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romeocharlie
12th Jun 2018, 00:22
Virgin Australia CEO John Borghetti to step down.

https://www.theaustralian.com.au/business/aviation/virgin-australia-ceo-john-borghetti-to-step-down/news-story/be30ab7773d4e56c1242350572505670

Best employee Qantas ever had.

https://www.smh.com.au/business/companies/virgin-australia-boss-john-borghetti-to-retire-by-2020-20180612-p4zkw9.html

Second link for those that don't have blockers...

Capn Bloggs
12th Jun 2018, 00:40
Pay wall...

The Bullwinkle
12th Jun 2018, 00:46
Just a pity we’ve got to wait another 18 months, although hardly anyone’s seen him during the last 18 months! (except McLaren sales reps)

Stationair8
12th Jun 2018, 00:51
Article also on the free business website- www.thebull.com.au (http://www.thebull.com.au)

downdata
12th Jun 2018, 00:54
I wonder if the public humiliation from the NZ/QF cooperation announced at iata is the last straw... whoever that takes over ship will certainly have his/her work cut out for him/her.

GoldCoastTobacconist
12th Jun 2018, 01:06
Jayne Hrdlicka


(Great thread title )

'Looking good John ... '

PoppaJo
12th Jun 2018, 01:12
Where’s Hogan? :}

Comoman
12th Jun 2018, 01:21
No paywall:

https://www.ausbt.com.au/john-borghetti-resigns-from-virgin-australia?utm_source=hero

bazza stub
12th Jun 2018, 01:44
Maybe he and Joyce can share a cell.

Tommy Bahama
12th Jun 2018, 01:50
Can only imagine the parties at The Village this week......this news is right up there with the departure of Hammes!

777Nine
12th Jun 2018, 02:27
Should have been sacked many moons ago. Whoever takes over will have to be nothing short of a miracle worker, although surely they can't do worse than he did.

KZ Kiwi
12th Jun 2018, 02:30
But he did introduce hats and flash new uniforms...........

Rabbitwear
12th Jun 2018, 05:02
CEOs always leave when it gets too hard !
Time for a pilot to run the show , while Mr Borghetti cruises the world on his luxury yacht !
maybe he can sell Tiger to JQ for $2 for a cool hundred per cent profit before he leaves !

AerialPerspective
12th Jun 2018, 05:26
CEOs always leave when it gets too hard !
Time for a pilot to run the show , while Mr Borghetti cruises the world on his luxury yacht !
maybe he can sell Tiger to JQ for $2 for a cool hundred per cent profit before he leaves !

About bloody time this one left... I’d stay away from yatchts if I was him, based on his performance at VA it’ll probably sink... or be a pilotless ship because he made the Captain sit down the back...

Ollie Onion
12th Jun 2018, 05:56
Just a shame he didn’t resign at the infamous Board Meeting where Air NZ CEO Luxton demanded his resignation. If he had gone the Virgin and Air NZ would still be cosy.

Altimeters
12th Jun 2018, 08:13
Someone tell JT the position has now become available. Cya BorDEBTii!

Bend alot
12th Jun 2018, 08:55
CEOs always leave when it gets too hard !
Time for a pilot to run the show .

There are many examples that "a pilot" is often not a very good idea to have running the show - the latest fine example being Jetgo.

Daylight Robbery
12th Jun 2018, 09:42
Some do all right (for themselves)

BBC NEWS Business Pilot who rescued Aer Lingus heads BA (http://news.bbc.co.uk/2/hi/business/4330349.stm)

Bend alot
12th Jun 2018, 11:01
Some do all right (for themselves)

BBC NEWS Business Pilot who rescued Aer Lingus heads BA (http://news.bbc.co.uk/2/hi/business/4330349.stm)

Well that is a 2005 article and seems lots of job losses and birth of a Low Cost Carrier.

What are their terms of pay and conditions like?

Are the pilots all given 1990's Honda civics as a salary sacrifice?

Points stands there are far more recent examples of pilots running the show even in the last 10 years - that it is far from a given that they are capable of running the show.

bazza stub
12th Jun 2018, 13:50
There are many examples that "a pilot" is often not a very good idea to have running the show - the latest fine example being Jetgo.

not many examples of successful airlines run by bean counters either.

coaldemon
12th Jun 2018, 20:46
This would be Willie Walsh CEO of IAG and you don't think he knows what he is doing. Interesting.

Bend alot
13th Jun 2018, 08:21
not many examples of successful airlines run by bean counters either.

To correct you slightly - anything aviation run by bean counters statistically has a high failure rate.

bazza stub
13th Jun 2018, 08:44
To correct you slightly - anything aviation run by bean counters statistically has a high failure rate.

Duly noted. Thought that’s what I was getting at.

T-Vasis
13th Jun 2018, 10:54
Since John joined Virgin, the company has suffered losses of more than $1B. It has survived by continued capital injection by a few key shareholders. Had these investments not occur - we would not see Virgin today. With the share price at $2.07 in 2007, to current day levels of around $0.20, it has hovered on average to under $0.50. That's a 900% devaluation in the stock over the last 10 years - not good at all.

However, it is pleasing to see that it can now report free cash flow (so critical for business), and it is paying down debt. And the underlying performance for the last fiscal was its best yet. Sustainable earnings growth will now be essential, as we see market softening. It still has a 'way' to go.

With restrictions on Chinese capital outflow, and Etihad' own financial woes - they're going to need to be self-sustaining in the coming years.

Virgin had to do something, and I don't feel John's "game changer" program was the wrong thing to do. What they did not do well was estimate the time it would take to return positive results. That took a few years longer than anticipated. Virgin is very lucky it was saved by the capital raising it did. Very lucky.

Snakecharma
13th Jun 2018, 23:40
One of the big problems with his strategy is the way it was implemented.

“We need a330’s and we need them now”. There is a term used in virgin called JWIN. John wants it now...

he hated the old paint scheme, so he demanded that the aircraft be painted quickly, well before they were due,

he hated the uniforms so they they had to go quickly (can’t say I blame him on that one)

He hated the embraer so that fleet had to go

he wanted to take QF on in the regional market so they had to get a kazillion ATR’s at over inflated prices, and then buy Skywest at an over inflated price, then buy a couple of F100’s off Alliance at an over inflated price.

he hated the res system so it had to go

see a theme appearing? A more managed implementation of the plan would have achieved the gains he wanted without wasting hundreds of millions of dollars

777Nine
14th Jun 2018, 01:01
One of the big problems with his strategy is the way it was implemented.

“We need a330’s and we need them now”. There is a term used in virgin called JWIN. John wants it now...

he hated the old paint scheme, so he demanded that the aircraft be painted quickly, well before they were due,

he hated the uniforms so they they had to go quickly (can’t say I blame him on that one)

He hated the embraer so that fleet had to go

he wanted to take QF on in the regional market so they had to get a kazillion ATR’s at over inflated prices, and then buy Skywest at an over inflated price, then buy a couple of F100’s off Alliance at an over inflated price.

he hated the res system so it had to go

see a theme appearing? A more managed implementation of the plan would have achieved the gains he wanted without wasting hundreds of millions of dollars




As mentioned in another thread, because he didn't get the top job at Qantas he obviously had a personal vendetta, which unfortunately meant that Virgin was the casualty. Never a good idea to run a business in that manner.

I believe that if Virgin has the right person at the helm, the ship can be steadied.

T-Vasis
14th Jun 2018, 02:27
John had to do what he did to Virgin for its survival. Low cost airlines only survive by continued growth in order to take advantages of economies of scale and market share. If you stop growing, your margins are eaten up by cost rises e.g. cogs, fuel, labour etc.

You can't just increase price in this environment. The customer type will transfer to bus, train, or not travel at all. And then you get further hammered by your competitor who has the scale and the capital, to undercut you, and continue to grow. It was a double sword for Virgin. It would be gone today. He did the only thing he could to ensure survival.

blow.n.gasket
14th Jun 2018, 09:13
Low cost airlines only survive by continued growth in order to take advantages of economies of scale and market share.

has all the hallmarks of a ponzi scheme that description !

The Bullwinkle
14th Jun 2018, 10:35
John had to do what he did to Virgin for its survival. Low cost airlines only survive by continued growth in order to take advantages of economies of scale and market share. If you stop growing, your margins are eaten up by cost rises e.g. cogs, fuel, labour etc.

You can't just increase price in this environment. The customer type will transfer to bus, train, or not travel at all. And then you get further hammered by your competitor who has the scale and the capital, to undercut you, and continue to grow. It was a double sword for Virgin. It would be gone today. He did the only thing he could to ensure survival.
I’ll call bullshit on this one!!! :mad:

777Nine
14th Jun 2018, 10:49
John had to do what he did to Virgin for its survival. Low cost airlines only survive by continued growth in order to take advantages of economies of scale and market share. If you stop growing, your margins are eaten up by cost rises e.g. cogs, fuel, labour etc.

You can't just increase price in this environment. The customer type will transfer to bus, train, or not travel at all. And then you get further hammered by your competitor who has the scale and the capital, to undercut you, and continue to grow. It was a double sword for Virgin. It would be gone today. He did the only thing he could to ensure survival.

All valid points, but there also in lies the problem. Virgin started as low-cost, and then went after Qantas and became something that it still isn't sure it is. It was never going to be easy going after a 90 year old company that is ingrained into Australia and take market share from them and not spend a bucket load of money. All the flashy uniforms, repainting planes, flashy lounges etc. All things that cost money. They should have stuck to low cost and nailed that, and perhaps they would be in a better position.

romeocharlie
14th Jun 2018, 11:17
John had to do what he did to Virgin for its survival. Low cost airlines only survive by continued growth in order to take advantages of economies of scale and market share. If you stop growing, your margins are eaten up by cost rises e.g. cogs, fuel, labour etc.

You can't just increase price in this environment. The customer type will transfer to bus, train, or not travel at all. And then you get further hammered by your competitor who has the scale and the capital, to undercut you, and continue to grow. It was a double sword for Virgin. It would be gone today. He did the only thing he could to ensure survival.

You're kidding right? Spending money in a time of transition when saving is imperative. The environment dictated an increase in fares - the RASK only increased for both companies when they were both to an unsustainable point. The EPS is indicative of the bad decisions that have been made over his tenure.

777Nine pretty much covered the main points, but I'll gladly add to it.

The acquisition of Tiger
The whole Bali debacle
Running 330's from Perth to Abu - costing millions when it didn't even happen
The ATR's
The :mad: contest of 2014 with no winners
Hedging fuel incorrectly, with the ex-head of Caltex on your board

I honestly can't believe you'd sit there and say he (and the board) have made smart decisions, while he smugly sits in Business class and asks the LA - SYD inbound crew what he should name his new P1 (actually happened) after taking a bonus when the company is making its what, 6th straight loss?

wheels_down
14th Jun 2018, 11:59
You're kidding right? Spending money in a time of transition when saving is imperative. The environment dictated an increase in fares - the RASK only increased for both companies when they were both to an unsustainable point. The EPS is indicative of the bad decisions that have been made over his tenure.

777Nine pretty much covered the main points, but I'll gladly add to it.

The acquisition of Tiger
The whole Bali debacle
Running 330's from Perth to Abu - costing millions when it didn't even happen
The ATR's
The :mad: contest of 2014 with no winners
Hedging fuel incorrectly, with the ex-head of Caltex on your board

Perth to Abu Dhabi. Etihad Enforced.
Tiger Acquisition. Singapore Enforced.

If you think Etihad and Singapore were just sitting back watching everything happen your in another world.

Hold the CEO accountable. No Problem. Don’t forget to hold those major shareholders also because they have more involvement behind close doors than most think. The above two were key decision makers in major cockups also.

T-Vasis
14th Jun 2018, 12:03
Respectfully, Virgin would have been eaten up by QF at both ends. Keeping a sole LCC business would have ended in failure. You can't argue this. There was nothing to save, and margins were not growing at Virgin (look back at their annual reports to see). Growing cASK, declining rASK, barley enough operating cash flow - what else could he do. And if he did not do what he did - someone else would have.

You point out some specific examples, that in "retrospective eyes" did not turn out as planned - but that is called having courage to try things. Qantas has done the same, and failed at many also.

I speak to the vision of replicating the successful Qantas model of high-end and low-end market servicing. Required in this country. We just do not have the population, or the advantages of hubs. And out cost base in this country is very high, and we get punished on forex. Lots of disadvantages operating in Australia.

Bula
14th Jun 2018, 17:52
Courage, yes but no. Is it courageous when there is no skin off ones back?

He had a vision, and the execution was inept at best. Almost like being thrown into the deep end and asking for a life jacket.

Would have been much easier to organize his financial backing and support before looking to pass the hat around. Someone screwed the numbers.

romeocharlie
14th Jun 2018, 22:51
Perth to Abu Dhabi. Etihad Enforced.
Tiger Acquisition. Singapore Enforced.

If you think Etihad and Singapore were just sitting back watching everything happen your in another world.

Hold the CEO accountable. No Problem. Don’t forget to hold those major shareholders also because they have more involvement behind close doors than most think. The above two were key decision makers in major cockups also.
I absolutely hold them accountable too - I think the whole board is inept. I'm not saying I could've done a better job at the time - but these people are supposed to have the qualifications to enable them to make better decisions - they are paid commensurately to do so!

gordonfvckingramsay
15th Jun 2018, 00:00
Paid commensurately is an understatement romeocharile. An all care, no responsibility role is hardly worthy of pay + bonuses in the millions, or tens of millions. These are self awarded accolades which for little to no real gain has been achieved. If we as pilots were as inept at managing these airlines, we would be out of a job before we knew it.

The Bullwinkle
15th Jun 2018, 01:24
Someone screwed the numbers.
And anybody who presented him with the correct numbers got fired.
This debacle of his own making is the result of surrounding himself with sycophantic “Yes” men with no balls.
Anybody who had the audacity to point out his errors or mistakes were quickly removed from the company!

Rated De
15th Jun 2018, 09:41
Virgin had to do something, and I don't feel John's "game changer" program was the wrong thing to do. What they did not do well was estimate the time it would take to return positive results. That took a few years longer than anticipated. Virgin is very lucky it was saved by the capital raising it did. Very lucky.

Any close examination of the Low Fare Model highlights the predicament Mr Borghetti found himself in.

Low cost airlines only survive by continued growth in order to take advantages of economies of scale and market share. If you stop growing, your margins are eaten up by cost rises e.g. cogs, fuel, labour etc.

The litany of failures in Europe is testament to the problems with a high volume low yield model, that as the cost base begins to migrate to mid cost (after the start-up) phase ends. Debt is recycled most often at higher charges and pressure on cash flow is something to watch with Low Fare Airlines very closely. Margins are then squeezed and with Qantas operating as a monopoly with respect to pricing and route structures the delicate balancing act required was to try to maintain the Operating margin as the cost base rose. Coincidentally, little Napoleon's obsession with JQ, meant that literally that the way to do this was left unguarded: Domestic J class.

Many will recall in 2013 when little Napoleon ran to the government looking for $3billion 'as the market was distorted' VAH had exploited the breech and as Qantas was too busy growing JQ it took along time for the opponent to notice, for once VAH had backing Qantas could not afford the distraction of JQ, a low yield high volume business...

No battle plan survives contact with the enemy.

Perhaps it was executed imperfectly, but the strategy was correct. The idea was to lose money at a decreasing rate until the J class position was solidified, thereby ensuring the business could absorb the migration of the cost base. The move scared Qantas.
The Australian market actually is better served by two robust participants.

SHVC
15th Jun 2018, 11:13
still a long rocky road ahead.
https://gulfnews.com/business/aviation/etihad-airways-reports-1-52b-in-losses-for-2017-1.2236787

AerialPerspective
16th Jun 2018, 00:29
One of the big problems with his strategy is the way it was implemented.

“We need a330’s and we need them now”. There is a term used in virgin called JWIN. John wants it now...

he hated the old paint scheme, so he demanded that the aircraft be painted quickly, well before they were due,

he hated the uniforms so they they had to go quickly (can’t say I blame him on that one)

He hated the embraer so that fleet had to go

he wanted to take QF on in the regional market so they had to get a kazillion ATR’s at over inflated prices, and then buy Skywest at an over inflated price, then buy a couple of F100’s off Alliance at an over inflated price.

he hated the res system so it had to go

see a theme appearing? A more managed implementation of the plan would have achieved the gains he wanted without wasting hundreds of millions of dollars





True, and what was the result... very little of SkyWest left, Alliance operating flights on VA routes on their behalf which VA had the aircraft to operate but chose not to... a pathetic paint scheme by a designer who more than once has sat back and let it be said he designed the original 1984 QF livery which he had nothing to do with, who’s design for VA raised eyebrows at VS and who’s Woolworths design was almost the same as Apple’s logo and attracted Apple's lawyers when it looked like Woollies were planning a line of discounted computers.
SABRE is a piece of crap so hating the reservations system is one thing but replacing it with the most pathetic of the alternatives doesn’t make it worthwhile... what else, oh yes, letting pilots go at TT before you have new aircraft on the AOC and employing pilots for those aircraft who then sit around being paid while you have two or was it three attempts to get the AOC variation... don’t mention DPS...
There’s just so much the theme is clearly ‘incompetence’... also born out by good people who always seem to disappear while imbeciles get promoted... not just JWIN but people being scared of saying no to this person who really appears to have risen well above their level of competence.

The Bullwinkle
16th Jun 2018, 10:37
who really appears to have risen well above their level of competence.
A textbook example of “The Peter Principle”.

https://en.m.wikipedia.org/wiki/Peter_principle

AerialPerspective
18th Jun 2018, 02:03
A textbook example of “The Peter Principle”.

https://en.m.wikipedia.org/wiki/Peter_principle



... or the Dunning-Kruger effect...

The Bullwinkle
18th Jun 2018, 02:58
https://cimg9.ibsrv.net/gimg/www.gmforum.com-vbulletin/741x742/52fc2ad1_c0b3_4d06_a9b0_589b34f307af_7d081382afbcc3657b3b6d8 bbabae618936aff3d.jpeg

Tommy Bahama
19th Jun 2018, 02:54
This from fragrant Harbour forum......no wonder he's getting out! HNA's financial problems are old news. Where there is smoke there is usually fire.

https://www.telegraph.co.uk/business/2018/06/18/chinas-central-bank-creates-crisis-task-force-mega-debtor-hna/

thefeatheredone
19th Jun 2018, 04:12
Scary stuff. There will be no more cash to bail out Virgin, however, I’d suggest that whatever HNA do or don’t do with VA, it will have little impact on their problems.

Toruk Macto
19th Jun 2018, 04:21
HNA bosses are well connected , I’m sure they’ve enjoyed the big spending spree over the journey and no doubt they hoped the music would continue . It appears Beijing have put them on a short leash now . Probably to big to fail though ?

Tommy Bahama
19th Jun 2018, 05:27
HNA bosses are well connected , I’m sure they’ve enjoyed the big spending spree over the journey and no doubt they hoped the music would continue . It appears Beijing have put them on a short leash now . Probably to big to fail though ?


Yep, Just like Bear Stearns and Lehman Brothers.......When you have debt and/or hold garbage assets eventually you have to pay the piper.

Servo
20th Jun 2018, 05:14
This from fragrant Harbour forum......no wonder he's getting out! HNA's financial problems are old news. Where there is smoke there is usually fire.

https://www.telegraph.co.uk/business/2018/06/18/chinas-central-bank-creates-crisis-task-force-mega-debtor-hna/

Yeah, you know because JB doesnt have much money and needs to get out now whilst he can.....................................