Buffeted, Godfrey Fastens His Seatbelt (AFR)
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Buffeted, Godfrey Fastens His Seatbelt (AFR)
Thurs "Australian Financial Review"
Buffeted, Godfrey Fastens His Seatbelt
Date January 20th, 2005
There's speculation about the tie-less CEO's future, writes Tansy Harcourt
When Brett Godfrey sketched plans on a beer coaster for a low-cost carrier back in the early 1990s, he predicted getting it off the ground would be the toughest task.
"I thought the hardest part of the airline would be setting it up because we would work 24/7," Virgin Blue's chief executive Godfrey told The Australian Financial Review recently.
Ten years later he would discover how wrong he was. Yesterday, Virgin delivered its second profit warning in five months, saying earnings in the year to March 31, 2005, would fall 10 to 15 per cent short of those delivered in 2004.
The stockmarket response was savage. Virgin Blue shares were slammed down 12.6 per cent.
In sharp contrast to its hitch-free start-up years, 2004-05 has been tough for Virgin Blue and its usually outspoken founder and chief executive. The pressure is on Godfrey to show impatient investors that the business model works especially in the face of the onslaught from Qantas and its low-cost scion, Jetstar.
Reflecting the pressure on Godfrey is the airline's decision to hire two senior transport executives to strengthen its management team, triggering speculation about Godfrey's future.
Godfrey made a commitment during the float process to stay on for three years but has said he is not bound beyond that point. His right-hand man, head of strategy David Huttner, decided to leave just a few months ago.
In response to speculation about his future, Godfrey will only say that every company should have a succession plan in place.
Virgin Blue chairman Chris Corrigan has previously said he stands by Godfrey, but he has also confirmed that the decision to hire an Air New Zealand executive and former Nike executive reflected the fact that the airline's management skills could be enhanced.
"I have total confidence in Brett Godfrey," he said at the time.
Virgin Blue flew into turbulence in 2004 when oil prices soared and a reinvigorated Qantas launched Jetstar. The promotional $29 fares offered by Jetstar were matched by Virgin Blue and this, coupled with its 60 per cent increase in capacity, decimated its financial statistics for the first few months.
"I have learnt that it's very much more difficult running a public company than it is a private company because everything is so bloody public," Godfrey says.
Now, the man who prides himself as being a "hands-on" manager has realised that getting the right message to shareholders can be just as important in the short term as the day-to-day running of the business.
"I have three obligations: No. 1 is staff, then sales, then shareholders that's always been my maxim. But now shareholders is trying to compete with No. 1 and No. 2 in terms of my time."
The message was loud and clear when Virgin Blue's share price plummeted to a record low last year.
What Godfrey failed to get across to investors then was that he was comfortable with the airline's position and that the woes Virgin Blue experienced during Jetstar's start-up were largely planned for.
By the time of its half-year results in November, the airline had clambered back to just a 2 per cent decline on the previous year.
Godfrey describes the experience as a lesson and as a result has stepped back from his "Godfrey-isms". Instead of a showing financial analysts slides of "more red jets" in answer to questions on strategy as occurred at the full-year results Godfrey is leaning towards numbers and charts.
"I know some people thought we were too laissez-faire, coming out there and saying, 'What's the strategy? More red jets'. All right, we picked that certain people think that's naff and we've toned it down," he says.
Also coming in much smaller doses are Godfrey's usual serves to rivals, governments and airports.
"I probably have toned it down in terms of bashing people, but I still had a big dig at the government. I'm not afraid to do that we are a challenger brand," he says.
Godfrey gave a much more refined, charts-and-numbers presentation when announcing the airline's half-year earnings.
"I just didn't feel my normal passionate self," he says. "Maybe that's a good thing, maybe I go slower when I'm knackered . . . I felt I was probably boring people to death. "
But don't mistake that for a deliberate move to replace a freewheeling style with a corporate clone. "Qantas has the corporate stuff all sewn up, so we are not going to try do that I think our style is about people having a go.
"I'm not going to wear a tie, I'm not going to get up there and wear a suit. I don't feel I have to impress everyone," he says.
It's been a rocky ride for Virgin Blue in its first year as a listed company, but after falling from grace the pressure is on Godfrey to prove that the airline's business model is sustainable after all, his job depends upon it.
==========================================
Buffeted, Godfrey Fastens His Seatbelt
Date January 20th, 2005
There's speculation about the tie-less CEO's future, writes Tansy Harcourt
When Brett Godfrey sketched plans on a beer coaster for a low-cost carrier back in the early 1990s, he predicted getting it off the ground would be the toughest task.
"I thought the hardest part of the airline would be setting it up because we would work 24/7," Virgin Blue's chief executive Godfrey told The Australian Financial Review recently.
Ten years later he would discover how wrong he was. Yesterday, Virgin delivered its second profit warning in five months, saying earnings in the year to March 31, 2005, would fall 10 to 15 per cent short of those delivered in 2004.
The stockmarket response was savage. Virgin Blue shares were slammed down 12.6 per cent.
In sharp contrast to its hitch-free start-up years, 2004-05 has been tough for Virgin Blue and its usually outspoken founder and chief executive. The pressure is on Godfrey to show impatient investors that the business model works especially in the face of the onslaught from Qantas and its low-cost scion, Jetstar.
Reflecting the pressure on Godfrey is the airline's decision to hire two senior transport executives to strengthen its management team, triggering speculation about Godfrey's future.
Godfrey made a commitment during the float process to stay on for three years but has said he is not bound beyond that point. His right-hand man, head of strategy David Huttner, decided to leave just a few months ago.
In response to speculation about his future, Godfrey will only say that every company should have a succession plan in place.
Virgin Blue chairman Chris Corrigan has previously said he stands by Godfrey, but he has also confirmed that the decision to hire an Air New Zealand executive and former Nike executive reflected the fact that the airline's management skills could be enhanced.
"I have total confidence in Brett Godfrey," he said at the time.
Virgin Blue flew into turbulence in 2004 when oil prices soared and a reinvigorated Qantas launched Jetstar. The promotional $29 fares offered by Jetstar were matched by Virgin Blue and this, coupled with its 60 per cent increase in capacity, decimated its financial statistics for the first few months.
"I have learnt that it's very much more difficult running a public company than it is a private company because everything is so bloody public," Godfrey says.
Now, the man who prides himself as being a "hands-on" manager has realised that getting the right message to shareholders can be just as important in the short term as the day-to-day running of the business.
"I have three obligations: No. 1 is staff, then sales, then shareholders that's always been my maxim. But now shareholders is trying to compete with No. 1 and No. 2 in terms of my time."
The message was loud and clear when Virgin Blue's share price plummeted to a record low last year.
What Godfrey failed to get across to investors then was that he was comfortable with the airline's position and that the woes Virgin Blue experienced during Jetstar's start-up were largely planned for.
By the time of its half-year results in November, the airline had clambered back to just a 2 per cent decline on the previous year.
Godfrey describes the experience as a lesson and as a result has stepped back from his "Godfrey-isms". Instead of a showing financial analysts slides of "more red jets" in answer to questions on strategy as occurred at the full-year results Godfrey is leaning towards numbers and charts.
"I know some people thought we were too laissez-faire, coming out there and saying, 'What's the strategy? More red jets'. All right, we picked that certain people think that's naff and we've toned it down," he says.
Also coming in much smaller doses are Godfrey's usual serves to rivals, governments and airports.
"I probably have toned it down in terms of bashing people, but I still had a big dig at the government. I'm not afraid to do that we are a challenger brand," he says.
Godfrey gave a much more refined, charts-and-numbers presentation when announcing the airline's half-year earnings.
"I just didn't feel my normal passionate self," he says. "Maybe that's a good thing, maybe I go slower when I'm knackered . . . I felt I was probably boring people to death. "
But don't mistake that for a deliberate move to replace a freewheeling style with a corporate clone. "Qantas has the corporate stuff all sewn up, so we are not going to try do that I think our style is about people having a go.
"I'm not going to wear a tie, I'm not going to get up there and wear a suit. I don't feel I have to impress everyone," he says.
It's been a rocky ride for Virgin Blue in its first year as a listed company, but after falling from grace the pressure is on Godfrey to prove that the airline's business model is sustainable after all, his job depends upon it.
==========================================
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What the hell is the newly employed German gentleman (quite a talented businessman from what I've read) doing sitting in the background while Godfrey et al' has done little more than whinge publicly and ridden the gravy train after Ansett's demise?
It is quite clear that Godfrey hasn't performed well at all when real competition in their own backyard is presented.
So much for his "hands on" approach.
The last hands-on action he took was to sack a Captain for being both responsible and professional, only to have the Chief Pilot re-employ him straight away!!!
Great way to endear yourself not only the Tech Crew but every employee Brett!
On yer son !!!
I wonder how much longer the shareholders and Chris Corrigan will put up with his bumbling?
Godfrey has already dumped alot of shares and has seen the writing on the wall.
Load factors down, profit down, pax numbers decreasing and poor future outlooks have got the shareholders and institutional investors on edge.
Give the Kaiser the crown I say !!
It is quite clear that Godfrey hasn't performed well at all when real competition in their own backyard is presented.
So much for his "hands on" approach.
The last hands-on action he took was to sack a Captain for being both responsible and professional, only to have the Chief Pilot re-employ him straight away!!!
Great way to endear yourself not only the Tech Crew but every employee Brett!
On yer son !!!
I wonder how much longer the shareholders and Chris Corrigan will put up with his bumbling?
Godfrey has already dumped alot of shares and has seen the writing on the wall.
Load factors down, profit down, pax numbers decreasing and poor future outlooks have got the shareholders and institutional investors on edge.
Give the Kaiser the crown I say !!
Ho..Hum
People were fools to buy the shares at $2.25, they were probaby only worth $1.85 at the most....Can see SRB buying the lot back for around $1.60, that's how he makes money by buying something off someone he has already sold it to for less than he sold it to them for
DJ 737
The Roo Rooter
People were fools to buy the shares at $2.25, they were probaby only worth $1.85 at the most....Can see SRB buying the lot back for around $1.60, that's how he makes money by buying something off someone he has already sold it to for less than he sold it to them for
DJ 737
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How's staff morale fairing there DJ?
I know that I do have a bit of a go a VB at times, but it's really directed at Bretty et al. The people at the coal face are all decent blokes. It's pretty much the same at QF. Brainless morons running the show whilst the good blokes doing the work get shafted.
So, serious question. How are you guys holding up?
I know that I do have a bit of a go a VB at times, but it's really directed at Bretty et al. The people at the coal face are all decent blokes. It's pretty much the same at QF. Brainless morons running the show whilst the good blokes doing the work get shafted.
So, serious question. How are you guys holding up?
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If I may offer a HO Schnauzer
Many people I talk to are just holding their breath to see how the EB negotiations work out. I hope the AFAP can finally get their ****e together and offer some decent representation
to their members rather than blindly following what DJ management tell them what they will accept in terms of salary and conditions.
IMHO rosters are much more family friendly than they used to be probably thanks due to the MEL base but pay remains a major issue.
Hope we can sort this out.
Cheers
Many people I talk to are just holding their breath to see how the EB negotiations work out. I hope the AFAP can finally get their ****e together and offer some decent representation
to their members rather than blindly following what DJ management tell them what they will accept in terms of salary and conditions.
IMHO rosters are much more family friendly than they used to be probably thanks due to the MEL base but pay remains a major issue.
Hope we can sort this out.
Cheers
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....................Tsall downhill from here
The AFAP lost all credibility in the strike, when was that 89? While ever you have people willing to pay for their own endorsment and will undercut somebody else for a job no hope.
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Absolutely agree super cec,
Dispicable that pilots are now required to pay for an endorsement to land that dream job. ( In their minds anyway).
I for one try to council the younger ones to be a bit more aware of what is available to them globally but more and more a bond is required and '89 is just past history with no personal implications to be considered. Sad really that the lesson of history repeating is lost so quickly
Dispicable that pilots are now required to pay for an endorsement to land that dream job. ( In their minds anyway).
I for one try to council the younger ones to be a bit more aware of what is available to them globally but more and more a bond is required and '89 is just past history with no personal implications to be considered. Sad really that the lesson of history repeating is lost so quickly
While ever you have people willing to pay for their own endorsment and will undercut somebody else for a job no hope
Icarus, that is BS. 
How does $30K paid up front by someone BEFORE they even get a start with DJ somehow equate to a training bond of $20K, payable ONLY in the event that the trainee leaves the airline within a specified time period...?
The initial training period last for ~3 months (to being checked to line) and during this period the difference between training wage & full pay equals ~$1500 per fortnight i.e $9K total.
The training bond is only paid IF the trainee leaves the airline before the bonded period is up - as such it seems a long bow to stretch to suggest that a payout of $20K (which in all likelihood will never be made) and a reduction in wages of $9K is somehow equal to an upfront payment of $30K for an endorsement BEFORE the person is employed...
Show me how you do your maths Icarus - I'm keen to see how you justify your statements.
Put it this way - if someone offered you $30K in cash right now, or possibly (but probably not) $20K in cash in 2 years time, which is worth more to you....? There's your answer
How does $30K paid up front by someone BEFORE they even get a start with DJ somehow equate to a training bond of $20K, payable ONLY in the event that the trainee leaves the airline within a specified time period...?The initial training period last for ~3 months (to being checked to line) and during this period the difference between training wage & full pay equals ~$1500 per fortnight i.e $9K total.
The training bond is only paid IF the trainee leaves the airline before the bonded period is up - as such it seems a long bow to stretch to suggest that a payout of $20K (which in all likelihood will never be made) and a reduction in wages of $9K is somehow equal to an upfront payment of $30K for an endorsement BEFORE the person is employed...
Show me how you do your maths Icarus - I'm keen to see how you justify your statements.
Put it this way - if someone offered you $30K in cash right now, or possibly (but probably not) $20K in cash in 2 years time, which is worth more to you....? There's your answer
Last edited by Johhny Utah; 20th Jan 2005 at 23:58.
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Agree with you Johnny U.
There's nothing wrong with a bond, but paying up front for an endorsement in my book just doesnt cut it.
This doesnt always present a level playing field.
Those that can afford to pay for an endorsement have an unfair advantage over the poor struggling GA pilot that may have a family and for whatever reason cannot afford to either pay up front or borrow the cash.
Whatever happened to the term "fair go"?
Do what BA/Cathay/QF and the USA airlines do - have a recruiting system where those employed are those that they see as being suitable as an employee for the long term and not those that can just afford it.
If a substantial investment is made in their training then the training bond is a fair and equitable system rather than the "yeah, he/she'll do and they can afford to pay for their endorsement".
There's nothing wrong with a bond, but paying up front for an endorsement in my book just doesnt cut it.
This doesnt always present a level playing field.
Those that can afford to pay for an endorsement have an unfair advantage over the poor struggling GA pilot that may have a family and for whatever reason cannot afford to either pay up front or borrow the cash.
Whatever happened to the term "fair go"?
Do what BA/Cathay/QF and the USA airlines do - have a recruiting system where those employed are those that they see as being suitable as an employee for the long term and not those that can just afford it.
If a substantial investment is made in their training then the training bond is a fair and equitable system rather than the "yeah, he/she'll do and they can afford to pay for their endorsement".
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Johnny, 100% correct mate! But understand this. These people who started accepting the company line that pilots should pay for their own endorsement are probably not the sharpest knives in the draw! This is the biggest con in the world, the company exec's must roll around laughing every time they see some misguided fool rock up, cap in hand and down $30K. What a joke!
