Virgin Blue Share Price Plummets by over 16 %
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Virgin Blue Share Price Plummets by over 16 %
Apparently VB shares just plumetted by about 16% on opening on the ASX today.
Data provided by VB detail facts that load factors are down by about 7% overall and as a result full year profit forecasts will be down this FY by 10-15 %.
Knee-jerk reaction maybe, but the analysts and institutional investors are not so keen for this stock apparently.
Data provided by VB detail facts that load factors are down by about 7% overall and as a result full year profit forecasts will be down this FY by 10-15 %.
Knee-jerk reaction maybe, but the analysts and institutional investors are not so keen for this stock apparently.
It is hardly surprising that the market has decided to punish the VBA share price based upon the latest news. It looks as though brokers/investors out there have had enough of the "DJ/Branson/Godfrey Way" - plenty of hype initially, followed by little to no ongoing performance information and then the climax of failing to deliver & announcing poor performance results to the marketplace. 
Surprise surprise.
I feel truly sorry for all those DJ staff who bought into the airline with the float - effectively just (another!) transfer of wealth from the employees to the fat cats at the top
Surprise surprise. I feel truly sorry for all those DJ staff who bought into the airline with the float - effectively just (another!) transfer of wealth from the employees to the fat cats at the top
Nunc est bibendum
Didn't Brett Godfrey sell a whole bunch of shares a month or so ago? I wonder if he foresaw the market reaction? Not making an accusation of any sort, just wondering aloud! 
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Sure did Keg, on the 16/12/04 -
5,000,000 shares x $1.88 = $9,400,000
And it seemed strange to me at the time why you would sell at $1.88 when the shares at that time had been up around $2.10. Now I guess we know!
5,000,000 shares x $1.88 = $9,400,000
And it seemed strange to me at the time why you would sell at $1.88 when the shares at that time had been up around $2.10. Now I guess we know!
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AAP
Virgin Blue plunges on profit warning
Jan 19 16:22 AEDT
AAP
Investors dealt swift justice to discount airline Virgin Blue on Wednesday after the company warned that its full-year profit would fall up to 15 per cent short of last year due to sluggish demand from travellers.
Virgin shares plunged as much as 20 per cent to a record low of $1.60 after the warning just ahead of the market open. The shares later pared their losses to ended down 12.5 per cent at $1.74.
"Post-tax profit for the full year ending March 31 will be in the order of 10-15 percent below that achieved for the last financial year," the company said. Virgin Blue is 25 per cent-owned by Richard Branson's Virgin Group.
The airline, which is locked in a price war with Qantas Airways and its discount carrier Jetstar, said sluggish demand late last year was continuing. As a result, it had cut its estimated annual passenger numbers by 2.5 per cent.
Virgin's surprise earnings warning hung over the entire transport sector. Shares in Virgin's 46-per cent owner Patrick Corp ended down 4.5 per cent at $6.22, while Qantas shares slumped 3 per cent to $3.51.
However, CMC Group chief dealer Brian Griffin suggested the market had over-reacted to the announcement, noting that it coincided with a spike in world oil prices overnight to seven-week highs near $US50 a barrel.
"The fact is if a company isn't making money the market will punish you but I don't think it's the end of the world for Virgin Blue as a business model," he said.
"It has done wonders for domestic air traffic in Australia but there might be a slight return to reality in what a company can achieve within a two or three year period in terms of profitability."
Virgin Blue reported an interim net profit of $63 million for the six months to September 30, 2004, down 1.8 per cent on the previous corresponding half.
This is the second time Virgin Blue has announced a surprise revision to its earnings expectations.
At the annual general meeting in August, the company said pre-tax earnings for the four months to the end of July 2004 had fallen 22 per cent.
Virgin Blue, which specialises in no-frills flights, began operations in Australia in 2000 and was floated on the sharemarket in December, 2003.
However, it began running into tougher competition last year when Qantas last May launched its own separately branded discount carrier, Jetstar.
This set off a price war in cut-throat deals, including promotional fares as low as $9.
Virgin earlier this week began offering tickets from A$1 excluding taxes and surcharges, which will be sold in a daily "happy hour" promotion.
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Virgin Blue plunges on profit warning
Jan 19 16:22 AEDT
AAP
Investors dealt swift justice to discount airline Virgin Blue on Wednesday after the company warned that its full-year profit would fall up to 15 per cent short of last year due to sluggish demand from travellers.
Virgin shares plunged as much as 20 per cent to a record low of $1.60 after the warning just ahead of the market open. The shares later pared their losses to ended down 12.5 per cent at $1.74.
"Post-tax profit for the full year ending March 31 will be in the order of 10-15 percent below that achieved for the last financial year," the company said. Virgin Blue is 25 per cent-owned by Richard Branson's Virgin Group.
The airline, which is locked in a price war with Qantas Airways and its discount carrier Jetstar, said sluggish demand late last year was continuing. As a result, it had cut its estimated annual passenger numbers by 2.5 per cent.
Virgin's surprise earnings warning hung over the entire transport sector. Shares in Virgin's 46-per cent owner Patrick Corp ended down 4.5 per cent at $6.22, while Qantas shares slumped 3 per cent to $3.51.
However, CMC Group chief dealer Brian Griffin suggested the market had over-reacted to the announcement, noting that it coincided with a spike in world oil prices overnight to seven-week highs near $US50 a barrel.
"The fact is if a company isn't making money the market will punish you but I don't think it's the end of the world for Virgin Blue as a business model," he said.
"It has done wonders for domestic air traffic in Australia but there might be a slight return to reality in what a company can achieve within a two or three year period in terms of profitability."
Virgin Blue reported an interim net profit of $63 million for the six months to September 30, 2004, down 1.8 per cent on the previous corresponding half.
This is the second time Virgin Blue has announced a surprise revision to its earnings expectations.
At the annual general meeting in August, the company said pre-tax earnings for the four months to the end of July 2004 had fallen 22 per cent.
Virgin Blue, which specialises in no-frills flights, began operations in Australia in 2000 and was floated on the sharemarket in December, 2003.
However, it began running into tougher competition last year when Qantas last May launched its own separately branded discount carrier, Jetstar.
This set off a price war in cut-throat deals, including promotional fares as low as $9.
Virgin earlier this week began offering tickets from A$1 excluding taxes and surcharges, which will be sold in a daily "happy hour" promotion.
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Godfrey's sale of shares with any prior knowledge of the VB profit situation suggests insider trading of a magnitude which makes Rene Rivkin look like an amatuer.
Go directly to jail, Bretty. Do not pass go.
Go directly to jail, Bretty. Do not pass go.
Grandpa Aerotart
Always amazes me how the 'market' equates a 7% reduction in PROFIT to 'not making money'....and dumps stock as a result.
VB are still profitable...yet 'the market' (a bunch of 20 somethings) decides to sell, sell, sell....based on some performance indicating formula 'the market' invented.
Anyone else wonder why the future security (financial/employment) of millions is in the hands of a bunch of adrenaline junky kids whose main aim is to be a multi millionaire by 26...at the expense of those millions of 'investors'.
'The market' thrives on kaos...manipulate the price up and down and make huge profits for a few at the expense of the many. Stock Brokers make no money when people buy a good, long term investment stock and hang on to it.
VB are still profitable...yet 'the market' (a bunch of 20 somethings) decides to sell, sell, sell....based on some performance indicating formula 'the market' invented.
Anyone else wonder why the future security (financial/employment) of millions is in the hands of a bunch of adrenaline junky kids whose main aim is to be a multi millionaire by 26...at the expense of those millions of 'investors'.
'The market' thrives on kaos...manipulate the price up and down and make huge profits for a few at the expense of the many. Stock Brokers make no money when people buy a good, long term investment stock and hang on to it.
Moderate, Modest & Mild.
Careful with the accusations/insinuations, schnauzer.
Although it's a lot of money for the likes of you and me, I understand it actually amounted to not such a large percentage of his overall holding.
Otoh, I feel certain that the Trades & Securities Commission will have their finger on the pulse, and that BG would have been well aware of that had it been a factor.
Although it's a lot of money for the likes of you and me, I understand it actually amounted to not such a large percentage of his overall holding.
Otoh, I feel certain that the Trades & Securities Commission will have their finger on the pulse, and that BG would have been well aware of that had it been a factor.
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15% of his holding is how much it was which is significant in the scheme of things .
As for price expectations in the market it is all about potential growth in the marketplace and hence profit growth. VB has just confirmed to the market that there is no growth expected in actual fact there is a profit fall ,hence the sell down. Share market looks forward not back...
As for price expectations in the market it is all about potential growth in the marketplace and hence profit growth. VB has just confirmed to the market that there is no growth expected in actual fact there is a profit fall ,hence the sell down. Share market looks forward not back...
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Chimbu Chuckles.
I agree. (see thread on QF Shares / Fund managers)
Brokers live off of volumes. High Churners / Volatility.
Solid long term holds aren't good for their commissions.
Probably why they don't warm to the likes of the Warren Buffet philosophy.
The difference of course is whether one 'invests' in a good company, or 'speculates'.
Anyone who listens to 'tips' is a speculator. Anyone who gives you a tip is either a broker needing some income, or someone who doesn't understand the market.
Frankly I believe this alone is reason enough to keep strategically vital assets like Utilities, and National Carriers government (public)owned.
I agree. (see thread on QF Shares / Fund managers)
Brokers live off of volumes. High Churners / Volatility.
Solid long term holds aren't good for their commissions.
Probably why they don't warm to the likes of the Warren Buffet philosophy.
The difference of course is whether one 'invests' in a good company, or 'speculates'.
Anyone who listens to 'tips' is a speculator. Anyone who gives you a tip is either a broker needing some income, or someone who doesn't understand the market.
Frankly I believe this alone is reason enough to keep strategically vital assets like Utilities, and National Carriers government (public)owned.
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Thurs "The Age"
$1 fares innovative, not desperate: analysts
By Fleur Leyden
January 20, 2005
When an airline decides to sell fares for as little as $1 and a day later puts out a profit warning, it begins to look a lot like its rival's price-squeeze strategy is working.
Virgin Blue, like all airlines, is at the mercy of fluctuating oil prices.
But Qantas' squeezing of Virgin at the budget end with Jetstar has also meant fewer Virgin seats being filled and a fall in the airline's profit by as much as 15 per cent.
Analysts said growth and competition in the industry in the past year were always going to mean that passenger numbers would come under pressure.
"We always expected there would be an immediate negative impact, and there was in May (when Jetstar was launched), but they got through that and then stabilised," said Centre for Asia Pacific Aviation managing director Peter Harbison.
"Now we are probably finding that average yields have stabilised a bit below where they were before in the domestic market."
In an effort to spur bookings, Virgin two days ago launched $1 (plus surcharge) "happy hour" fares, which are sold between 1pm and 2pm each day, on different domestic routes.
Analysts described the cutthroat fares as innovative rather than a sign of desperation at Virgin, although they acknowledged that Jetstar would continue to squeeze it at the budget end.
"Virgin is evolving to attract more of the corporate market, so it takes its average revenue in even though its costs may be a little bit higher than Jetstar's," said Mr Harbison.
Qantas may soon find itself in a similar fight with Singapore Airlines if the Federal Government relents and opens the lucrative Australia-Los Angeles route to more competition.
===========================================
Thurs "The Australian"
Price war grounds Virgin
Blair Speedy
January 20, 2005
VIRGIN Blue shares plunged to record lows yesterday as the airline, under attack from low-cost rival Jetstar, warned "sluggish demand" would see full-year profits fall by up to 15 per cent.
The shares, sold to investors in December 2003 at $2.25 each, crashed 20 per cent to a record low of $1.60, as Virgin admitted its fleet expansion had outstripped a rise in passenger numbers.
Chief executive Brett Godfrey said "sluggish demand" seen in November and December had continued into the new year, leaving more empty seats on the airline's expanded fleet.
"As a consequence, passenger numbers for the full year have been revised downwards by approximately 2.5 per cent," he said.
This was expected to translate into a net profit of $135 million-$143 million for the 12 months to the end of March 2005, well below expectations for a result of about $178 million.
Virgin Blue shares eventually finished down 25c at $1.74, marginally above the record low close of $1.66 struck in October last year. Shares in Qantas, which owns Jetstar, finished 11c weaker at $3.51.
Shares in Chris Corrigan's Patrick Corp, a founding investor in Virgin Blue with British entrepreneur Richard Branson, fell 29c to $6.22 as the value of its 46 per cent stake slumped $120 million. Sir Richard raised $500 million by selling shares into the float at $2.25 – 29 per cent above yesterday's closing price. He retains a 25.1 per cent stake.
The downgrade came four weeks after Mr Godfrey sold 5 million shares in the company at an average price of $1.88, for a total of $9.4 million.
At the time of the sale, his first since the company floated on the stock market in December 2003, the airline said Mr Godfrey remained "committed and enthusiastic about his role with the Virgin Blue Group".
An airline spokeswoman said yesterday Mr Godfrey, who personally donated $500,000 to the tsunami appeal, sold less than half the number of shares he was allowed to under the restrictions imposed on executives trading in their own company's stock. He retains about 28.1 million shares worth $49 million.
The news coincided with the release of strong second-quarter results from Sydney airport, with 7.3 million passengers passing through the airport in the three months to the end of December, up from 6.9 million a year earlier for an increase of 5.7 per cent.
Performance figures for December showed Virgin Blue's passenger numbers were up from a year earlier at 1.27 billion "passenger kilometres" – the number of passengers multiplied by the total distance flown by its planes – compared with 1.1 billion a year earlier, an increase of 16 per cent.
But Virgin's capacity had grown even faster, with the aircraft fleet growing from 40 to 49 and available seat kilometres increasing by 28 per cent to 1.74 million. This translated into just 73 per cent of available seats being filled in December, down from 81 per cent a year earlier.
Qantas said earlier this week that it had filled 72.3 per cent of its seats in November, down from a year earlier. Analysts said Qantas's discount carrier Jetstar, which began in May last year, was clearly having an effect on Virgin Blue's performance.
With Bloomberg, AAP
=============================================
$1 fares innovative, not desperate: analysts
By Fleur Leyden
January 20, 2005
When an airline decides to sell fares for as little as $1 and a day later puts out a profit warning, it begins to look a lot like its rival's price-squeeze strategy is working.
Virgin Blue, like all airlines, is at the mercy of fluctuating oil prices.
But Qantas' squeezing of Virgin at the budget end with Jetstar has also meant fewer Virgin seats being filled and a fall in the airline's profit by as much as 15 per cent.
Analysts said growth and competition in the industry in the past year were always going to mean that passenger numbers would come under pressure.
"We always expected there would be an immediate negative impact, and there was in May (when Jetstar was launched), but they got through that and then stabilised," said Centre for Asia Pacific Aviation managing director Peter Harbison.
"Now we are probably finding that average yields have stabilised a bit below where they were before in the domestic market."
In an effort to spur bookings, Virgin two days ago launched $1 (plus surcharge) "happy hour" fares, which are sold between 1pm and 2pm each day, on different domestic routes.
Analysts described the cutthroat fares as innovative rather than a sign of desperation at Virgin, although they acknowledged that Jetstar would continue to squeeze it at the budget end.
"Virgin is evolving to attract more of the corporate market, so it takes its average revenue in even though its costs may be a little bit higher than Jetstar's," said Mr Harbison.
Qantas may soon find itself in a similar fight with Singapore Airlines if the Federal Government relents and opens the lucrative Australia-Los Angeles route to more competition.
===========================================
Thurs "The Australian"
Price war grounds Virgin
Blair Speedy
January 20, 2005
VIRGIN Blue shares plunged to record lows yesterday as the airline, under attack from low-cost rival Jetstar, warned "sluggish demand" would see full-year profits fall by up to 15 per cent.
The shares, sold to investors in December 2003 at $2.25 each, crashed 20 per cent to a record low of $1.60, as Virgin admitted its fleet expansion had outstripped a rise in passenger numbers.
Chief executive Brett Godfrey said "sluggish demand" seen in November and December had continued into the new year, leaving more empty seats on the airline's expanded fleet.
"As a consequence, passenger numbers for the full year have been revised downwards by approximately 2.5 per cent," he said.
This was expected to translate into a net profit of $135 million-$143 million for the 12 months to the end of March 2005, well below expectations for a result of about $178 million.
Virgin Blue shares eventually finished down 25c at $1.74, marginally above the record low close of $1.66 struck in October last year. Shares in Qantas, which owns Jetstar, finished 11c weaker at $3.51.
Shares in Chris Corrigan's Patrick Corp, a founding investor in Virgin Blue with British entrepreneur Richard Branson, fell 29c to $6.22 as the value of its 46 per cent stake slumped $120 million. Sir Richard raised $500 million by selling shares into the float at $2.25 – 29 per cent above yesterday's closing price. He retains a 25.1 per cent stake.
The downgrade came four weeks after Mr Godfrey sold 5 million shares in the company at an average price of $1.88, for a total of $9.4 million.
At the time of the sale, his first since the company floated on the stock market in December 2003, the airline said Mr Godfrey remained "committed and enthusiastic about his role with the Virgin Blue Group".
An airline spokeswoman said yesterday Mr Godfrey, who personally donated $500,000 to the tsunami appeal, sold less than half the number of shares he was allowed to under the restrictions imposed on executives trading in their own company's stock. He retains about 28.1 million shares worth $49 million.
The news coincided with the release of strong second-quarter results from Sydney airport, with 7.3 million passengers passing through the airport in the three months to the end of December, up from 6.9 million a year earlier for an increase of 5.7 per cent.
Performance figures for December showed Virgin Blue's passenger numbers were up from a year earlier at 1.27 billion "passenger kilometres" – the number of passengers multiplied by the total distance flown by its planes – compared with 1.1 billion a year earlier, an increase of 16 per cent.
But Virgin's capacity had grown even faster, with the aircraft fleet growing from 40 to 49 and available seat kilometres increasing by 28 per cent to 1.74 million. This translated into just 73 per cent of available seats being filled in December, down from 81 per cent a year earlier.
Qantas said earlier this week that it had filled 72.3 per cent of its seats in November, down from a year earlier. Analysts said Qantas's discount carrier Jetstar, which began in May last year, was clearly having an effect on Virgin Blue's performance.
With Bloomberg, AAP
=============================================
Last edited by Wirraway; 19th Jan 2005 at 15:27.
