TESNA - how would it have faired?
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TESNA - how would it have faired?
With all the problems at VB and the severe competition provided by JetStar, it makes me wonder how the TESNA proposal would have gone if it were to have started up?
Would Fox/Lew have ran it like a serious airline competitor or would it have gone down the gurgler?
Would the airline have benefitted by having a trucking/transport person and retailer at the helm with no real interest in an airline much the same as Ansett with Abeles/Murdoch?
Personally I would have given it 18 months or so.
Due to the narrow margins, poor returns and inreasingly competitive nature of the industry, I personally believe that airlines should be run by people with hands on airline experience.
Any punters??
Would Fox/Lew have ran it like a serious airline competitor or would it have gone down the gurgler?
Would the airline have benefitted by having a trucking/transport person and retailer at the helm with no real interest in an airline much the same as Ansett with Abeles/Murdoch?
Personally I would have given it 18 months or so.
Due to the narrow margins, poor returns and inreasingly competitive nature of the industry, I personally believe that airlines should be run by people with hands on airline experience.
Any punters??
Evertonian
The business model was fine. Forecasts estimated a profit within 6-10 months (from memory), obviously, Jet* wasn't in any equations.
I think the issue was that TESNA would've done quite well, whereas Queenscross would've been an unmitigated disaster!
Hindsight is a wonderful thing. Let's be glad this farce never eventuated.
I think the issue was that TESNA would've done quite well, whereas Queenscross would've been an unmitigated disaster!
Hindsight is a wonderful thing. Let's be glad this farce never eventuated.
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With all the problems at VB and the severe competition provided by JetStar.......
TIMMEEEE,
With your vast experience in the industry maybe you woul like to elaborate on "all the problems" and "severe competition".
TIMMEEE, you suggest
Sounds good in practice, but the only reason TESNA was even a consideration was that people with hands on experience in the airlines screwed the pooch, right royaly.
Perhaps levels of expertise in other fields might not be so much of a mis-match in this industry. Management at all levels seem to continue to make dubious decisions. Perhaps industry hands on experience, outside of management, is the key nowadays??
I personally believe that airlines should be run by people with hands on airline experience
Perhaps levels of expertise in other fields might not be so much of a mis-match in this industry. Management at all levels seem to continue to make dubious decisions. Perhaps industry hands on experience, outside of management, is the key nowadays??
Assy, how's this for 'all the problems' and 'severe competition'...
Taken from Huntley's Your Money Weekly, dated 05Aug2004 (an independent stock rating newsletter)
Taken from Huntley's Your Money Weekly, dated 05Aug2004 (an independent stock rating newsletter)
Weakening earnings scare market
At the AGM VBA said that revenue for the first four months of this financial year (VBA has a March 31 fiscal year)is up 29% but earnings before tax is down 22% compared with the pcp, driven by yield erosion and the impact of significant new capacity. Available Seat Kilometers (ASK's) increased 60% in the period. Growth in capacity is forecast to fall to 30% in H2.
While this lower yield will affect FY05 performance, the number of passengers flying with Virgin has been rising with the load factor increasing from 70% in May to 81% in July. While superficially this should be good for profitability, the average ticket price, which is the other important part of the equation, has not been disclosed. With the establishment of Jetstar the average price has fallen countering the virtuous impact of the improved load factor.
We do not know what the load factor was in this four month period but a chart in the presentation material suggests an average of around 76%. This is significantly down on the 84% in the pcp. This load level combined with the revenue and capacity growth figures implies that average ticket prices fell by around 11%.
Qantas has an advantage over VBA in that it has a more diversified portfolio of routes, particularly deriving from a strong international business. This breadth of business provides it with the ability to subsidise Jetstar thereby potentially making life very difficult for VBA. We also are unsure as to the extent of VBA's jet fuel hedging. We suspect that Qantas is better hedged than VBA.
While VBA might achieve a further drop in operating cost that would provide a measure of profit support, the competitive environment looks harsh and we retain our view that subscribers should not assume the investment risk currently embodied in VBA.
At the AGM VBA said that revenue for the first four months of this financial year (VBA has a March 31 fiscal year)is up 29% but earnings before tax is down 22% compared with the pcp, driven by yield erosion and the impact of significant new capacity. Available Seat Kilometers (ASK's) increased 60% in the period. Growth in capacity is forecast to fall to 30% in H2.
While this lower yield will affect FY05 performance, the number of passengers flying with Virgin has been rising with the load factor increasing from 70% in May to 81% in July. While superficially this should be good for profitability, the average ticket price, which is the other important part of the equation, has not been disclosed. With the establishment of Jetstar the average price has fallen countering the virtuous impact of the improved load factor.
We do not know what the load factor was in this four month period but a chart in the presentation material suggests an average of around 76%. This is significantly down on the 84% in the pcp. This load level combined with the revenue and capacity growth figures implies that average ticket prices fell by around 11%.
Qantas has an advantage over VBA in that it has a more diversified portfolio of routes, particularly deriving from a strong international business. This breadth of business provides it with the ability to subsidise Jetstar thereby potentially making life very difficult for VBA. We also are unsure as to the extent of VBA's jet fuel hedging. We suspect that Qantas is better hedged than VBA.
While VBA might achieve a further drop in operating cost that would provide a measure of profit support, the competitive environment looks harsh and we retain our view that subscribers should not assume the investment risk currently embodied in VBA.
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34R.
My opinion is based on the fact that a trucking magnate and a retail merchant (although both successful, as were Abeles/Murdoch) wanted to run an airline but never wanted the airline in the first place!
They attempted to make what was described by analysts as a "real estate grab" and blatantly lied about their own money spent on actual orders which never occurred.
They even had Greg Combet from the ACTU fooled as to their intentions.
Combet was on TV supporting TESNA and talking about the "significant sums of money spent on aircraft orders" which never existed.
Getting back to the question at hand, if by some eventuality the airline actually commenced operations, how would it have gone?
Assymetric - you dont have to be a rocket scientist to see the inherent and logistical problems at VB.
The media have made these serious problems public and done it in an easy to understand manner which even yourself could understand!!
Someone did an analogy using a pub for example on another posting about VB's share price and performance.
It summed it up perfectly Assymetric.
My opinion is based on the fact that a trucking magnate and a retail merchant (although both successful, as were Abeles/Murdoch) wanted to run an airline but never wanted the airline in the first place!
They attempted to make what was described by analysts as a "real estate grab" and blatantly lied about their own money spent on actual orders which never occurred.
They even had Greg Combet from the ACTU fooled as to their intentions.
Combet was on TV supporting TESNA and talking about the "significant sums of money spent on aircraft orders" which never existed.
Getting back to the question at hand, if by some eventuality the airline actually commenced operations, how would it have gone?
Assymetric - you dont have to be a rocket scientist to see the inherent and logistical problems at VB.
The media have made these serious problems public and done it in an easy to understand manner which even yourself could understand!!
Someone did an analogy using a pub for example on another posting about VB's share price and performance.
It summed it up perfectly Assymetric.
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I agree that the Fox/Lew Tesna proposal would have been doomed from the start.
The shoddy way it was handled from the onset and lies portrayed were indicative of that.
Add to that the government grants and tax concessions sought by Fox/Lew amounting to over a hundred million $$AUD over a number of years were unrealistic and naive at best.
The whole TESNA business proposal was nothing more than lies, rumour and exploitation at best.
And yes, I believe you should have good airline people with hands on experience running the show.
Now people, if thats your idea of a successful business plan them I'm the Marquess of Queensbury!
The shoddy way it was handled from the onset and lies portrayed were indicative of that.
Add to that the government grants and tax concessions sought by Fox/Lew amounting to over a hundred million $$AUD over a number of years were unrealistic and naive at best.
The whole TESNA business proposal was nothing more than lies, rumour and exploitation at best.
And yes, I believe you should have good airline people with hands on experience running the show.
Now people, if thats your idea of a successful business plan them I'm the Marquess of Queensbury!
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If VB cannot make money on sectors where there are only two providers (ie J* and VB) then I can only assume that there must be real trouble in the house!
I recently flew VB and it appeared to me that the staff had lost that edge and drive that they were using to there advantage when they were the underdog. Employees going the extra mile can make a VERY big difference to the bottom line...
Then again perhaps its time the ACCC investigated the operating methods of J* to ensure that it is competing as a seperate company to QF and not taking advantage of the fuel savings and buying power of the parent company.
If TESNA had started they may well have treaded water - they had some fairly innovative ideas. The downside would have been that most of the managers that got Ansett to the position of financial disaster were still at the helm of TESNA! If they could not run AN successfully what magic potion had they taken to run TESNA?
Consumer patterns are constantly changing, perhaps there is a trend back towards full service within the AUS arena?
I recently flew VB and it appeared to me that the staff had lost that edge and drive that they were using to there advantage when they were the underdog. Employees going the extra mile can make a VERY big difference to the bottom line...
Then again perhaps its time the ACCC investigated the operating methods of J* to ensure that it is competing as a seperate company to QF and not taking advantage of the fuel savings and buying power of the parent company.
If TESNA had started they may well have treaded water - they had some fairly innovative ideas. The downside would have been that most of the managers that got Ansett to the position of financial disaster were still at the helm of TESNA! If they could not run AN successfully what magic potion had they taken to run TESNA?
Consumer patterns are constantly changing, perhaps there is a trend back towards full service within the AUS arena?
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Hey guys, you are obviously looking at the latest profit forcast and share price.
Don't you think it is lucky for us all and especially for the guys and girls at VB that not everyone (i.e. Brett Godfrey) doesn't follow in Geoff Dixon's footsteps, otherwise at the first indication of reduced profits for a company we would all be out of a job.
WHY?
To keep their books looking good, so they can get their golden handshake at the end.
TIMMEEEE
Sorry for taking this thread in another direction.
Don't you think it is lucky for us all and especially for the guys and girls at VB that not everyone (i.e. Brett Godfrey) doesn't follow in Geoff Dixon's footsteps, otherwise at the first indication of reduced profits for a company we would all be out of a job.
WHY?
To keep their books looking good, so they can get their golden handshake at the end.
TIMMEEEE
Sorry for taking this thread in another direction.
Assy, they don't have to do that: essentially, they managed to do this before they even started ops by paying such low wages in comparison to established operators.
Perhaps now we'll see some pressure from management totry & lower costs even further. After all, that is the ole advantage that DJ has in the marketplace...?
Perhaps we'll see more services being crewed by Pacific Blue crew to try & lower costs in much the same way that QF have used the JetConnect & JetSt*r crews...?
Needless, watching Godfrey & Co try to resolve their current issues should make for some interesting management watching over the next few months.
Perhaps now we'll see some pressure from management totry & lower costs even further. After all, that is the ole advantage that DJ has in the marketplace...?
Perhaps we'll see more services being crewed by Pacific Blue crew to try & lower costs in much the same way that QF have used the JetConnect & JetSt*r crews...?
Needless, watching Godfrey & Co try to resolve their current issues should make for some interesting management watching over the next few months.
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Johnny Utah.
So in essence what you are saying is that Virgin Blue is the "McDonalds" of airlines?
Setting up a company and employing younger staff (on average) and paying them alot less compared to the opposition?
Sure in McDonalds they give you a uniform and make out it's trendy to work for min wages.
Yes, it does have a familiar ring to it.Only after a while the kids grow up and realise that they can do better elsewhere.
Without getting sidetracked,who was that contributor that suggested that a large majority and VB ground staffers applied for the Virgin Credit Card only to be rejected for insufficient earnings?
Back to the topic now and I believe that TESNA would have been hard up competing with both the likes of QF and VB.
The supposed owners of TESNA would have surely let it burn to the ground in a flash as soon as they saw there was no hope of making a profit in the short term.
When Fox and Lew saw that they couldnt make a profit with their projected model and without government grants they ran like dogs with their tails between their legs and let the whole thing disintegrate, along with the hopes of thousands.
So in essence what you are saying is that Virgin Blue is the "McDonalds" of airlines?
Setting up a company and employing younger staff (on average) and paying them alot less compared to the opposition?
Sure in McDonalds they give you a uniform and make out it's trendy to work for min wages.
Yes, it does have a familiar ring to it.Only after a while the kids grow up and realise that they can do better elsewhere.
Without getting sidetracked,who was that contributor that suggested that a large majority and VB ground staffers applied for the Virgin Credit Card only to be rejected for insufficient earnings?
Back to the topic now and I believe that TESNA would have been hard up competing with both the likes of QF and VB.
The supposed owners of TESNA would have surely let it burn to the ground in a flash as soon as they saw there was no hope of making a profit in the short term.
When Fox and Lew saw that they couldnt make a profit with their projected model and without government grants they ran like dogs with their tails between their legs and let the whole thing disintegrate, along with the hopes of thousands.
Evertonian
VH-Cheerup...Queenscross was the company that was to employ the staff, TESNA was the company that was to have all the assets...I don't think you need a slide rule to figure out what was supposed to happen next!
