Virgin Blue Shares Crash and Nosedive
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Virgin Blue Shares Crash and Nosedive
Air fare war becomes a bumpy ride for Virgin
By Mark Todd and Scott Rochfort
August 5, 2004
Budget airline Virgin Blue conceded yesterday that with Qantas and the national carrier's off-shoot, Jetstar, on its tail, earnings so far this financial year were down 22 per cent.
The stock's 29-cent fall yesterday to $1.75 marked its worst day since Virgin Blue listed at $2.25 on the sharemarket last December in a blaze of publicity.
The airline's second largest shareholder, the British billionaire Sir Richard Branson, was not at yesterday's annual meeting in Brisbane. Virgin Blue's chairman, Chris Corrigan, told shareholders it was not just Jetstar dogging Virgin Blue.
He also blamed rapid expansion, high fuel costs, the threat of terrorism and the SARS virus.
Virgin Blue's chief executive, Brett Godfrey, shrugged off the share slump and the competitive threat from Jetstar, saying his airline remained on track to meet its financial targets for 2004-05.
"All I can say is that I haven't sold any stock myself," he told reporters after the meeting.
After the successful launch of Jetstar, and with parent Qantas expected to report a record annual profit of up to $700million later this month, Virgin Blue is now the airline under pressure.
After a poor April and May, Virgin Blue's loads recovered in June as Jetstar took to the air.
In July, Virgin Blue carried a record 1.1 million passengers and loads were 81 per cent.
"I can say categorically that we're doing reasonably well in the Jetstar markets," Mr Godfrey said.
However, stock watchers are worried that, because of the intense competition in the domestic aviation market, Virgin Blue is selling seats too cheaply.
There are also concerns that Jetstar's own ambitious fleet growth plans could add to Virgin Blue's woes.
"The capacity issue hasn't really started yet, so we would be very sceptical going forward," said Jason Smith, an analyst with Citigroup Smith Barney. He said both airlines would increase their fleets by 14 per cent this fiscal year, and 17 per cent in 2004-05.
Although the rising price of fuel is hurting all airlines, Mr Godfrey said Virgin had no immediate plans to increase the $6 surcharge it already had in place
By Mark Todd and Scott Rochfort
August 5, 2004
Budget airline Virgin Blue conceded yesterday that with Qantas and the national carrier's off-shoot, Jetstar, on its tail, earnings so far this financial year were down 22 per cent.
The stock's 29-cent fall yesterday to $1.75 marked its worst day since Virgin Blue listed at $2.25 on the sharemarket last December in a blaze of publicity.
The airline's second largest shareholder, the British billionaire Sir Richard Branson, was not at yesterday's annual meeting in Brisbane. Virgin Blue's chairman, Chris Corrigan, told shareholders it was not just Jetstar dogging Virgin Blue.
He also blamed rapid expansion, high fuel costs, the threat of terrorism and the SARS virus.
Virgin Blue's chief executive, Brett Godfrey, shrugged off the share slump and the competitive threat from Jetstar, saying his airline remained on track to meet its financial targets for 2004-05.
"All I can say is that I haven't sold any stock myself," he told reporters after the meeting.
After the successful launch of Jetstar, and with parent Qantas expected to report a record annual profit of up to $700million later this month, Virgin Blue is now the airline under pressure.
After a poor April and May, Virgin Blue's loads recovered in June as Jetstar took to the air.
In July, Virgin Blue carried a record 1.1 million passengers and loads were 81 per cent.
"I can say categorically that we're doing reasonably well in the Jetstar markets," Mr Godfrey said.
However, stock watchers are worried that, because of the intense competition in the domestic aviation market, Virgin Blue is selling seats too cheaply.
There are also concerns that Jetstar's own ambitious fleet growth plans could add to Virgin Blue's woes.
"The capacity issue hasn't really started yet, so we would be very sceptical going forward," said Jason Smith, an analyst with Citigroup Smith Barney. He said both airlines would increase their fleets by 14 per cent this fiscal year, and 17 per cent in 2004-05.
Although the rising price of fuel is hurting all airlines, Mr Godfrey said Virgin had no immediate plans to increase the $6 surcharge it already had in place
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TIMMEEE
You must be thrilled. Your posts to date indicate a weird pleasure derived at the mere hint of trouble for your opposition.
Not to mention the fact that whenever Godfrey's name is mentioned on this forum, your name invariably follows it. Your fixation amuses me.
You must be thrilled. Your posts to date indicate a weird pleasure derived at the mere hint of trouble for your opposition.
Not to mention the fact that whenever Godfrey's name is mentioned on this forum, your name invariably follows it. Your fixation amuses me.
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He also blamed rapid expansion, high fuel costs, the threat of terrorism and the SARS virus
Of all the airlines in the world, DJ would be one of the LEAST affected by that. You are stretching it Mr Corrigan. SARS also ceased to be a factor for most airlines 12 months ago.
Ditto on blaming terrorism.
How about admitting that since going public the airline now gets judged by the markets and Execs like yourself should bear responsibility when things go awry and the free media ride ends?
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So your share price crashes by a massive 14% eh Mr Godfrey and Huttner?
Earnings down a staggering 22% also!!!!
Just meeting your projected forecasts is simply not going to cut it this time.
Jetstar is growing and becoming more of a threat than you and your team ever envisaged in their wildest nightmares.
This would be viewed as a severe crisis by any other major company and hard and serious decisions taken to combat not only the problem, but the threat that proliferates.
No amount of finger pointing and whinging will help you this time Mr Godfrey or make this problem go away.
Anyone can ride the so called gravy train after Ansett collapsed and have almost everything handed to them on a platter, but the truth is it's times like these that show the true worth of a general manager.
The way you carry VB through the next 2 financial years will dictate not only your worth, but your effectiveness to run the company.
So far its been less than exemplary in my opinion.
And yes Airport Reserve, I agree with Timmeee that when someone likes to get in your face on the big screen and blame one and all assunder for their woes, they deserve to cop a bit of flack.
An earnings slump of 22% can be explained no other way and to have your share price plumett by 14%, well................. you go figure.
Earnings down a staggering 22% also!!!!
Just meeting your projected forecasts is simply not going to cut it this time.
Jetstar is growing and becoming more of a threat than you and your team ever envisaged in their wildest nightmares.
This would be viewed as a severe crisis by any other major company and hard and serious decisions taken to combat not only the problem, but the threat that proliferates.
No amount of finger pointing and whinging will help you this time Mr Godfrey or make this problem go away.
Anyone can ride the so called gravy train after Ansett collapsed and have almost everything handed to them on a platter, but the truth is it's times like these that show the true worth of a general manager.
The way you carry VB through the next 2 financial years will dictate not only your worth, but your effectiveness to run the company.
So far its been less than exemplary in my opinion.
And yes Airport Reserve, I agree with Timmeee that when someone likes to get in your face on the big screen and blame one and all assunder for their woes, they deserve to cop a bit of flack.
An earnings slump of 22% can be explained no other way and to have your share price plumett by 14%, well................. you go figure.
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Brett says he hasn't sold any shares himself. Maybe he should have followed Bransons example. The mums and dads holding a loss probably won't have much comfort from that.
The dream ride folowing Ansetts demise is over. You can't keep flooding the market with capacity, if the punters aren't paying enough for you to make a profit. Welcome to the real world Brett.
If you owned a pub and sold beer below cost you would fill the joint every day. You could even start more pubs. But when the money ran out you either put prices up or go out backwards. It ain't rocket science.
Incidently, if Branson thinks it will be that easy in the USA he may find that there are no "Ansetts" over there to fall over at the right time.
The dream ride folowing Ansetts demise is over. You can't keep flooding the market with capacity, if the punters aren't paying enough for you to make a profit. Welcome to the real world Brett.
If you owned a pub and sold beer below cost you would fill the joint every day. You could even start more pubs. But when the money ran out you either put prices up or go out backwards. It ain't rocket science.
Incidently, if Branson thinks it will be that easy in the USA he may find that there are no "Ansetts" over there to fall over at the right time.
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The way you carry VB through the next 2 financial years will dictate not only your worth, but your effectiveness to run the company.
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How predictable!!
When senior management and major shareholders start selling shares some months ago, why would anything else be expected. That fact has been on the ASX Website for quite some time.
The honeymoon on cost of maintenance with new aircraft in their early fleet starting to be over and the costs associated with that will start to kick in as well soon. There's still downside here.
As a friend of mine who knows a bit says "if you want exposure to Virgin buy Patricks"
When senior management and major shareholders start selling shares some months ago, why would anything else be expected. That fact has been on the ASX Website for quite some time.
The honeymoon on cost of maintenance with new aircraft in their early fleet starting to be over and the costs associated with that will start to kick in as well soon. There's still downside here.
As a friend of mine who knows a bit says "if you want exposure to Virgin buy Patricks"
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Share price $1.63 and falling.
Looks like the institutional investors are starting to opt out of Virgin Blue and taking their money to greener pastures.
Unfortunately this leaves the poor old mum and dad shareholders holding the baby so to speak.
So far VB has promised so much but delivered so little.
Mo Fo.
Very well written thread and great analogy about the pub!
That put it perfectly into perspective and was a great way to portray exactly what is happening.
Perhaps Brett Godfrey should drink more!!
Looks like the institutional investors are starting to opt out of Virgin Blue and taking their money to greener pastures.
Unfortunately this leaves the poor old mum and dad shareholders holding the baby so to speak.
So far VB has promised so much but delivered so little.
Mo Fo.
Very well written thread and great analogy about the pub!
That put it perfectly into perspective and was a great way to portray exactly what is happening.
Perhaps Brett Godfrey should drink more!!
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This must really be a sobering result for CSFB who predicted that Virgin Blue's 12 monthly share price would reach $3.02.
Way to go guys !!
On the other hand Solomon Smith Barney - JB Were have rated VB's shares as "underperform" and see little recovery for up to a year.
And these figures were prior to yesterdays dismal and alarming results so expect further downgrades.
A very disappointing result despite the Mr Godfrey's upbeat expectations of VB who until yesterday could do no wrong in the eyes of the press.
Just watch VB get a pasting from the media and take the place of Jetstar who have fallen from media grace.
Come to think of it, where was Sir Richard Branson when all of these truths were revealed?
No amount of spin from Christopher Corrigan or Brett Godfrey could mask their disappointment and shame at the real truth being unmasked for all to see.
Way to go guys !!
On the other hand Solomon Smith Barney - JB Were have rated VB's shares as "underperform" and see little recovery for up to a year.
And these figures were prior to yesterdays dismal and alarming results so expect further downgrades.
A very disappointing result despite the Mr Godfrey's upbeat expectations of VB who until yesterday could do no wrong in the eyes of the press.
Just watch VB get a pasting from the media and take the place of Jetstar who have fallen from media grace.
Come to think of it, where was Sir Richard Branson when all of these truths were revealed?
No amount of spin from Christopher Corrigan or Brett Godfrey could mask their disappointment and shame at the real truth being unmasked for all to see.
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Airport Reserve.
Yes you are right but the fact remains that the truth does hurt!
I have many friends working for VB and they seem to have the same opinion as myself about Brett Godfrey's performance as a general manager.
When someone whinges incessantly and blames everyone else for his troubles and woes and expects the public to feel sorry for him then I'm sorry - it just doesnt cut it with me.
You only ever see him on TV when he's squealing like a stuffed pig and bleating about being hard done by.
When their AOC was not granted initially to VB it was CASA against them.
If its not CASA against him, its Qantas.
If it's not Geoff Dixon being unfair, its the government.
If it's not the govt, its the Macquarie Airports or whoever.
Whings whinge bloody whinge!
This is the same man that sacked a VB Captain for doing his job as a professional, only to be rebuked by the chief pilot who had to immediately re-employ the same pilot!
Sounds like the man for the job to me wouldnt you say Airport Reserve??
Everything has been handed to them on a platter since the demise of Ansett and now the gravy train has run out of steam and come off the rails he now has to pulll his finger out and actually perform.
Diverting some of that hot air used to whine like an old mole would be a start.
Actually making hard and serious decisions that will both enable his airline to grow and profit to the satisfaction of not only shareholders, but the financial fraternity will come a close second.
Brett Godfrey now has serious competition and the fact is that so far he just cant seem to get his little head around that fact.
As has been said so many times and by so many people now is the time a CEO shows his true abilities to manage the airline out of a tight spot.
Somehow I dont think he lives up to expectations, do you Airport Reserve?
The posts and general opinions by not only shareholders as well as the Finance industry so far have been less than flattering.
Yes you are right but the fact remains that the truth does hurt!
I have many friends working for VB and they seem to have the same opinion as myself about Brett Godfrey's performance as a general manager.
When someone whinges incessantly and blames everyone else for his troubles and woes and expects the public to feel sorry for him then I'm sorry - it just doesnt cut it with me.
You only ever see him on TV when he's squealing like a stuffed pig and bleating about being hard done by.
When their AOC was not granted initially to VB it was CASA against them.
If its not CASA against him, its Qantas.
If it's not Geoff Dixon being unfair, its the government.
If it's not the govt, its the Macquarie Airports or whoever.
Whings whinge bloody whinge!
This is the same man that sacked a VB Captain for doing his job as a professional, only to be rebuked by the chief pilot who had to immediately re-employ the same pilot!
Sounds like the man for the job to me wouldnt you say Airport Reserve??
Everything has been handed to them on a platter since the demise of Ansett and now the gravy train has run out of steam and come off the rails he now has to pulll his finger out and actually perform.
Diverting some of that hot air used to whine like an old mole would be a start.
Actually making hard and serious decisions that will both enable his airline to grow and profit to the satisfaction of not only shareholders, but the financial fraternity will come a close second.
Brett Godfrey now has serious competition and the fact is that so far he just cant seem to get his little head around that fact.
As has been said so many times and by so many people now is the time a CEO shows his true abilities to manage the airline out of a tight spot.
Somehow I dont think he lives up to expectations, do you Airport Reserve?
The posts and general opinions by not only shareholders as well as the Finance industry so far have been less than flattering.
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TIMMEEE,
Actually I concur, the man does himself, nor those that work under him, any favours by crying poor. Indeed his true metal will be tested over the next few years, and I suspect it will be by that performance that he will ultimately be judged.
My amusement/bemusement stems from the fact that those belonging to our premier carrier are so easily incensed by his ramblings. Who cares what he sais or what platform he uses to say it. You guys are still making plenty of money and your futures seem pretty stable for the time being. Your are obviously above the need to carry on like that, so why the need to shout as loud as he is?
Your efforts to illustrate his childish antics see you using the same tactic as him. I find that rather ironic, that's all.
Actually I concur, the man does himself, nor those that work under him, any favours by crying poor. Indeed his true metal will be tested over the next few years, and I suspect it will be by that performance that he will ultimately be judged.
My amusement/bemusement stems from the fact that those belonging to our premier carrier are so easily incensed by his ramblings. Who cares what he sais or what platform he uses to say it. You guys are still making plenty of money and your futures seem pretty stable for the time being. Your are obviously above the need to carry on like that, so why the need to shout as loud as he is?
Your efforts to illustrate his childish antics see you using the same tactic as him. I find that rather ironic, that's all.
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Virgin blue partially represent the demise of ansett. the gov't should never have allowed them in. virgin helped kill ansett.
it's not the pilots' fault or the staff who just wanted jobs... or is it?
they helped push their way in and push the incumbent, ansett, out. did they realise they were helping seal the fate of 16000 other aussies?
they didn't seem to care at the time so in a twisted way it's good to see them sweating.
nothing (and no one's job) is sacred. that was demonstrated in 2001.
be a shame to see the AN refos that found refuge in VB having to swim again though.
now i'm off to the buddhist temple to see what i can do about all this bad karma of mine
it's not the pilots' fault or the staff who just wanted jobs... or is it?
they helped push their way in and push the incumbent, ansett, out. did they realise they were helping seal the fate of 16000 other aussies?
they didn't seem to care at the time so in a twisted way it's good to see them sweating.
nothing (and no one's job) is sacred. that was demonstrated in 2001.
be a shame to see the AN refos that found refuge in VB having to swim again though.
now i'm off to the buddhist temple to see what i can do about all this bad karma of mine
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Fri "The Australian"
From go to woe for Virgin Blue
By Steve Creedy, Aviation writer
August 06, 2004
WORRIES about increased competition from Jetstar, rising fuel prices and the effect of an oversupplied low-cost market on growth prospects again forced down Virgin Blue's shares yesterday.
The fall -- another 7c to $1.68 -- was smaller than the 14 per cent plunge prompted by Wednesday's surprise announcement that pre-tax earnings for the first four months of its 2004-05 year were 22percent down on a year ago.
Analysts, who had been predicting a 2004-05 consensus of $210million to $230 million, were now looking at the $165 million to $176million range.
Virgin's move to significantly lift capacity before the launch of Jetstar appears to have backfired with investors -- at least in the short term.
The airline's decision to boost its fleet to 46 aircraft meant its capacity in the first quarter was 60per cent up on last year and prompted load factors to fall.
While Virgin Blue plans to add only another three planes this financial year, Jetstar is also adding capacity as it brings its 177-seat Airbus A320s on line.
Virgin believes that the capacity problem will resolve itself and the group reported on Wednesday that its July load factor had risen to 81 per cent.
Centre for Asia Pacific Aviation managing director Peter Harbison was among the few who agreed, saying yesterday that load factors to June compared with a strong domestic market last year that was boosted by SARS and the Iraq war. "They've grown by 60 per cent -- do you expect them to absorb that straightaway?" he said.
But other analysts warned that Virgin's aggressive expansion might have pushed the domestic airline industry to overcapacity.
"We estimate that annualised industry capacity growth is running in excess of 10 per cent above long-term trend levels and the situation is likely to worsen before it improves," said a note from ABN-Amro analysts Anthony Srom and Jason Mabee, who cut net profit forecasts 19 per cent to $165.4 million and moved from a "hold" recommendation to "reduce".
"Like Ryanair earlier this year, we believe (Virgin) has grown ahead of demand for its product, after taking into account traffic stimulation from pricing initiatives, and hit a capacity hiccup."
Questions are also being raised about Virgin's domestic growth potential now that it is competing for the low-cost segment with Jetstar. It has already indicated it is looking for growth opportunities in overseas markets such as Asia.
Citigroup Smith Barney analyst Jason Smith said further growth was expected in 2004-05 but it would get harder and more costly to achieve.
Mr Smith reduced net profit forecasts for the current financial year by 11.5 per cent to $175.5 million but kept Virgin on a hold recommendation with a target price of $1.76.
"Jetstar's launch, the potential ongoing threat of another low-cost carrier starting, rising fuel costs, further yield erosion and the market's disdain for airlines at present, all suggest its share price will remain under pressure in the short term," he said in a note.
Mr Smith said that valuing Virgin shares using a Qantas 2004-05 price-earnings ratio of 7.5 times implied a value of just $1.26 per share.
"We now believe Virgin only starts to become attractive below $1.45 a share," he said.
On fuel, Mr Smith said Virgin had just 35 per cent of its fuel hedged this financial year and its fuel surcharge was failing to cover costs at the current jet kerosene price of $US51 a barrel.
He expected both Virgin and Qantas to increase fuel surcharges over the next month if prices remained above $US50.
UBS Investment Research analysts Stephen Wood and Alex Unsworth cut 2004-05 earnings estimates for Virgin by 9 per cent to $168 million with a neutral rating and a price target of $1.94.
The analysts suggested margins at the airline could recover if load factors remained strong.
==========================================
From go to woe for Virgin Blue
By Steve Creedy, Aviation writer
August 06, 2004
WORRIES about increased competition from Jetstar, rising fuel prices and the effect of an oversupplied low-cost market on growth prospects again forced down Virgin Blue's shares yesterday.
The fall -- another 7c to $1.68 -- was smaller than the 14 per cent plunge prompted by Wednesday's surprise announcement that pre-tax earnings for the first four months of its 2004-05 year were 22percent down on a year ago.
Analysts, who had been predicting a 2004-05 consensus of $210million to $230 million, were now looking at the $165 million to $176million range.
Virgin's move to significantly lift capacity before the launch of Jetstar appears to have backfired with investors -- at least in the short term.
The airline's decision to boost its fleet to 46 aircraft meant its capacity in the first quarter was 60per cent up on last year and prompted load factors to fall.
While Virgin Blue plans to add only another three planes this financial year, Jetstar is also adding capacity as it brings its 177-seat Airbus A320s on line.
Virgin believes that the capacity problem will resolve itself and the group reported on Wednesday that its July load factor had risen to 81 per cent.
Centre for Asia Pacific Aviation managing director Peter Harbison was among the few who agreed, saying yesterday that load factors to June compared with a strong domestic market last year that was boosted by SARS and the Iraq war. "They've grown by 60 per cent -- do you expect them to absorb that straightaway?" he said.
But other analysts warned that Virgin's aggressive expansion might have pushed the domestic airline industry to overcapacity.
"We estimate that annualised industry capacity growth is running in excess of 10 per cent above long-term trend levels and the situation is likely to worsen before it improves," said a note from ABN-Amro analysts Anthony Srom and Jason Mabee, who cut net profit forecasts 19 per cent to $165.4 million and moved from a "hold" recommendation to "reduce".
"Like Ryanair earlier this year, we believe (Virgin) has grown ahead of demand for its product, after taking into account traffic stimulation from pricing initiatives, and hit a capacity hiccup."
Questions are also being raised about Virgin's domestic growth potential now that it is competing for the low-cost segment with Jetstar. It has already indicated it is looking for growth opportunities in overseas markets such as Asia.
Citigroup Smith Barney analyst Jason Smith said further growth was expected in 2004-05 but it would get harder and more costly to achieve.
Mr Smith reduced net profit forecasts for the current financial year by 11.5 per cent to $175.5 million but kept Virgin on a hold recommendation with a target price of $1.76.
"Jetstar's launch, the potential ongoing threat of another low-cost carrier starting, rising fuel costs, further yield erosion and the market's disdain for airlines at present, all suggest its share price will remain under pressure in the short term," he said in a note.
Mr Smith said that valuing Virgin shares using a Qantas 2004-05 price-earnings ratio of 7.5 times implied a value of just $1.26 per share.
"We now believe Virgin only starts to become attractive below $1.45 a share," he said.
On fuel, Mr Smith said Virgin had just 35 per cent of its fuel hedged this financial year and its fuel surcharge was failing to cover costs at the current jet kerosene price of $US51 a barrel.
He expected both Virgin and Qantas to increase fuel surcharges over the next month if prices remained above $US50.
UBS Investment Research analysts Stephen Wood and Alex Unsworth cut 2004-05 earnings estimates for Virgin by 9 per cent to $168 million with a neutral rating and a price target of $1.94.
The analysts suggested margins at the airline could recover if load factors remained strong.
==========================================
Grandpa Aerotart
On VB I have no comment...but when do you think people will work out that the Stock Market is merely a way for rich people to take money from the rest.
VB's float is just the latest example.
Chuck
VB's float is just the latest example.
Chuck
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So the revised $1.94 12 month share price forecast is way down on the $3.02 previous forecast.
To make matters worse, the more astute analysts have openly stated that VB's value on a price/earnings model is worth about $1.40 or so.
Still some way to slide yet before the institutional investors and analysts will recommend a value based buy recommendation.
Air Hag, spot on about how their entry into the market effectively drove another airline out of business and were waiting in the shadows to pick up the pieces.
But then again thats what business is all about, survival of the fittest.
Yes, good to see the VB board sweating a bit and having to work for their money, but dont be surprised to see some reduction in either staff or services at VB.
Unless serious measures are taken to remedy the situation they got themselves into the share market will punish them until they act.
To make matters worse, the more astute analysts have openly stated that VB's value on a price/earnings model is worth about $1.40 or so.
Still some way to slide yet before the institutional investors and analysts will recommend a value based buy recommendation.
Air Hag, spot on about how their entry into the market effectively drove another airline out of business and were waiting in the shadows to pick up the pieces.
But then again thats what business is all about, survival of the fittest.
Yes, good to see the VB board sweating a bit and having to work for their money, but dont be surprised to see some reduction in either staff or services at VB.
Unless serious measures are taken to remedy the situation they got themselves into the share market will punish them until they act.
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On VB I have no comment...but when do you think people will work out that the Stock Market is merely a way for rich people to take money from the rest.
Just off to count my CBA shares again (bought at $5
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TIMMEEEE[B]
[/QUOTE]
Air Hag, spot on about how their entry into the market effectively drove another airline out of business and were waiting in the shadows to pick up the pieces.
But then again thats what business is all about, survival of the fittest.
You are kidding mate.
When VB arrived on the scene they had 2 planes. ANSETT was haemorrhaging due to years of bad management and high costs. Yes it was opportunistic of VB to come into the market, but in business it is all about timing.
You are currently bagging VB about how badly managed they are, but isn't it ironic that this is what caused ANSETT to fall over in the first place.
If you want to get on your high horse start bagging the ANSETT/Air NZ management for the whole cock up in the first place.
[/QUOTE]
Air Hag, spot on about how their entry into the market effectively drove another airline out of business and were waiting in the shadows to pick up the pieces.
But then again thats what business is all about, survival of the fittest.
You are kidding mate.
When VB arrived on the scene they had 2 planes. ANSETT was haemorrhaging due to years of bad management and high costs. Yes it was opportunistic of VB to come into the market, but in business it is all about timing.
You are currently bagging VB about how badly managed they are, but isn't it ironic that this is what caused ANSETT to fall over in the first place.
If you want to get on your high horse start bagging the ANSETT/Air NZ management for the whole cock up in the first place.
The reality is that if VB had not arrived on the scene, Impulse would have driven Ansett broke.
It wasn't a question that Ansett would have survived without competition it was a question of how long it would have survived for.
Ansett was allegedly 2 weeks from going under when Compass MkI was operating and it was skullduggery of major proportions that saved its bacon then.
In a deregulated environment, Ansett was a sitting duck. Management had pulled all the money out of the business that it really should have left there to re-invest - News used it as a parachute to stop News itself going belly up.
Yes - I agree that had things been done differently at Ansett it would have survived - but by the time Virgin arrived it was all over - it was just a matter of waiting for the fat lady to sing - no amount of recapitalising was going to fix it - it was beyond help
This, I might add, was despite the efforts of the vast majority of staff, who would have done just about anything to help it survive - the owners bear the full responsibility for its demise.
It wasn't a question that Ansett would have survived without competition it was a question of how long it would have survived for.
Ansett was allegedly 2 weeks from going under when Compass MkI was operating and it was skullduggery of major proportions that saved its bacon then.
In a deregulated environment, Ansett was a sitting duck. Management had pulled all the money out of the business that it really should have left there to re-invest - News used it as a parachute to stop News itself going belly up.
Yes - I agree that had things been done differently at Ansett it would have survived - but by the time Virgin arrived it was all over - it was just a matter of waiting for the fat lady to sing - no amount of recapitalising was going to fix it - it was beyond help
This, I might add, was despite the efforts of the vast majority of staff, who would have done just about anything to help it survive - the owners bear the full responsibility for its demise.