meeting.
The Virgin Blue Board will now form a committee to nominate additional independent Non-Executive Directors and a new VBA Holdings Ltd Chairman. The new appointments are expected to be finalised by the Annual General Meeting to be held in October.
Current directors Neil Chatfield and Paul Little have indicated that they have no present intention of disposing of the shares in Virgin Blue that they will receive upon distribution.
TRADING FOR THE YEAR ENDING 30 JUNE 2008 AND OUTLOOK
On 13 June 2008, Virgin Blue announced capacity reductions and a $50 million package of cost savings as part of the company's response to continuing record fuel prices. The company announced that these initiatives were the first outcomes of an ongoing review monitoring global jet fuel prices which now equate for 35% of the company's cost base.
The company can also confirm its guidance provided on 11 April 2008 that its underlying net profit after tax for the financial year ending 30 June 2008 is likely to be in the range of $132m-$137m, exclusive of approximately $40m of development costs associated with new initiatives being launched in 2008.
The Company’s balance sheet and cash reserves remain strong and based on current trading conditions the Board sees no requirement for additional equity raisings in the foreseeable future.

[Iron Bar]

ABC news reporting Toll holdings are opting out of it's 60% ownership of Virgin Blue. Virgin shares to be distributed to Toll shareholders as a dividend. One Virgin share for each Toll share held.

[trashie]

Interesting article in todays Centre for Asia Pacific Aviation.
- Aviation Newsletters, Aviation Publications, Aviation News - Centre for Asia Pacific Aviation - Virgin Blue freed to grow: Toll cuts loose - and not before time (http://www.centreforaviation.com/aviation/News_&_Intelligence/Perspectives/Virgin_Blue_freed_to_grow:_Toll_cuts_loose_-_and_not_before_time/)

"Whatever the short term impact on Virgin Blue’s shareprice, Toll Holdings’ highly unusual move today to deliver an “in specie” dividend of 98.3% of its share in the airline to its shareholders is great news for Australia’s second airline. Toll has been sitting on its majority 62.7% holding since it bought it two years ago. Toll announced publicly last year that it was not a long term holder and attempted to sell its holding, but was unable to find a buyer prepared to pay the price it wanted.

In practical terms this has been a savage disadvantage for an airline which is being intensely challenged by market conditions, at the same time as it is metamorphosing into a higher yield-chasing operator. To compete for Australia’s domestic corporate market, Virgin has deviated from the LCC model to acquire a second aircraft type, Embraer regional jets, and is now on the brink of commencing B777 service to the US. Freeing up its ownership registry is almost certain to attract a flurry of interest, despite the carrier’s recent share price performance.---------"

[Betsy]

Betsy Wrote:
If I was Toll Holdings I'd shut it down. Shareholders don't like bad investments. How much more money could you pour into it?

Icarus2001 Wrote:
Gee I wish I had a BAD INVESTMENT that returned over $200 million last year and about $90 million this year!

Oh I just like to rub it in.. :p

[desmotronic]

Betsy,
I wouldnt laugh too loudly at the misfortunes of others, the elimination of the Toll overhang could be a positive for VB. I always wonder about non pilots like yourself who hang around ad nauseum pretending to be something they're not.

VB up 4% today.:}

[Betsy]

True I'm not a pilot, and I have never pretended to be one.

All I've posted on here are facts & figures, despite being on a 'rumours' website. It's better than reading some people's comments which are based on nothing but their emotions.

I can't help but think that mismanagement at the top has landed DJ into its current state. Remember BG was still talking it up a few weeks ago after QF announced grounding planes and cutting routes? And I quote:

"Our approach will be different to Qantas. Qantas is looking at cutting routes and cutting staff... our approach will be different." (source: SMH, Virgin Blue stay in business: Godfrey - Breaking News - Business - Breaking News (http://news.smh.com.au/business/virgin-blue-stay-in-business-godfrey-20080610-2onp.html))

Well a few days after that, DJ announced sending four 737s to NZ and cutting SYD-PPP/MEL-DRW. No one seemed to have picked up the fact that he ate his own words. It was sad that an airline CEO still refused to accept reality.

As for laughing at the misfortunes of others.. let me put it bluntly, how could I feel sorry for someone who doesn't want to work and ends up sleeping in the street?

[ANstar]

This is good news for both Virgin and Toll.

Toll get rid of an asset that is volatile and cyclical in it's nature.... Toll's core business is more steady in its earnings.
For Virgin it means they are free to make their own decisions without Toll's imput. I would also expect there to be another airline out there that may be interestedin snapping up a few shares.

The shares are cheap, but DJ is in a good positon compared to alot of other airlines around the world... lots of cash in the bank - but IMHO in need of a more strategic partner/alliance (and an owner who is into the airline business)

The price may just be right for someone to jump in - Toll were greedy fools not to sell it last year when they had offers.

[Whiskery]

Looks as though the shareholders hold the balance of power now - who's in the running to be on the new board?:D

[ga_trojan]

I believe Geoff Dixon might be looking for a retirement job.:}

[DJCCGuy]

So any idea on who might be interested in becomming the next stake holder in the company?

Also who was it that placed the offers that Toll jrejected originally?

[halas]

A well dressed fella walks into a village in the jungle.......

halas

[Betsy]

Whoever dares take up those shares will want to turn it around and do it quickly, which I think if DJ has any chance of survival it'll have to be turned into a LAMB - lean-and-mean business. A big restructuring would be the only answer.

I suppose such airlines as SQ and EK might have once shown interest but in the current climate, they have their own bottom lines to look after. Besides SQ has been shafted buying 49% of VS, I doubt the Singaporeans will take another 'red' lemon with open hands. Especially after someone else has chucked it on the floor.

And, if Branson was so confident about DJ why didn't he just take up some/all of Toll's shares? My guess is he's looking for another sucker.

[mmmbop]

Desmotronic,

I always wonder about non pilots like yourself who hang around ad nauseum pretending to be something they're not.

I never wonder but always laugh harder at guys on the flight deck who think because they have done an ATPL they know how an airline should be run.

I don't see a problem with a non-pilot coming onto a RUMOUR network and talking about things non-technical.

M

[ANstar]

Betsy, Branson was trying to buy more of Virgin Blue back at around $1.80 a share at the end of last year. Toll rejected that.

[Section28- BE]

Some points that I have pondered since the announcement yesterday as an observer only (in an unaffected or preconceived fashion- and I stand to be corrected on any of them):

Ex the Toll announcement to the Market-

Link here: TOLL ASX Announcement.14.07.08 (http://www.asx.com.au/asx/statistics/getAnnPdf%28%27/asx/statistics/showAnnouncementPDF.do?idsID=%27,%20%2700859807%27,%20%27Ann ouncement%27%29;return%20false;)

The Share Distribution Date is 22 August 08 - so I assume that is the date of effective title transfer and that they become "Trade-able" as at 10:00 AEST on the opening of the market?????

Ex: The Courier Mail article today-

Link here:15.07.08 Toll Holdings to offload nearly all its Virgin shares | The Courier-Mail (http://www.news.com.au/couriermail/story/0,23739,24018457-3122,00.html)

The Toll holding is 62.7% or 648,000,000 shares (acquired as part of the Patrick takeover) of which they are going to retain 1.7% or 11,000,000 shares as a strategic holding, leaving some 637,000,000 shares (61% distributed to Toll shareholders 1 for 1 as a "Dividend") to be effectively pumped into the current market at 10:00 AEST on Friday the 22nd of August.
(all figures above ex CM article- I haven't done the research)

Not that I'm not saying that there is not someone out there preparing to do a strategic snatch and grab on the stock/airline- or players currently assembling a position (post the announcement) in the lead up to this distribution.

Given the demographic of the current shareholders of Toll receiving this "Dividend"- which will include Institutions, Professional/Experienced traders and Broking Houses.

What is the capacity/appetite of the market in these current times to absorb that volume of an aviation stock, and what net effect will that have on the price?????

Or what will the commitment/fortitude of these new stockholders be to ride out the current Aviation Cycle???????

For Toll having had a "professional adviser" work on disposing of their holding for some time- they have paid a dividend in the form of an airline to their current holders- would they not just book the difference between the holding value in the books and the dividend as a book loss going forward????, and get on with life.

[B772]

I understand fuel hedging by VB was only introduced after input by Toll at a board meeting. If this had not happened god only knows what would have happened with VB.

[desmotronic]

Section28,
It well known that Pacific National was the main game in the Patrick takeover and not VB. The market was well aware that TOLL wanted to offload VB since the word go. Going forward who knows whats next for the share price but there are lots of super funds who will be obliged to acquire VB holdings to maintain their index weighting.

Anyhooo VB up another 10% today.

Mmmmmbop,
I suppose you have to learn to amuse yourself in the back seat there's not much else to do.

[bushy]

And the middle eastern airlines will be happy as the oil price cripples all the others.

[DJCCGuy]

Whoever does end up taking over DJ I think we will see a very different airline as a result

[Betsy]

ANstar Wrote: Betsy, Branson was trying to buy more of Virgin Blue back at around $1.80 a share at the end of last year. Toll rejected that.

What I meant was why didn't RB take up some/all of Toll's shares yesterday? He obviously knew they were going to offload. And at Friday's closing price 50.5c it was a bargain compared to $1.80.

Or is he hanging around for the price to drop further and then sweep in?


To DJCCGuy - DJ has to change regardless - it simply can't survive in its current form. I took a DJ flight on the weekend and they were handing out those free earphones in the hope many would pay for the Foxtel onboard. I took one and only used it for the preview. You gotta wonder how much money is being wasted - totally unnecessarily - on those everyday.

[ThunderLips]

I never wonder but always laugh harder at guys on the flight deck who think because they have done an ATPL they know how an airline should be run.


I find it even more amusing that the CEO of VB is a failed Commercial Pilot but is smart enough (thats up for debate) to run an airline.

[B772]

desmontronic. I do not see what has changed, why would any current index hugger have to acquire further VBA shares, regardless their All Ordinaries index weighing is currently just 0.04%.

[neville_nobody]

I find it even more amusing that the CEO of VB is a failed Commercial Pilot but is smart enough (thats up for debate) to run an airline.

Ironically so is Alan Joyce by his own admission

[desmotronic]

B772,
Indices often have minimum liquidity in addition to minimum capital requirements.

[denabol]

Lemme ask if I'm getting this right. Toll shareholders get free Virgin shares. Toll writes off the difference between its investment and the price of VBA averaged over five days before the strike date in August.

But if VBA goes up, the tax free value to Toll holders goes up, the write down on Toll's books goes down.

And, duh, Paul Little and his mates keep their VBA shares and seats on the VBA board.

Far ******* out.

[wirgin blew]

I doubt Branson has the money or inclination to buy more shares in VB. The global aviation problem due to the price of fuel has probably hit his personal wealth as well.
Toll are getting out of the aviation business which isn't their core business so whats the fuss about. VB will be traded like crazy on the first few days as institutions try to get a piece of the action as the company is trading well below what it is worth on paper. Toll values the company at $1.47 and don't forget the $700 million in cash that VB has.
Also don't forget nearly 90% of the shares are off the market at the moment and it isn't till August that the 61.5% get distributed (1% remain with Toll). How many of those end up in Paul Little and his mates pocket as they are substantial share holders of Toll.
The funds (your superannuation) will invest in VB as soon as it gets back into the ASX 300 because that is what they do. They have exposure to all companies and they trade them daily.
If I was a betting man I would say that VB will be trading around $1 by Christmas as long as Australia doesn't get dragged down to much by the economic destruction of the US Empire.

PS. Headsets would cost next to nothing to make so you probably only need one or two people to buy the Foxtel to cover the cost of the days headsets. Also VB aren't giving away the advertising space on CH 13 and 29 for free. God knows if subliminal advertising works but the people who buy and sell that stuff probably believe that it does.

[LFandH]

"Merged: Virgin Blue Share Price - how low can it go and for how long?"

.......VB shares will go to 10 cents or below. Anyone would be a fool to invest in airlines in a very uncertain future.

[F111]

Currently share price is 69c, after hitting a high of 70c today. So since the Toll announcment the price has risen 20c.

[yourejoking!]

The decks need to be cleared of the vast numbers of middle managers that just werent here 7 years ago. Millions could be saved immediately when it's realised how much deadwood has been accumulated over the good years. :ugh:

[porch monkey]

Word on the IFE is that BG doesn't give a **** whether people buy it or not. As long as it gets the advertising, (and it does), it's revenue neutral, including the headsets.

[VBA Engineer]

Not sure about the newer white headsets but the old red ones were bought in "massive" quantities at 3.9 cents each.

Each box received by the stores guys was around 1400mm long, a metre high and 800mm wide and they were absolutely chock full of them.

It wouldn't surprise me if the LiveTV company provided them now.

[B772]

US Air are removing IFE from 200 domestic aircraft as the novelty has worn off. The savings in fuel and other costs approx. $15M per annum.

[ANstar]

B772 I wouldn't use US as an example of an airline doing the right things!

They are removing IFE as they cant afford it - not because the novelty has worn off.

[desmotronic]

The contrarian in me says this thread should read "how high can the VB share price go!"

Up 50% since last week.

LFandH,
Big call for your first post, pm me if you would like a wager.:8

[yerex]

How about Air NZ taking a position in vb and QF (JitConnict) a position in PB!!! Not even a rumour, just a thought. The A treble C would live with it???? After the NZ Gov't buy out of Toll rail Cullen would roll over again!.

[Wellhung Unit]

I find it even more amusing that the CEO of VB is a failed Commercial Pilot but is smart enough (thats up for debate) to run an airline.



crap....he is not

[ThunderLips]

Quote:
I find it even more amusing that the CEO of VB is a failed Commercial Pilot but is smart enough (thats up for debate) to run an airline.

crap....he is not



I agree, I dont think he's smart enough to run an airline.

[oldhasbeen]

.....and I thought it was his PPL that he failed!!:eek:

[biton]

VBA stocks hit a high of 75c yesterday to finish at 67c. Looks like the market likes the news that has been delivered. Hopefully this trend can be maintained. If I read correctly, JP Morgan are estimating a share price of around 85c by the end of the year. If this is correct then despite anything else, it is a trend in the right direction.

[desmotronic]

90c today might be time to get out before oil goes back up!:}

[international hog driver]

Let's see how we do in mid-Oct. from Betsy..

Well 4 months down, 2 to go and the price today was $1.15 so thats close enough to a 30% increase so far.

Too bad I did not hold out longer as Going Boeing said....:{

[porch monkey]

Only 30% IHD? You should have gotten in when they were 48 cents.

[43Inches]

May be interesting to see what happens post august 22,

[TIMMEEEE]

Great to see the shareprice coming up at last.
One thing though - it seems to have risen in huge leaps and bounds which is not a good thing at all, especially in an unstable and erratic market.

This ultimately drives away alot of investors and makes long term planning difficult, especially in times of economic uncertainty.

Still, the share price is less than half of its initial float and has a long way to recover.

I like what Yellow Rocket had to say about the micro-managing nonsense that goes on - and it just aint VB that suffers !

[porch monkey]

Problem is Tim, BG is the main culprit for micro managing.......

[coaldemon]

someone is buying up a stake or there is a takeover premium being priced in. Either one should prove interesting.

[rcoight]

Down over 20% so far today!

What is going on?!

:eek:

[F111]

Due to lower profit announcement this morning. Profit of $98m; down from $214m last year.

[international hog driver]

DOH!....:ugh::ugh::ugh:

oh well it happens......dont quite understand the massive drop it was well flagged and forecast that there was massive profit warning.

It really shows how many people play the market for dividend and how many play for long term growth.

Bugger:*

[desmotronic]

Last 3 days VBA has fallen from $1.15 to $0.60.

Oil going back up, AUD$/US$ going down plus a profit warning. :zzz:

Hmm, get back in under 55c. :}

[airtags]

The dance with the share prices will continue until the August prom night then the test will be where Toll's minor shareholders move in the first few weeks of Sept - pending of course a couple of scheduled economic reports and a RBA meeting.

I'd be surprised if if we didn't see the CEO and the Board actively lobbying the financial journalists over the next week or so - expect a bit of spruiking about VB's (note key words) 'consolidation' and 'market focus'.

Key still remains VB's relatively low net asset value, a huge secondary risk from offset (sic; non balance sheet) liabilities - which would impact heavily on the cash reserve in an adverse/extreme position - and the big one... that intangible of the market's confidence in the future direction of the business.

Even the high risk institutions/funds will be a little cautious about aviation & esp VB. - As my Dad once said - the only people that get rich out of avaiation and keep the $'s are former CEO's & ex-wives!!!!!

You're proabably better taking your punt at Randwick until VB gets back to core ops as a very good LCC.

:E

[Phlap1]

As a minor Toll holder, I will be dumping these rubbish shares at
the first possible opportunity. Cash is king not VBA shares!

[Thylacine]

Phlap1 As a minor Toll holder, I will be dumping these rubbish shares at the first possible opportunity. Cash is king not VBA shares!

Don't worry there are still twice as many buyers as sellers at today's price. Pity you didn't sell the lousy shares at $1.15

[Section28- BE]

Given my previous post #59 of 14 July 08 on this thread-

And it now being the 21st of August, I thought I might throw this chart up ex the ASX, as it may be of interest to watch over the next couple of trading days.

VBA, VIRGIN BLUE HOLDINGS ORD

The chart of daily prices over 6 months for security VBA

http://hfgapps.hubb.com/asxtools/imageChart.axd?s=VBA&pi=Stock&ct=3&tf=D6&ovs=XJO&si=Index&tima1=20&tima2=20&bi=9&bima=0&comt=index&ds=VBA&dovs=XJO&val=1&stmp=20080822121705573


ASX excludes all liability arising out of any inaccuracies in this Chart, except where liability is made non-excludable by legislation. Chart values may be adjusted for changes in a company's capital structure or to link historical values that represent the company's primary equity security.

Edit 22 Aug 08- 02:23: The ASX changed their charting function on their website and the chart disappeared- so here it is again.

[TIMMEEEE]

Desmotronic, good advice to sell the shares when they were at 90 cents indeed.

The share price has collapsed back to close at 48 cents today.
Expect further declines in the share price as the Toll shareholders prepare to dump this volatile stock.

Such wild and rapid swings in share price is enough to drive away any long term or serious investor and make any institutional investors stay away in droves.

A junk stock perhaps?
When it was floated a few short years back for over $2.20 or so I remember the fanfare of Sir Richard and Brett Godfrey touting its wonders and its fulfilling future.
I agreed seeing that picking up where Ansett left off from was a bit of a no-brainer.
It had a ready made market, a single aircraft fleet, lower wages and new aircraft.

Since then the shares peaked at $2.81 in Feb 07 and have been decimated ever since with todays price of 48 cents after having traded as high as $1.25 earlier in the week!
Changing business tactics midstream from their original business plan hasnt exactly panned out as desired.

I'd be wondering if Mr Godfrey's business plan has been up to scratch.

[eba6]

Can't help but wonder if virgins decision not to go into Star Alliance when Ansett folded will now be seen as a big mistake. It is hard to attract business without a global Alliance partner.You can advertise about some extra space but what high yield passengers really want is that ability to travel without having to check in more than once.

[THE ORACLE]

Sentiment concerning the stock seems to show that only Godfrey knows what a 'New World' Airline is!!

Virgin's stock value is an absolute 'train wreck' which will only worsen if they persist with their three tiered business plan!!

[BPA]

There was an article in the NZ papers last week about Virgin Blue, Pac Blue and V Australia joining Star.

[KittyBlue]

Dont forget with star alliance or not, when you are coming into Oz, you need to recheck once you pass customs. There is a VB checking spot at the international in syd/bne/mel. As for those going the other way, they have many interlined flights with many airlines thru syd/bne/mel etc.

[Betsy]

Of particular interest was some 16 million shares changed hands at closing of trading yesterday at 48-49 cents. That's some 1.5% of the company. Who could the buyer be??

[KRUSTY 34]

Problem solved then kitty.

Share price should be up above $2.00 in no time!

[KittyBlue]

What is the problem with their ideas Krusty34. Its a easy way of not putting out monies for more business. I do understand the view that you need to put out money to make it. I believe the DJ brand is well establish to make an alliance descision today. They (management) do not believe that its a thing to do at this moment, from previous comments made by Virgin (SA holding) Group and Virgin Blue Group that they wish not to go down a track with such as an alliance. Things change!

Each area of the company can probably cut back in areas, of course this can cause issues with moral etc. A very fine line to tread and decide with. There will always going to be a pro and con to each descision made.

Remember DJ started with alternate ideas in what an airline was going to be from day one, evolution takes place and mistakes are made and changed and growth is made!

Its a business and the main reason for a business to be in business is make the money!!

[Skystar320]

Last 3 days VBA has fallen from $1.15 to $0.60.

Oil going back up, AUD$/US$ going down plus a profit warning.

Hmm, get back in under 55c

Its going back down...........

[KRUSTY 34]

Sorry if I hit a raw nerve kitty, but you should be careful about swallowing the hype. Believe me, the last thing I want is to see more Aussies thrown out of work, but if DJ aren't careful they may end up going the way of the airline who's demise is the only reason they, and you for that matter, are here today! Some of the parallels are quite ironic.

I'm not going to mince words. Every post you put up is nothing short of a thinly veiled attempt at propaganda. I smelt a rat when you started extolling the virtues of "flying" the EJ into regional centers, and your illinformed description of operational matters. This is a pilots forum, and while the opinions of others are certainly welcome, your previous attempt at subterfuge has lost you any credibility with this reader. I do however love this little gem...

"Remember DJ started with alternate ideas in what an airline was going to be from day one, evolution takes place and mistakes are made and changed and growth is made!"

Make no mistake, the only reason DJ is alive today is because of the death of Ansett.

People really should learn the leasons of history, unless of course they wish to repeat it.

[Skystar320]

Krusty, point well valid and well noted.

Its been documented that VB had gone far left field from a true lost carrier to a [what do you call them]

Three well points we can see

- Frequent Flyers
- Premium Economy
- Business class at the airport
- Introduce the ERJ flying into regional ports

DJ stick with what you were good at, the TRUE low cost airline

[sthaussiepilot]

I agree, however you can see why they attempted this, they need to go back where they were, but I dont belive they can compete with Tiger or even Jet* for that mater, I would much rather see Virgin survive over Jetstar....

[CheckEssential]

AH KRUSTY......Best thing said in a long time matey.....couldn't agree with ya more!!!

[wirgin blew]

KRUSTY what parallels are you refering to? QF has the questionable engineering issues at the moment not VB. VB have still got large cash reserves $700 million. They are expanding the market not pulling out of the market eg QF to shut Mildura maintenance whilst VB put EJets in there. QF have handed not so profitable routes to Jetstar as they realised if they didn't compete with VB on the same level they would be in trouble eg OOL. VB under VOZ are picking the eyes out of the most profitable international routes LAX and JNB.
Finally the company made a $98 million dollar profit and included in this $40 million of start up costs for VOZ. So as VB $138 million in a year when the price of fuel is double what it probably should be.
The reasons for VB changing is to please the people buying the seats not the wannnabe pilots/economists/stock brokers on this forum. All the changes have been asked for by the people buying the seats. There is no point sticking to the one thing if it isn't going to last in the long term. If this recession gets under way do you think the people from the outer suburbs will still be able to afford even J* and Tiger.
I say the changes are for the good and with a +80% load factor the majority agree.

[Skystar320]

Finally the company made a $98 million dollar profit and included in this $40 million of start up costs for VOZ. So as VB $138 million in a year when the price of fuel is double what it probably should be.


This fuel was hedged, if thats the case, why has Qantas made a nice little profit when their operations are 4/5 times, if not more bigger

I think DJ are losing the plot, I hope not they are a good airline.

[porch monkey]

Not quite as simple as this 320, but if QF is 5 times larger, then to have an equal profit vis size, then QF would have to make 5 times the VB profit, wouldn't they. They did, which is fine, but I'm pointing out why QF did/have to make a bigger profit to be considered reasonable. Also, consider that all of QF's issues recently, including cancellations, empty positioning, delays, hotels etc racked up in the last 2 months aren't on this balance sheet. Next year will give a bit of an indication there.

[wirgin blew]

Also back to the QF profit. Does this include planes that were supposed to be here already but have been delayed. The A380 for example at $300 million USD per plane would make a big dent in the QF P&L.

[43Inches]

QF new purchase aircraft are on a progressive payment scheme, it was alluded to when the financial statements were released. I think a fair amount of the aircraft cost may have already been accounted for.
As for VB I think some may have had a good look at the balance sheets which has led to the price fall. Liabilities almost doubled during the year to $2.5b, operating cash dropped to $600m. Combine this with slowing economy, decreasing loads, increased competition, volatile fuel prices and no parent company to inject cash and it doen't look like a great investment at the moment.

[KittyBlue]

KRUSTY34 are you a former Ansett employee? This is not a dig at you or Ansett, I would like (with your permission) what experiences form your perspective?

As for my propaganda, I have been with DJ since start up. I've have change positions 3 times and do thank the company for my long term employment. Some descision that have been made, I personally feel were made reactive than by great conscious thought. Some have been successes and some failures. But hey 'The Blue Room' evolved into 'The Lounge' as is as popular with regular and adhoc fliers.

Bias, it may come across that way.... you speak about DJ and I have direct knowledge, and happy to discuss it with everyone. I can not say that I can talk about other airlines in the same manner.

I do wish the company to continue being profitable.... keeps me and the 4000+ staff in a job.

[airtags]

kitty
balanced viewpoint and no doubt from the heart however, the fact remains that VB has a very low nett asset value and a host of non reportable, off balance sheet liabilities that would wipe out the cash reserve in an instant. That's the simple risk equation and it is that risk that fenced off the potential buyers when a sale was first mooted by Toll's, Paul Little.

Irrespective of fuel and the cost of money, the business is in a very difficult place - it can't afford route continuity, but in reality it can't afford in the long term to drop/consolidate routes either. V Jets (nice planes) were very exe choices for notional regional feeder routes plus the price elasticity of seasonal leisure routes reduces the ability of the business to amortise the lease captial over longer terms.

Aviation is a tough gig and without a strong USP and year round sustainable market it's pragmatic at best.

It is very easy and sometimes incorrect for others to make Ansett analogies however baseline is that VB under the current CEO and Board have indeed lost focus and have forgot what their core business was all about. Ansett went down due to similar management traits albeit with a fair measure of rape and pillage from banks, financiers all of whom were helped by the NZ govt. [Note: Ansett refugees no correspondence - pls fwd all hate mail to Korda Mentha and also ask about their fees]

VB is a great airline and given the scale of the Australian market, has a real place as a competitive LCC - But it has high risks that need to be mitigated.

In addition to the dubious investment decisions (IFE/Premium Econ etc etc) it is a worry in that there is also a reliance on a number of CASA dispensations for daily ops and that there are other significant operational burdens that do pose unacceptable fatigue and safety risks for VB's hardworking crews.

In addition, the capex for V Australia is a hard hit as will be the hits from the conservative forecasts of the operating losses for the establishment years. Reality is the SYD/LAX route might have demand but under the Open Skies model is likely to provide diminished yeilds.

If Godfrey and the Board were to go tomorrow and be replaced by sound strategic management, then the market would immediately give the shares a huge leg up. "Brett" might be good at emailing and reving up the VB faithful, but the markets are not blinded by the Branson bravado that surrounds the DJ hype.

Let's hope that Godfrey, the Board and some within VB's over subscribed management ranks either get out or better still - get with the program and get the business back on track.

To paraphrase the punter opinion however:
VB is to shareholder/market confidence what Qantas is to current safety perceptions......everyone hopes it doesn't happen.... but still keeps an 'ear out' to hear the crash.

[THE ORACLE]

airtags,

Congratulations on delivering such a pithy summary of the DJ mess. The one aspect you didn't mention is the 'panic' and emotion that affects stock values when traders and investors (speculative and otherwise) perceive that a particular stock has become a 'dog' in the market and this aspects was demonstrated spectacularly with the Virgin stock implosion last Friday during the final trading session.

[Betsy]

Betsy wrote:
Of particular interest was some 16 million shares changed hands at closing of trading yesterday at 48-49 cents. That's some 1.5% of the company. Who could the buyer be??

Oracle,

Did you mean this? Panic selling of 16 million+ shares?

It seems to me the trade was purposely timed between the seller and buyer - if someone dumped 16 million+ DJ shares and there was no buyer the share price would've closed way below 48 cents. Could that buyer be Sir Richard? Temasek? QF?

[THE ORACLE]

Betsy,

It is doesn't matter who sold and who bought. What is important is the precipitous decline of the stock price and the uncertain emotions associated with buy/sell decisions on the back of individual interpretation of DJ's financial position and future prospects based on their business plan.

Today's trading might be interesting!!

[rcoight]

Perhaps the 16 million + shares traded at the close on Friday had something to do with the TOLL / Virgin offer that went to Toll shareholders? :

As a TOLL shareholder, we received 1 VBA share for each TOLL one owned and were also given the option of buying more. Presumably some people took up that offer and that may explain the huge amount traded in (more or less) one hit?
I seem to recall the date it was to happen was the 22nd Aug.

[THE ORACLE]

r,

TOLL 'dumped' their 62 percent shareholding onto their core investors, including you it seems. The decision by TOLL to 'dump' the stock and take a massive writedown on this years balance sheet, rather than persist with a difficult investment must send a very negative message to both core and non core investors concerning DJ.

This accumulating negative sentiment is doing the damage to DJ as any prospective investor will look closely at it, and possibly other similar models (such as Jet Blue in the U.S. (once a 'darling' now a 'dog') and decide accordingly.

Once a negative trend perception starts it is very difficult to stop. Economists call this the 'Pygmalian Affect' or the 'Self Fulfilling Prophecy' and to an extent this psychological phenomenon contributed to the run on banks in the U.S. which resulted in the 1929 stock market crash.

[porch monkey]

Airtags, I'm curious. What "dispensations" are you talking about?

[ebt]

Oracle - not sure about JetBlue being on the nose. Lufthansa seem to think they're got something going right there.

Give it time and I think that it will show that VB are on the right track with their model. Qantas don't really want to compete with them at the top end of the market, as they would rather up the yield in business class, which they dominate by default. That will open up a large enough market gap for VB to fill for those business pax who are a little more price sensitive. Of course they're going to have to really say goodbye to the leisure market, but that shouldn't be too much of a loss.

[BPA]

xsite,

Only you can make the choice, do you want to change, do you want to be domestic FA (with or it's good and bad points) or do you really enjoy being a regional FA?
However Virgin Blue does have at least 2 years money in the bank. How much money does REX have? The fuel costs are hitting all airlines including REX. Virgin Blue is slowly picking up corporate clients (including a few in the ABX area), so this will impact on REX's yield.

[43Inches]

BPA just wondering where you got the 2 years cash from as a press release associated with the financials indicated a decline in reserve cash from 139 days operating reserve to 101?

Rex has extremely low to no debt compared and can restructure to operate very few routes, uncontested, very quickly. It will be interesting to compare their financial position as it will be released shortly.

[Skystar320]

dude every business has its up's and downs.. VB over REX anyday.

[Ratter]

I think the the point to saying 2 years cash may be in the fact that the 101 days of operating cash is if all aircraft were grounded and there was absolutely no money coming into the company.

I think most will agree that this is a very unlikely scenario. In reality, if Virgin were to lose about 100 million per year and make that up with cash reserves then i would logically believe that they would have a few years of cash up their sleeve.

Regards,

Ratter

[Jenna Talia]

xsite,

I understand only a very small part of VB is listed on the ASX. The ex REX F/A's who I know that went to VB recently are very happy campers. Also recently a number of senior REX pilots had interviews and more will in the near future. A senior checkie from ML recently also resigned to start with VB. Go for it! :ok:

JT

[43Inches]

I fail to understand how only a small portion of VB is listed, Which part of VB did Toll have 62% ownership?

[wirgin blew]

62% previously owned by TOL, 25% with Virgin Group (Branson), 3% with Brett, and the remaining 10% with the market.

Now with TOL dumping 60%, they will retain a small interest apparently, the market has 70% of the company to play with. The last two days of trading have seen volumes of 80 million as opposed to normal around 3 million per day. Thats roughly about 13 times the usual amount of trading in the company.

As I have said before this is probably super funds buying into a ASX 300 company to diversify their portfolios.

[Knumb Knuts]

VBA share price upgraded to outperform

[Quokka]

"buy...buy...buy!!" (http://www.macquarie.com.au/fsgapp/fsgresearch/FSGArticleViewerServlet?documenttosend=abstract&report_id=50008420%20&print_view=yes) :ok:

[43Inches]

I think that release might just suggest who is doing the buying at the moment, it makes sense though that if you got controlling shares you could break up the company and sell its assets for a profit right now.

[Section28- BE]

They put well over 40 million through yesterday, they seemed to firm a couple of cents in the last hour to close at 0.525 cents.

No announcements on change/or becoming a Significant Holder this morning- ex the ASX site.

Rgds
28- BE

[Skystar320]

I think that release might just suggest who is doing the buying at the moment, it makes sense though that if you got controlling shares you could break up the company and sell its assets for a profit right now.

:yuk::yuk::yuk::yuk::yuk::yuk:

Can I suggest you going back to school [business] and learn about economics including takeovers, then you will realease its not as simply as buying the company to shut it down.......

:=:=:=:=:=

[TIMMEEEE]

It looks like VB shares have found their current niche in the market place at around the 50cent mark.

At that level the airline has been quote as worth about $600m (not including liabilities which have risen significantly over the last 12 months).

And as yet we havent seen the end of the fuel cycle or the US recession which will really bite Australia and hence all carriers (especially low cost of which VB is still one - sorry Brett!).

With such volatility any savvy gambler would even stay away from purchasing these shares as there are alot of other better value underpriced shares on the market that still pay good dividends!

[porch monkey]

With 40 million shares changing hands tim, the "savvy gamblers' don't appear to share your opinion. Neither does Mac Bank it seems. (Even though I detest them!)

[43Inches]

Sorry Skystar, that post was poorly written, I was alluding to macquarie and friends may be buying the shares then talking them up to earn some quick cash (first half). The second half was in regard to the shares being undervalued compared to company assets therefor a controlling interest could get some of their money back even if the company failed through asset sales. The intent was not to buy and break up for profit for the sake of it. The little spreadsheet next to the macquarie artical was interesting though as it showed a big loss next year but then a big swing to profits afterwards, a big call to predict that in the current environment.

Currently the books state an equity of $900m company assets and as TIMMEEE stated at about 50c a share 100% of shares would get about $600m. There would obviously be contract termination, personnel payouts, legal issues etc, etc, etc on top of that.

[Skystar320]

yes thats the value of the shares given you own 100% of the shares, however when you try a buyout option your not going to offer the holders of DJ shares at the current asking price

Therefore your going to offer them atleast 10-30% more than the current asking price to make the sellers sell the shares to you!

[KRUSTY 34]

Oh well, we'll only make $100 mil. Not bad for a days work.

Gordon Gheko 1986!

[ozbiggles]

Timmmeezzzzzz
We get it, you don't Like Virgin, the company or its share price.
You got anything new to add?

[Section28- BE]

Today they put through a total of 35,076,274 with a high of 0.540c and a low of 0.505c to close at 0.520c or down 1/2 a cent for the day.

[porch monkey]

Well, Someone's buying. The interesting thing will be who.........

[Quokka]

I was alluding to macquarie and friends may be buying the shares then talking them up to earn some quick cash (first half).

Disclaimer:

I, nor any Tom, Mr Smith or Harry that I know has bought VB shares... yet. ;)

Mainly because I got out of bed at midday today, fed the cats and promptly went back to bed... only to surface later at a time that precluded me calling my Mac Private Buckeroos broker... and a long time after the close of trade.

As a rule, I don't buy shares in aviation companies because I believe the potential downside is significantly higher than the potential upside. Just my personal opinion and one that is not shared by my Mac Private Buckeroos Client Advisor. It's a rule that I've broken twice, once with QF and once with VB... on both occasions I lost money. Don't get me wrong, I love aviation, having spent my teenage years and my whole working life in it. I just have more success in other sectors of the market when punting.

End of Disclaimer.

However... having read the article, from a general investing perspective, one would have to agree that when the share price of a company falls below the asset value... one should have a very, very, close look at it.

One warning though... remember Pasminco. :{

[Section28- BE]

Today they put through a total of 23,313,942

High of 0.52c and a Low of 0.49c

To close at 0.50c - or down 2 cents for the day.

[VH-JJW]

Below NTA, below market P/E and any other valuations.

Despite my personal misgivings about their strategic direction etc.

It looks cheap!

I'm in for a purely speculative play at $0.50 :}

[43Inches]

Something starting to happen today, 50m shares traded so far and price lifted slightly, still cheap though.

[desmotronic]

if you call 8% rally for the day slightly.

[Skystar320]

Its interesting to see what happens with DJ shares, $100 - $150 of your money is well worth spent if the price can go past $1.50 where as your inital $150 gives you $300back

Call me whatever, but I might fund $150

[Section28- BE]

Yesterday they put through a total of 51,349,369

High of 0.555c and a Low of 0.495c

To close at 0.545c - or up 0.045 cents for the day.

Still no announcements on change/or becoming a Significant Holder this morning- ex the ASX site.

Rgds

[B772]

I notice the DJ Debt/Equity ratio is now 160.6%.

Scary stuff !.

[THE ORACLE]

B772,

Scary indeed, when after 6 years in business with an initial list price of around $2.40 and the 'gift' of the Ansett collapse, DJ is now worth 20 percent (at around 50 cents per share) of the original listed value.

What a great basis for continuing the DJ 'expansion'.

Good luck to all concerned!!

[Section28- BE]

They closed on Friday at 0.575 cents

Today they put through a total of 14,974,221

High of 0.565c and a Low of 0.525c

To close at 0.54c - or down 0.035 cents for the day.

The Commonwealth Bank of Australia (and its subsidiaries) announced to the market today that, on the 27th of August it/they became a Substantial Shareholder in VBA- with 57,179,077 shares or 5.44%.

[Skystar320]

for all concerned please refer to Australian Securities Exchange - Stock Market Information, Stock Quotes - ASX (http://www.asx.com.au)

[DJCCGuy]

With 5.44%, im assuming this would mean we wont be seeing any significant changes to the airline?

[Skystar320]

Seems Colonional hedge funds picked the stake up [mind you 50cents a share, extrememly cheap!]

[desmotronic]

SYDNEY (Dow Jones)--Virgin Blue Holdings Ltd. (VBA.AU) Chief Executive Brett Godfrey said Tuesday that recent volatility in the airline's shares was the result of Toll Holdings Ltd. (TOL.AU) exiting its stake in the business and he was not aware of any other airline taking a stake in the company.

"What I understand is it's predominantly domestic institutions taking positions, I'm not aware of other airlines buying shares," he told reporters at the launch of Virgin's new lounge facility at Sydney airport.

Godfrey also said the airline's fortunes had improved since April.

"April was a little bit tough but since then it's stabilized, which is good and it's proving to be a bit more resilient than a lot of people thought," he said.

Earlier Tuesday, Virgin Blue announced plans to establish a jet base in Sydney that would employ around 1,000 people within five years.

Godfrey said the establishment costs of the base would be a minimum of A$10.5 million upfront, and that Virgin expects to house around one third of its fleet, or around 25 planes, at the new base once it is established.

[Section28- BE]

Ex the SMH today:

Branson passes on Blue

http://images.smh.com.au/2008/09/02/197030/richardbranson-300x0.jpg
Same stake … Richard Branson

Matt O'Sullivan
September 3, 2008

RICHARD BRANSON'S Virgin Group will not be increasing its stake in Virgin Blue in the aftermath of Toll Holdings's divestment of its shares in Australia's second-largest airline.
Sir Richard declined to reveal in July whether Virgin Group intended to increase its stake beyond 25.5 per cent after Toll decided to offload most of its 62.7 per cent stake.
His emphasis at the time was for a more hands-on role to steer the airline through the sector's biggest downturn in years.
Yesterday, the chief executive of Virgin Blue, Brett Godfrey, said he was not surprised Virgin Group had not raised its stake after about 70 per cent of the airline went into a free float last month. "[Virgin Group] are probably likely to stay in and probably may not increase their holdings," he said.
"They have made it clear they don't need to hold a controlling stake - they just need a significant stake [so] that they have their interests protected. They have typically said they do not want to have 51 per cent of airlines."
Shares in Virgin fell 3c to 51c yesterday - just 4c above its all-time low reached in June. The share price has been under pressure as institutional investors, who received Virgin stock from Toll, wait to sell because it is not central to their portfolios.
A spokeswoman for Virgin Group confirmed yesterday that "at this stage there are no plans to increase the shareholding".
Mr Godfrey has also previously talked up the possibility of other airlines or investors buying a strategic stake following Toll's sell-down. But yesterday he said he "was not aware of any strategic buyers or other airlines acquiring any of the shares".
Virgin Blue yesterday announced it would base a further 1000 staff - including pilots, cabin crew and engineers - in Sydney within five years after committing to a new jet base, which will boost its workforce in the city to as many as 2000 employees.
The carrier's headquarters will stay in Brisbane, but the company said in April it would make Sydney airport its international hub.
The NSW Government lured Virgin with payroll concessions and marketing and training incentives. The Premier, Morris Iemma, declined to reveal rebate details yesterday as they were "commercial-in-confidence".

[THE ORACLE]

Dream on Brett!!

[benjam]

Oracle,
you come across as an absolute goat.

[porch monkey]

Don't worry about him mate, every post he makes is to bag VB. Hasn't been right yet. Maybe they knocked him back or something........

[THE ORACLE]

Now 'Benjam' and 'Porch' there is no need to 'spit the dummy' when your PPrune based 'fantasy view' of reality is challenged.

Perhaps if you both read more widely you wouldn't be so sensitive and respond with such petulance!!

To give you some perspective, below is an extract from yesterdays Canadian news. This article follows the announcement by Ottawa based 'Zoom' Airlines that it had ceased all operations.

Now honestly, in such a trading climate do you really think the management at DJ are acting prudently?


MONTREAL -- Soaring fuel costs and a sluggish global economy have created a perfect storm for the world's airlines, which are expected to lose more than US$5.2 billion in 2008, according to a forecast released Wednesday by the industry.


North American carriers are expected to suffer the most, accounting for US$5 billion of the total loss, the International Air Transport Association said in a revised forecast. That doesn't include billions of dollars in restructuring costs.


That will reverse a $5.6-billion profit in 2007, IATA said.


Asia Pacific profits will be cut to US$300 million, one-third of their 2007 total.


European airline profits are expected to decrease to $300 million from $2.1 billion and the Middle East earnings should be shaved to $200 million. Losses in Latin America and Africa will increase to $300 million and $700 million respectively.


IATA director general Giovanni Bisignani calls the situation "bleak" as high oil prices and falling demand hurt the industry's profitability.


"The industry is in an extraordinary situation. We are in a perfect storm of rising costs, particularly oil, and falling demand," he said in a news conference from the association's Montreal headquarters.


In June, IATA forecast losses would range between $2.3 billion and $6.1 billion.


The revised forecast is based on an average crude oil price of US$113 per barrel or US$140 for jet fuel. The increase from US$73 per barrel a year ago has raised total fuel bills by US$50 billion to an estimated US$186 billion. Fuel is expected to represent 36 per cent of operating costs, up from 13 per cent in 2002.


Challenging market conditions in 2009 are expected to result in US$4.1 billion of additional losses as weaker economic growth expands beyond the United States.


"I think 2009 will still be a very, very difficult year so fasten your seatbelt for at least another two years," Bisignani said.


Although oil prices have recently fallen, they are still about 55 per cent higher than last year.


Airline passenger traffic in July fell 1.9 per cent compared to 2007, the lowest level in five years.


Capacity increased by 3.8 per cent, indicating that service cuts have not kept pace with falling demand.


Asia Pacific carriers saw demand fall by a surprising 0.5 per cent, partly attributable to a change in Chinese visa requirements.


Cargo demand also contracted by 1.9 per cent, with Asian carriers experiencing a 6.5 per cent drop.

[porch monkey]

Since you like to quote sources etc with the doomsday stories, UBS don't appear to share the doomsday view of DJ anymore. Not being petulant my friend, simply pointing out that the ONLY posts you make are of doom and gloom. Especially of DJ. We know you don't like them, and that's fine. Tell me, where is QF's profit going to come from into the future, given that it is presently being made what it is through cutting everything in sight? What do you cut when there is nothing left that can be cut? I'm personally yet to be convinced that the E jet thing is really going to work. But at least they are doing something.

It is after all easy to quote financial "experts", and cite one example to support your view. Just as I have, of course. Guess I'm the just the glass half full kind of guy.

[THE ORACLE]

Porch, thanks for the reply!

I neither like or dislike DJ, Tiger, QF or any other operator for that matter. I am not into emotion BUT I am into facts and I am into heeding the lessons of recent history.

When deregulation first occurred in the airline industry (U.S. in the mid 1980's) many many airline operators commenced trading and some of them grew quite large and successful (Southwest) and others had interesting business plans and great ideas (such as People Express), while others went for niche markets operating single aircraft types (such as Midway with DC9's out of Chicago).

Today most of these carriers are GONE!!!

All these operators expanded rapidly to try and capture passengers and market share and with the single exception of Southwest, they ignored the need to balance capacity against profitability in order to avoid going out of business by flying empty planes or planes FULL of NO YIELD passengers over extensive route networks (remember Compass in Australia?). All these operators failed due to competitive pressures.

My comments have nothing to do with personal attitudes towards airlines. My criticism of DJ is valid as their management is showing the same arrogance that has brought down many other airlines with similar plans and aspirations.

So Porch, time and tide will prove my observations right or wrong. Maybe DJ can re-write history and establish a new 'paradigm' as the academics like to say, but market conditions and DJ's market capitalisation and business plan indicates otherwise.

Your comment on cost cutting at Qantas to achieve greater profits is quite valid, however, DJ operates a low cost model where they would rather try and obtain concessions from staff and others to keep costs as low as possible, so they really have no place to go when fierce competition (Domestically, Regionally and Internationally) erodes their very thin margins and drives them from profit to LOSS, LOSS, LOSS, which Godfrey has already foreshadowed for 2009!

When that happens it is TOO LATE to reverse! Don't you think it would be prudent (considering there are thousands of employees involved) to act responsibly now, rather than being like a problem gambler and betting ALL on a few throws of the commercial dice?

[porch monkey]

As you quite rightly pointed out. Except for Southwest. And there is your exception to the rule. By no stretch of the imagination is Godfrey a Herb Kelleher, no way no how. Fact is tho it can and has been done. Will it happen here? F@cked if I know actually, but get onto the Pacific now before SQ and others, (and that WILL happen), they never will. As for the E jets, my thoughts on that are on another thread. At least they are trying something. Like I said, glass half full I guess....

[porch monkey]

As an edit, you said DJ can pretty much only drive employee costs down to make cuts? What do you think QF have been doing for the last 5 years thanks to Jetstar? BTW, VB pay is pretty much in the middle of both QF and Jetstar, so really, how is that relevant?

[benjam]

Oracle, just pointing out that you come across as a tool in your posts.

Take it or leave it. Change or don't change. I couldn't care less!

[THE ORACLE]

Porch,

Southwest succeeded and remains phenomenally successful in the U.S. because it has stuck to it's original business plan and remains as a low cost single aircraft type B737 operator.

DJ on the other hand now presents itself to the market as a 'new world' carrier (whatever that is supposed to mean) and is in the process of adding considerable complexity and cost to its operations by introducing 3 aircraft types. Southwest is a very different type of operation for these reasons!

[THE ORACLE]

benjam,

I'll take it! 'tool' - 'anything used as a means of achieving an end'; 'a necesary medium or adjunct to one's profession' (Concise Oxford Dictionary).

Thankyou for the compliment!!

[Section28- BE]

I note today that VBA closed at 0.49 cents

On a volume of 18,353,068

With a High of 0.55c and a Low of 0.49c

Or down 0.065 cents for the day.

[Miles to go]

Wow

They are worth less than toilet paper

[Skystar320]

thought they closed on 50cents?

[blow.n.gasket]

Would that be Zimbabwe cents?:ok:

[Skystar320]

up today :ok:

[Rabbitwear]

Tiger may make a move at around 40 cents , stay tuned............
Most of the 737s will return to lessors and Tiger will introduce more A320s and wait for it , old 777s from SQ for the major domestic ops .
Goodbye VB...........

[coaldemon]

I can feel a rendition of the fairytale "Puss in Boots" coming up.

[sthaussiepilot]

Goodbye VB.........

I really hope this isnt goodbye for them, I hope that they pull through...:(

[Betsy]

Tiger may make a move at around 40 cents , stay tuned............
Most of the 737s will return to lessors and Tiger will introduce more A320s and wait for it , old 777s from SQ for the major domestic ops.

Is it pure speculation, or you know something we don't?

[Skystar320]

pure speculation

"sciolist"... Noun, archaic. "a person who pretends to be knowledgeable and well informed".

[ozbiggles]

Who do you work for rabbitwear?
PS - Never ask a question you don't know the answer to.
For others a 5 second search of previous posts can often provide a good reasons for peoples posts. Some people on this site even have a paid assistant to do up a dossier for them!!

[43Inches]

I would say that its very unlikely, if tiger bought out VB they would be making the same mistake as VB themselves, over complicating the simplicity model. Other than the sydney slots they'd gain VB has nothing really that tiger would need, they would have to negotiate the break up, re-negotiate with staff and so on. Better they let it collapse (if it does) and pick up what pieces it needs after. At least tiger is sticking to the single fleet low cost philosophy etc... I'd say tiger would be more interested in something like rex as a low cost regional feeder, but thats also pretty unlikely.

[farrari]

Their Book Value is 88 cents, so actually at around 52 cents not a bad speculative buy. May be why CBA has just got a little over 5% recently, or maybe not so speculative ;)

[puma pants]

Do some of you idiots really want to see VB fail?
What's in that for anyone?
I don't fly for them, but I can't see why there is this dumping on them, which seems to translate into some sort of bizarre wish for it's failure. Surely we've seen enough of airline collapses in this part of the world.
For the industry's sake, VB need to stick around, if only to keep QF honest.

[wirgin blew]

Its all trash talk one airline to another. This thread should probably be locked since there is hardly anything worthwhile or new on it.

The Aussie market is on the nose to the rest of the world. VB isn't the only stock trading below what it is worth. The commodities boom is all but over, BHP and RIO will takeover the mining companies that have something worth selling. The recession is on in NSW and the rest of Australia will surely follow suit. Labor wont last more than one term. Need I say more.

Its really only a two horse race in these forums QF or VB and the majority of posters work for the Rat so you are never going to get anything but biased comments from them.

[airtags]

No!
the thread should not be locked - and if you don't like the wider perception then perhaps you should write to your CEO & Board who have done nothing to convince the market that there is a plan for the business other than continue on with all the 'new world carrier b.s.' that created the downward spiral in the first place.

VB desperately needs to get back to core business - focus on yeild and forget trying to prop up the failed business models for Premium Economy that were flawed from the begining. It needs to forget trying to be cute with the financial structure of the IFE deal and forget trying to rely on off balance sheet liabilities to prop up claims of '>A$700m cash reserves'

VB's dalliance into the PAc route with V is extremely high risk - apart from conciously putting the biz into the red for Y1 & Y2, the inbound market from the US is softening fast and the government's 'open skies' policy for the Pac route means more operators and a much lower NSR. (This is also an issue with Q)

VB is a great LCC - and as an LCC it did very well and should be a profitable business........ if it gets focus. Until however there is evidence of such, VB can expect to be tossed around in a stormy and very reactive market.

By the way - not all Q people or those from other airlines are anti VB - I happen to use VB's services a lot (except over water by choice) and it is usually good value - in fact Q & VB both share the same problem at the moment (perception) and for the record, the red rat is not doing a good job of convincing the market either!

It's great you are passionate about your employer - hang to that but maybe don't confuse their grasping of foreskin with foresight.

AT

[Betsy]

Agree with Airtags. Never mind the share price for a moment, what are management doing to turn the business around?

The latest moves by DJ/PB are somewhat puzzling. It was only a couple of months ago they pulled out of MEL-DRW and SYD-PPP, now they're starting BNE-POM, SYD-CHC and possibly OZ-DPS.

First, I'd love to know how they justify setting up base in PNG, offering 720 seats a week each way to/from BNE. Is there a sudden surge of demand that no one noticed until now? And are Australians all flogging to Bali instead of local resorts?

It's of utmost importance that companies conserve cash in these rough times. Instead at DJ money is still being spent left right and centre. I don't work for QF, but I'm sure the clowns at Red Rat are laughing their heads off right now.

DJ is a great airline and I don't want to see it gone like AN. But talking it up doesn't make things better. It's just sad BG still acts that way and sadder that some people believe every word he says.

[Skystar320]

Never heard anything about setting up a base in PNG, the base would be in Brisbane?

[sthaussiepilot]

I'd imagine the australian base would be in BNE, however they will be competing against SkyAirWorld on this one... as they fly to Port Moresby frequently... and are planning to expand there.......

Cant see this working well for either Airline....

[KittyBlue]

Betsy,

The MELDRW, SYDPPP ran infrequently from 1- 3 days a week. It was easier and cheaper to connect poeple through BNE for the daily flights to PPP and DRW.

POM is a destination, orginating from BNE. So this feeds off the wet lease agreement crew, no no base in POM.

As for conserving cash, DJ believe they need to spend money to make money, rather than sitting there with the reserves working without expansion. Each to their own i guess.

Also do you really think (a general comment to all) with a board of directors and a senior management team, that one person makes the descision without checking in with the research and the commercial interest? If this was the case I sure bet I would be on the breadline about 5 years ago.

[HANOI]

SA pilot

Quote
I'd imagine the australian base would be in BNE, however they will be competing against SkyAirWorld on this one... as they fly to Port Moresby frequently... and are planning to expand there.......
Cant see this working well for either Airline.... Unquote

SkyAirWorld do NOT operate BNE-POM. They do not have traffic rights.
In fact they wet-lease an E190 to Air Niugini for two only per week BNE-POM-BNE. Can't see how they are going to expand an operation they don't have , what's your source?.

[Skystar320]

Skyairworld operate the EMB on a wet lease contract to Air Niugini, same as the CNS - POM sector in EMB-145's :bored::bored::bored:

[COP]

The base is Bne. Why would anyone even think to base a crew in PNG? Come on guys lets be realistic. And as a matter worthy of note, Aussies on holiday go to Bali in huge numbers, especially from Perth, but all other capitals as well. The Bali idea is not a bad one. Garuda are always full (certain ports) and there would certainly be those willing to travel on VB instead. And yes SAW do run a wet lease for APNG it works but it is limited. I think VB could do the same on a limited basis and keep some dough in the pocket.

[HANOI]

Cop

Just to clarify......the SAW wet-lease arrangement is with Pixie not APNG.

[sthaussiepilot]

"Hanoi"

I know a pilot.... who is employed by SkyAirWorld and flys to Port Moresby often

In the 190 I belive:ok:

I belive somewhere around here I have a picture from the flight deck flying there, with the approach charts on the yolk, so if they are not supposed to be flying there, I dont know how he's been taking the 190 over there then... :}

[KittyBlue]

sthaussiepilot,

Hanoi is stating as in a wetlease agreement SkyAirworld operates as Air Niugini. The flying rights belong to Air Niugini, not SkyAirWorld. They work on their behalf.

[sthaussiepilot]

Ahhhhhhhhhh Okay,

Still SkyAirWorld Pilots, CC, and Aircraft... just under different name....

Check your PM please, just need a little bit of clarification, but would de-rail this thread... :ok:

[cnic]

APNG have nothing and would have nothing to do with sky airworld, lets just say after missing the runway in honiara it was noted.

[sthaussiepilot]

SkyAirWorld are not that bad, they have made a few bad decisions in regards to money... and well work....

And Didnt really miss it... it moved... you should know that:p

You cant really expect an airline not to have a small incident at some point... hopefully not as early into their RPT as they did, but they broke an egg, they should still have 11 more left...

[On Guard]

PB makes a dis proportionate amount of money for the VB group hence when the chips are down in AU opportunities are being thrown PB's way. So it is not throwing money away. Eg Poly Blue just announced 9.8mil profit - thats 1 a/c making that money btw.

However the concern is too much growth too quick is very dangerous.

Re QF. QF and Air NZ are not laughing at VB/PB they are both very nervous.

[Stationair8]

Closed at 0.445 cents today.
Wonder how many shares JR still holds?
Brett's ball's would surely start to feel the heat.

[Section28- BE]

VB have announced the appointment of Mark Vaile to the Board.

[43Inches]

Rabbitwear, we're about to see how accurate your predictions are....

CBA just pulled the pin on a large number of shares to fall out of being a substantial holder price has traded at .405c.

[DJCCGuy]

Things need to change!

[wirgin blew]

Even if someone wanted to buy VB I doubt they would be able to borrow the money unless they had it already saved up ie EK. This whole credit mess is going to stuff things up big time for the next couple of years at least.

[Betsy]

DJCCGuy wrote:
Things need to change!

Yes, and here's the list I've got:

1. Posepone V-Australia launch
2. Stop delivery of more E-jets
3. Reduce domestic capacity
4. Further cost reduction measures
And most importantly
5. Senior management

[ozbiggles]

Makes you wonder if there has been some 'shorting' going on really and now that has had the hand brake applied, those same 'people' bailing out. 1 and 2 cent changes every day in the share price make a big percentage difference and there have been some big parcels of shares being traded.