Things don't look too Rosy for VA

[RodH]

https://cimg9.ibsrv.net/gimg/www.gmforum.com-vbulletin/779x577/va_d631d74a9ed6c0efccf4ccca92b752347dcc563b.png

Full story on the ABC news website

[On Guard]

Did you read the article?
Typicall JB spin but fundamentals are better.

[TBM-Legend]

All propped up by HNA and friends....

[Icarus2001]

You would have to say, with revenue of $5.4 BILLION and lots of full aeroplanes flying around, they simply do not know what they are doing. Consistent losses year after year. Amazing stuff.

https://www.smh.com.au/business/companies/virgin-australia-falls-deeper-into-red-with-653-million-loss-20180828-p500bz.html

[aussie1234]

Sounds strangely like a $2B loss not that long ago

[Snakecharma]

Yes, I suspect there is some housekeeping going on there.

You would think it would raise alarm bells for the board with regards who they are going to get to take over the ceo role. Any internal candidates would be tainted by the result you might think.

[FedupSo]

We need MM to change the cabin crew uniforms to turn it all around.

[On Guard]

Exactly. All set up for the heroes (our saviour) departure in 6-12. Smoke and Mirrors.

[Half Baked]

House of cards!

Without continued foreign capital injection, the music stops. How long can this continue before the financial taps are turned off?

[logansi]

Fundamentals are better, they ave written off the deferred tax asset, it's just about making next year look better,

Excluding those items, underlying profit was $110 million, up from last year's $4 million loss, and the strongest result since 2008


Domestic Market is booming for VA and QF right now, VA should be making massive profits under the right leadership

[ebt]

House of cards!

Without continued foreign capital injection, the music stops. How long can this continue before the financial taps are turned off?
The taps were turned off some time ago. The last equity injection was by HNA in September 2016. After that Air NZ sold their shares, but no external equity has come in since then. If you look at the net cash flow (that is, the cash coming in from operations), it's been pretty healthy. At the end of the day, it's not a lack of profits that kills a business, it's a lack of cash, and they certainly have a bit in the wallet.

This huge net loss is Virgin taking a bath on a few items, after which things will improve in future. The charges are accounting and not cash, so fundamentally they aren't dipping into the kitty to make up any shortfall - indeed, the kitty is growing. Their next challenge will be to pare down some of their debt.

[wheels_down]

A lot of misunderstanding here in regards to numbers, I must be on a pilots forum right?

The tax offset is non cash. There is no needing to be ‘propped up’.

[downdata]

If you want to look at “fundamentals”, all segments - tiger, va international, loyalty are performing worse than prior year - except for VA domestic. Tiger and international are still loss making.

The domestic market is proped up by sequential capacity cuts into growing demand. This cannot and will not last forever. Airline industry has just about the same level of barrier to entry as your local deli...

[PoppaJo]

downdata, that was a result of the exit of the E190/atr which was replaced with new 737s but they were not like for like as they are configured heavier and didn’t have the same amount in order . They had to give some flying to Alliance as they didn’t have the capacity. They briefed the media on this last year.

[TimmyTee]

Qantas must have been up for murder and genocide when they announced their $2.8 billion loss a few years ago according to all the accountants on here.

For the rest of us mere mortals, here is an article explaining why it’s one of their best results in some time: https://www.theage.com.au/business/companies/virgin-has-come-through-turbulence-even-as-fuel-headwinds-are-rising-20180829-p500fr.html

[ebt]

If you want to look at “fundamentals”, all segments - tiger, va international, loyalty are performing worse than prior year - except for VA domestic. Tiger and international are still loss making.

The domestic market is proped up by sequential capacity cuts into growing demand. This cannot and will not last forever. Airline industry has just about the same level of barrier to entry as your local deli...

Yes, like how every deli is able to raise millions of dollars, sign leases on $40 million assets, negotiate terminal access, gain an AOC...:rolleyes:

Having said that, the ratio of local delis (or milk bars for those in certain provinces) still operating compared to those that have gone bust is around the same.

[Rated De]

Qantas must have been up for murder and genocide when they announced their $2.8 billion loss a few years ago according to all the accountants on here.

For the rest of us mere mortals, here is an article explaining why it’s one of their best results in some time: https://www.theage.com.au/business/companies/virgin-has-come-through-turbulence-even-as-fuel-headwinds-are-rising-20180829-p500fr.html

A management timed impairment is what Qantas did and Virgin did the same.
As did Etihad, impairing the A380 to zero value on the books.

Whether the unions at Virgin are stupid enough to buy the largess of the 'loss' and agree to pay freezes only to witness 'an amazing transformation' the next financial year is an other story entirely.

What that means is, the statutory loss of $2.8 billion does not represent a cash loss to the company, rather it is a paper loss in the value of its assets. It is a bit like when the value of your house goes up, or down, your wages and your bills do not move.So in terms of the money in the door and out the door, Qantas was still in the red. The underlying loss of $646 million again looks like a big number, and it is, but crucially it was better than some had expected.For the first time in a long time, chief executive Alan Joyce said investors could expect an underlying profit in the first half of this financial year.

Mr Joyce even correctly flagged the 'turnaround' as the loss was on paper, as the 747 fleet was impaired.

[The Bullwinkle]

VA should be making massive profits under the right leadership
Under the right leadership is the main point.
MM and Blunty have absolutely no idea about how to run an airline.
At least John Thomas knows what the problems are, and has the ability to fix them.
He also has the support of all the frontline staff, unlike the incumbent.
Let’s just hope the board has the good sense to make him the next CEO for the benefit of everyone!

[krismiler]

With the current financial state of HNA they can't expect to rely on too many more bailouts.

[porch monkey]

I keep hearing that JT is the new saviour. So was Borghetti. Do you guys actually think the same board that sacked him will give him the top job? Seriously? Get some board turnover and MAYBE, MAYBE you might have half a chance. Looking at some of the comments on here, it is pretty obvious that some simply fall for the headline, and don't read any further.

[Snakecharma]

Krismiler, it isn’t only Hainan, Etihad have had significant losses included big losses associated with their partner airlines, and jet airways is screaming for a cash injection, the indication being they only had weeks of cash with which to continue operating.

Given they have cut off both Alitalia and Air Berlin, I would be surprised if Jet got any additional equity from the mothership, and same same virgin Australia,

i also hear around the water cooler than Nanshan is sitting there scratching their heads going “huh” and wondering what to do, so all in all the ownership structure might be about to morph into something quite different.

porch Monkey - good point and on face value it might have been a majority decision to excise JT from the business but would have been done so with significant lobbying from someone with potentially similar initials (but maybe not)

as we saw with the change in MT’s fortunes in cbr recently a few days can significantly alter an outcome, and who is to say the board would vote the same way again, particularly after the qf/anz link up and other various issues.

[porch monkey]

People forget that ANZ and QF code shared for years before they got into bed with VA. So it was quite likely they would go back. Sadly, the real reason ANZ got out will never be known in the public arena. Snake, it isn't just the board, it is also the public support he has received from one of the unions, to the extent of a "survey" being distributed to it's members regarding this. If you can think of one Australian board who have appointed a CEO that whether by perception or reality, was a favourite of the unions, I'll be very surprised. I don't say this because I don't think he can do it. I truly don't know as I have never met the man. But the more public nut hugging I see going on for him, the less I think his chances are, given the Australian industrial management style.

[The Bullwinkle]

who is to say the board would vote the same way again
Apparently it was a very close run thing but things would definitely be different now.
Rumour has it that the majority of the board now want JB gone, and I reckon it’s a pretty safe bet that they wouldn’t want one of his cronies to replace him.

[AerialPerspective]

Sounds strangely like a $2B loss not that long ago

Except that the other company made profits before and after and that year remains the only year they didn't - this bloke has been in charge of this company for 8 years and has barely made a return on anything, with increasing revenue. We are constantly showered with another bunch of bean-counter, weasel-word rubbish like 'cash flow positive' and/or similar rubbish about 'fundamentals being sound' - it's all clap trap... I'm sure we heard the same rubbish from Pan Am when it was shrinking it's way to oblivion... just how much more evidence do we need that this organisation's management is thoroughly incompetent, narcissistic and anybody that has come along with even a shred of an idea about what an aeroplane is or how an airline operates profitably has been shown the door. Just a complete and utter joke.

[TBM-Legend]

What about the shareholders value including the mum and dad investors? Poor form I think while JB collects the loot!

[On Guard]

If you believe the AFR, board will support quick move of JB for hopefully JT. If not they sell 5% to activist to shake things up and clear the decks more throughly. 51% shareholders are on board with this, China not showing their cards... yet.

[porch monkey]

Yeah, AP, we get it. You hate Virgin, you hate the management, whatever. Same old bile and vitriol in every post. Got something useful for us?
"If you believe the AFR". Says it all...........

[PoppaJo]

All this talk about JT.

You lot need to remember the Chairman was the one who sacked him. Highly likely she would reappoint him now, not.

[The Bullwinkle]

All this talk about JT.

You lot need to remember the Chairman was the one who sacked him. Highly likely she would reappoint him now, not.
You might just be surprised!

[AerialPerspective]

Yeah, AP, we get it. You hate Virgin, you hate the management, whatever. Same old bile and vitriol in every post. Got something useful for us?
"If you believe the AFR". Says it all...........

You need a reading lesson, I didn’t say anything about the AFR.
No, I don’t hate Virgin I know there are some good people there but none of them are in management - I also know a lot of good people who’ve been shafted by the current leadership. My argument is not with the company but it’s management.
Mate you seriously going to contend that a business that has lost money hand over fist since this overrated imbecile took over and has had billions poured in for no return should still be there... had a friend once who was a PA to a MD in the mining industry, the share price dropped 10% and stated there for 6 months and the MD, the PA and everyone around them was fired...
The share price is around 22c... it’s been there for 5-6 years, the company is in net loss to a massive extent for the whole time he’s been there, some good people have been recruited then shafted when they disagreed with him and it’s always someone else’s fault... bought Skywest and got rid of half the aeroplanes, now paying Alliance to do the flying, someone else’s fault... the A320/B737 TT debacle, someone else’s fault... millions piled into LAX, still losing money, someone else’s fault, automation mistakes, someone else’s fault... DPS debacle, someone else’s fault... his arse in business class more important than a person positioning to fly an aircaraft because of some 70s misconception about staff travel yet allows staff to travel in J long haul... I guess that was someone else’s fault too... all you hear from that company is decent people asking “why did we do a instead of b, it doesn’t make sense...” answered with “JB wanted...”
I keep commenting because the company is a corporate joke and it’s CEO is the most overrated executive in the industry... the fact this guy is still being paid a salary let alone a bonus for ch***t sake is completely laughable.
This bloke is the Basil Fawlty of the aviation industry and his inner circle is full of Manuels...

[Icarus2001]

Anyone who buys the line about the fundamentals being sound, think about this, after ignoring the write downs...

they made $110 million on revenue of $5.4 Billion, just think about that.

[James 1077]

Fundamentals are better, they ave written off the deferred tax asset, it's just about making next year look better,

Excluding those items, underlying profit was $110 million, up from last year's $4 million loss, and the strongest result since 2008

Except the only reason that you can write off a deferred tax asset is if Management do not believe that they will have sufficient future taxable profits to utilise the tax asset. So, no matter how Management dress this up, their view MUST (under accounting rules) be that they aren't profitable in the medium to long-term; what is more the auditors must agree with this following a review of their future financial projections.

[The Bullwinkle]

From today’s Australian:-

Whether or not Mr Borghetti would be delivering the next result was less clear, with the CEO indicating he may be gone well before January 2020.

“I’m staying here for another few months or thereabouts,” he said.

“The company is conducting a search and when they find someone and a proper handover is done, then I’ll go.”


Hopefully sooner rather than later.

[tail wheel]

Forget the article headline, read the article in reverse, starting at the last paragraph:

”The company said the loss was driven by a $573 million hit from accounting adjustments, including taking out $452 million in deferred tax assets from the books and a $121 million write down in the value of its international business.”

Then the second last paragraph:

’The loss came despite revenue increasing by 7.4 per cent to a record $5.4 billion and a doubling in its net cash position to $540 million.”

I seem to recall another Australian airline doing something not dissimilar in recent years?

With a little tweaking in management Virgin could be looking like a good investment!

[Gate_15L]

Except the only reason that you can write off a deferred tax asset is if Management do not believe that they will have sufficient future taxable profits to utilise the tax asset. So, no matter how Management dress this up, their view MUST (under accounting rules) be that they aren't profitable in the medium to long-term; what is more the auditors must agree with this following a review of their future financial projections.

Spot on, although I see the tax credits are available in the future will apparently if they do by some miracle make a statuary profit in future...

In saying that, there is apparently $1.4 billion in cash sitting around. And they are reducing their leverage, I'm guessing by paying debt down. By the looks of it they don't need any cash injections either from shareholders. At least the free cash flow is there to keep the place running...no paying for fuel on delivery.....

Sure the share price is low, but it's not a very liquid share with a tiny free float. It doesn't exactly attract the big financial institutions to buy and retail holders very seldom move the market.

It will be interesting to see if they will delay the MAX again or reduce the rate of MAX deliveries... I though I read in the Sydney Morning Herald that JB did not expect many MAXs to be around when the 10s started arriving in 2022..

“We don’t want to fly our 737s for 25, 26 years like Qantas does,” said Mr Borghetti, adding he expected Virgin to have taken on “closer to 10… than 30” of the new aircraft by 2022.


JT is also out of the running for CEO...

https://www.smh.com.au/business/companies/former-australia-post-boss-westpac-banker-in-virgin-chief-line-up-20180829-p500jp.html

[FedupSo]

All this FY report tells me is JB will be here for another 12mths. His bonus in 12mths will be astronomical and he’ll walk out the door. The board was/is self appointed by JB so the talk about them wanting him gone is rubbish so is all this JT talk.

[PoppaJo]

JT is also out of the running for CEO.
He was only ever in the running according to Pprune show ponies.

Unless on your in the executive circle nobody knows what went down behind closed doors. As much as I got was she got rid of him and he was never to return. You don’t then go rehire someone who you cannot stand and fired. According to some on this forum you do.

[The Bullwinkle]

JT is also out of the running for CEO...


He was only ever in the running according to Pprune show ponies.

Unless on your in the executive circle nobody knows what went down behind closed doors. As much as I got was she got rid of him and he was never to return. You don’t then go rehire someone who you cannot stand and fired. According to some on this forum you do.




That will come as news to JT.
As of last week he was still in contention.


A long list to take the reins at Virgin Australia has begun to take shape with former Australia Post boss Ahmed Fahour and Westpac executive George Frazis some of the names under consideration to succeed chief executive John Borghetti

Does anybody else see the irony in the boy from the mailroom being replaced by...... another boy from another mailroom!

[porch monkey]

AP, my reading is fine. I was answering 2 posts in the same post. I "contend" nothing. I have expressed no opinion on whether I believe Borghetti should stay, go or anything else. My opinion is completely irrelevant in the context of who gets the job next. Which is why I don't get stressed over it. You on the other hand, are gonna blow a seal if you keep that ranting up........

[porch monkey]

Bullwinkle, it doesn't matter that much who gets the job. What is important is that they surround themselves with capable, knowledgeable staff, and that they ACTUALLY LISTEN to what said staff tells them. Sadly, neither of those things usually happen.

[The Bullwinkle]

it doesn't matter that much who gets the job.

I respectfully disagree.

If John Thomas gets the job, there will be an immediate and noticeable improvement in staff engagement which will in turn be reflected in an improvement in the bottom line. He understands how an airline works.

Conversely, the appointment of MM or Blunty, neither of whom have the respect of the workers, will result in a further decline in morale, high staff turnover and a continuing plummet to the bottom. These two hardly even know what an aircraft is!

[porch monkey]

So you'd be equally happy then if Blunty or MM don't get the job, but Fahour or Frazis do? While I agree there are far better candidates than Blunt one or MM, part of the problem for both of them is apart from not being the 'sharpest" tools in the shed, they don't fit either of the conditions I mentioned earlier either..... That was the context of my earlier posting.

[The Bullwinkle]

I don’t know anything about Fahour or Frazis so the saying “better the devil you know” comes into play.
However, the entire workforce at Virgin DOES know John Thomas and they also know that he understands the problems at Virgin AND he knows what needs to be done to fix them.
It’s a very simple choice as to who would be the “best fit” to turn Virgin around.
Why do you think JB got rid of him in the first place?

[hoss]

Simple stuff, John Thomas IN, JB and Elizabeth Who OUT.

I’m fed up with arriving overhead with a tonne for - Tanner
- Hammes
- HR
- E190
- 50/50 Cadets
- Losing JT

I’ve forgot what it feels like turning up with 60 minutes in the tanks! Bring back JT and I’ll rethink my fuel planning.

[Oakape]

Bullwinkle, it doesn't matter that much who gets the job. What is important is that they surround themselves with capable, knowledgeable staff, and that they ACTUALLY LISTEN to what said staff tells them. Sadly, neither of those things usually happen.

And that is why it matters who gets the job. Unfortunately there are not enough of the good guys & gals to go around & I don't think Virgin can pay for someone at that level anyway.

[porch monkey]

Hoss, so your fuel planning is contingent on who the CEO is? Really? You can all wish for JT as much as you like. I just can't see the same board who gave him the arse, giving him the job, that's all. I might also point out that the vast majority of you were all agog when Borghetti got the job in the first place. Why you put ANY trust in a CEO with no runs on the board these days is beyond me.
"However, the entire workforce at Virgin DOES know John Thomas and they also know that he understands the problems at Virgin AND he knows what needs to be done to fix them." That's what everyone said about Borghetti, too.

[The Bullwinkle]

That's what everyone said about Borghetti, too.
Totally incorrect.
I would suggest that most at Virgin were skeptical of an ex-QANTAS person getting the top job, and knew very little about him.
But when he arrived he was affable enough and yes, I along with many others was taken in by this salesman, but it didn’t take very long for the real JB to surface.
JT on the other hand actually understands the industry, not the mail room, and he’s not as ego driven.
This has been experienced by the workers at Virgin already and the fact that so many want him back must surely demonstrate that he is well regarded.

[hoss]

Hi porch, no CEO names on that list of screw ups. I understand your thinking but 7.0 is a bit excessive, just as well I’m not on the ATR.

[Tangan]

While I’m not advocating for any new CEO my recollection of JT’s demise was the result of him putting an ultimatum to the board. He as the CEO of VAA was being frustrated in his plans for the airline by JB who, supposedly, had handed over control of the airline, but still overroad JT’s decisions.
JT went to the board, outlined his plans and indicate that the board had to decide who had to go........subsequently the board NARROWLY VOTED FOR JB.
IF and, I say IF that is the case, he wasn’t sacked so the board should not have a big issue in reinstating JT.

[TBM-Legend]

Unless there is a new Chairman and a Board change of a few, you're all wasting your time with the "new messiah" JT

[The Bullwinkle]

you're all wasting your time with the "new messiah" JT
Nobody is calling him the “new messiah”.
It’s just a fact that JT has a proven track record within aviation and he understands how this industry works.
He also has a modicum of respect for the actual workers, unlike JB.

[wheels_down]

I’ve never seen such dribble for some executive.

His History. Done. Gone. Finished. Never to be seen again. Let’s move on.

[The Bullwinkle]

I’ve never seen such dribble for some executive.

His History. Done. Gone. Finished. Never to be seen again. Let’s move on.


Obviously you don’t know him.

[wheels_down]

His set of skills does not fit the Virgin gig quite simply. He is more suited to a team led, innovative and valued employee culture.

That ain’t here.

[porch monkey]

Bullwinkle, I was there too. I recall the conversations and statements when he arrived. I was part of it. Lest you think I don't like JT, I think he would be a better bet than anyone else who has been mentioned so far. But my point still stands. Same board. The other issue is the more the workers agitate and talk him up, the more I believe it hurts any chance he may have. Can't recall any company in my working memory that has employed a CEO that was actually lobbied for by the workers.

[The Bullwinkle]

valued employee culture.

That ain’t here.
Well we can definitely agree on that!

Can't recall any company in my working memory that has employed a CEO that was actually lobbied for by the workers.
Doesn’t mean we shouldn’t try.

[RodH]

Maybe some" Cavalry " could arrive just in the nick of time to save the day!!!

This is part of a story from an online article .

" Singapore Airlines is believed to be eyeing an increased stake in Virgin Australia, above its current 20%, through a bid for the 19.8% shareholding of China's HNA Group.

Nanshan Capital, which also controls about a fifth of Virgin Australia’s shares, is also said to be interested in HNA's stake as the Chinese conglomerate offloads non-core assets to reduce debt, according to people familiar with the matter.

HNA's stake could attract bids from existing shareholders in the company as well as other airlines and investment funds if HNA decides to pursue a sale, the people said, asking not to be identified because the deliberations are private."

[The Bullwinkle]

Story in The Australian from last month.
https://www.theaustralian.com.au/business/dataroom/virgin-boss-john-borghettis-exit-date-a-concern/news-story/ce62c81f162a76a1660b0a2ef4d2b340

DataRoom reported last month that Virgin’s former head of domestic and international business, John Thomas, was in the frame to replace Mr Borghetti and is believed to be backed by some big investors.

[AerialPerspective]

AP, my reading is fine. I was answering 2 posts in the same post. I "contend" nothing. I have expressed no opinion on whether I believe Borghetti should stay, go or anything else. My opinion is completely irrelevant in the context of who gets the job next. Which is why I don't get stressed over it. You on the other hand, are gonna blow a seal if you keep that ranting up........

Blow a gasket, hardly... I see a potentially good airline with some good people that is being destroyed constantly... I'm not the least bit stressed, ranting or concerned about it personally, only for the employment futures of the people I know who work there and the possibility of a competitive industry which I have been in for the best part of 40 years. OK, so you don't care, but there are thousands of people who's jobs are riding on this and all we see is one disastrous decision after another and one excuse after the other - people like JT and many, many others have ended up as 'collateral damage' at the hands of the imposter(s) running the show.
When it comes right down to it, will I suffer if they go under, nope... I fly on both carriers and have more QF points than VA (and ID travel is long gone) so it would have minimal impact on me personally but I want to see the industry survive. There are plenty of people on here to criticize QF all the time and for a long time VA was seen as the messiah all the while being run into the ground. I don't get wound up about it, I'm just expressing an opinion from experience of the organization and some of the players. Mine is more a lament at, like politics, airline management in many companies these days seems to consist of people that any average businessperson wouldn't employ. The people one would be inclined to offer a job to without hesitation never reach those levels.
Maybe you should just chill out a bit and re-read some of my posts, often the intent is whimsy or irony... painting the pitiful side...

[mattyj]

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

applies to many industries

[CurtainTwitcher]

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

applies to many industries
Peter was an optimist, more like the Dunning Kruger effect (https://en.wikipedia.org/wiki/Dunning–Kruger_effect) in play:
the Dunning–Kruger effect is a cognitive bias (https://en.wikipedia.org/wiki/Cognitive_bias) in which people of low ability have illusory superiority (https://en.wikipedia.org/wiki/Illusory_superiority) and mistakenly assess their cognitive ability (https://en.wikipedia.org/wiki/Cognition) as greater than it is.

[Seagull201]

There's an in depth analysis, long news article, about the above topic, which was posted online 20 hours ago,
It's excellent reading in regards to the current VA financial situation.

Heading, "window for change opens at Virgin as owners take exit row". (The Sydney Morning Herald, 03 September 2018-1:18pm)
Can find it online by googling.

[The Bullwinkle]

https://amp-smh-com-au.cdn.ampproject.org/v/s/amp.smh.com.au/business/companies/window-for-change-opens-at-virgin-as-owners-take-exit-row-20180903-p501ew.html?amp_js_v=0.1&usqp=mq331AQGCAEoATgA#origin=https%3A%2F%2Fwww.google.com.au&prerenderSize=1&visibilityState=prerender&paddingTop=54&p2r=0&horizontalScrolling=0&csi=1&aoh=15360144842239&viewerUrl=https%3A%2F%2Fwww.google.com.au%2Famp%2Fs%2Famp.sm h.com.au%2Fbusiness%2Fcompanies%2Fwindow-for-change-opens-at-virgin-as-owners-take-exit-row-20180903-p501ew.html&history=1&storage=1&cid=1&cap=swipe%2CnavigateTo%2Ccid%2Cfragment%2CreplaceUrl

[On Guard]

Does anyone have a free link or can paste the Australian article today re Singapore.

[The Bullwinkle]

https://cimg7.ibsrv.net/gimg/www.gmforum.com-vbulletin/1162x1163/177718bf_a51a_4d1b_a92e_3ceb6366b0fe_40b072542708429cd06c6ae 979179a7184c476fe.jpeg

From today’s Australian.