Virgin to spawn new LCC??
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Virgin to spawn new LCC??
VIRGIN Blue could spawn an international carrier as well as a new low-cost airline in the next five years as the carrier expands its capacity.
Virgin Blue (vba.ASX:Quote,News) today announced a half year net profit of $124.3 million, an 81 per cent rise on the previous first half, predicting a full year result 60 per cent above the previous full year's net profit of $112 million.
As the profit was announced, the company pointed to ambitious expansion plans.
While its main airline would increasingly target the high yield customers dominated by Qantas, the company hoped to create an international carrier to fly the US route and maybe even a new low cost carrier.
Virgin Blue chief executive officer, Brett Godfrey, said the company was in negotiations with Boeing to acquire seven, long-haul 777-300ER aircraft at a cost of $US2.6 billion ($3.3 billion).
The talks were close to conclusion, Mr Godfrey said, and showed Virgin Blue was confident of regulatory approval to fly the US route.
Virgin Blue began considering the trans-Pacific route seriously, he said, when the Federal Government rejected Singapore Airlines' application to fly the route.
"The aviation review, which was quite a substantive review which was completed in February of last year, was (our) impetus," Mr Godfrey said.
"We said we weren't prepared to invest $2.5 billion of equipment and many millions of dollars in equity investment if we were going to be squashed in start up, so the Government had given us (an indication) and made it clear that Singapore would not be given access."
Mr Godfrey said it was too early to speculate about fares and destinations, but said the airline was open minded and wouldn't necessarily fly to Los Angeles.
He also confirmed that a new brand would need to be launched for this route and the new international carrier would operate independently of Virgin Blue.
On the domestic front, Mr Godfrey confirmed that Virgin Blue would continue courting the corporate market and seek a larger slice of Qantas's customers.
"We're now getting some momentum in moving into the domain of the legacy carrier yield," he said.
But the focus on budget travellers would not cease and the company was considering the launch of a new low cost carrier.
"Virgin Blue has moved off the market being a pure LCC (low cost carrier) and we think it's quite prudent now to consider whether or not Virgin Blue should even establish its own low cost brand, its own ultra-low cost LCC."
Mr Godfrey said the purchase of another six Brazilian Embraer aircraft to add to the 14 announced in November, could assist this strategy.
The aircraft had the capacity to service regional airports that had never been contested, as well as secondary metropolitan airports, such as Avalon near Melbourne.
Mr Godfrey stressed that the LCC proposal was purely conceptual at this stage.
The Virgin Blue CEO also sought to brush off the threat posed by Singapore based LCC, Tiger, which hopes to fly the Australian domestic market by the end of the year.
Mr Godfrey said Tiger's five planes were dwarfed by Virgin Blue's fleet of more than 50. He welcomed competition.
Virgin Blue (vba.ASX:Quote,News) today announced a half year net profit of $124.3 million, an 81 per cent rise on the previous first half, predicting a full year result 60 per cent above the previous full year's net profit of $112 million.
As the profit was announced, the company pointed to ambitious expansion plans.
While its main airline would increasingly target the high yield customers dominated by Qantas, the company hoped to create an international carrier to fly the US route and maybe even a new low cost carrier.
Virgin Blue chief executive officer, Brett Godfrey, said the company was in negotiations with Boeing to acquire seven, long-haul 777-300ER aircraft at a cost of $US2.6 billion ($3.3 billion).
The talks were close to conclusion, Mr Godfrey said, and showed Virgin Blue was confident of regulatory approval to fly the US route.
Virgin Blue began considering the trans-Pacific route seriously, he said, when the Federal Government rejected Singapore Airlines' application to fly the route.
"The aviation review, which was quite a substantive review which was completed in February of last year, was (our) impetus," Mr Godfrey said.
"We said we weren't prepared to invest $2.5 billion of equipment and many millions of dollars in equity investment if we were going to be squashed in start up, so the Government had given us (an indication) and made it clear that Singapore would not be given access."
Mr Godfrey said it was too early to speculate about fares and destinations, but said the airline was open minded and wouldn't necessarily fly to Los Angeles.
He also confirmed that a new brand would need to be launched for this route and the new international carrier would operate independently of Virgin Blue.
On the domestic front, Mr Godfrey confirmed that Virgin Blue would continue courting the corporate market and seek a larger slice of Qantas's customers.
"We're now getting some momentum in moving into the domain of the legacy carrier yield," he said.
But the focus on budget travellers would not cease and the company was considering the launch of a new low cost carrier.
"Virgin Blue has moved off the market being a pure LCC (low cost carrier) and we think it's quite prudent now to consider whether or not Virgin Blue should even establish its own low cost brand, its own ultra-low cost LCC."
Mr Godfrey said the purchase of another six Brazilian Embraer aircraft to add to the 14 announced in November, could assist this strategy.
The aircraft had the capacity to service regional airports that had never been contested, as well as secondary metropolitan airports, such as Avalon near Melbourne.
Mr Godfrey stressed that the LCC proposal was purely conceptual at this stage.
The Virgin Blue CEO also sought to brush off the threat posed by Singapore based LCC, Tiger, which hopes to fly the Australian domestic market by the end of the year.
Mr Godfrey said Tiger's five planes were dwarfed by Virgin Blue's fleet of more than 50. He welcomed competition.
"Virgin Blue has moved off the market being a pure LCC (low cost carrier) and we think it's quite prudent now to consider whether or not Virgin Blue should even establish its own low cost brand, its own ultra-low cost LCC."
"So you are low cost, then we'll start an ultra low cost."
"OK, we will start an ultra, ultra low cost!"
When will it end? The funny thing is Virgin Blue becoming the premium brand!
If they moved off being a pure LCC and now finally making good money with an appropriate share price, doesn't that say something about where the money pit is?
So why chase the pure LCC product anyway?
Their current cost base and the impending EMB's will give them good response solutions or maybe it's a case of bravado. You know everyman and his dog starting an airline this month.
So why chase the pure LCC product anyway?
Their current cost base and the impending EMB's will give them good response solutions or maybe it's a case of bravado. You know everyman and his dog starting an airline this month.
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DJ will use the E-jets, especially the 190 with their 100+ seats to start their new LCC with lower wages and conditions. Over time they will send the B737-700s over to the new operations. They will offer a new EBA based around seating capacity, ie up to 140 seats and they will have the E190 and the 737-700’s operating the new LCC. The E-jets will operate the regional flights with the 737-700’s operating the between the major cities. The B737-800’s will be used on the golden triangle, plus flights to Perth. The new LCC will have a fleet of 30-50 aircraft, while what is left of the current Virgin Blue will have 15 -20 737-800’s.
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Yes Virgin has definately been responsbile for eroding conditions of the industry in Oz, granted a business needs to make money to remain viable and conditions pre Virgin were probably not sustainable. Now the hint of a new low cost carrier, no wonder Mr Godfrey has been so passionately spreading the word of his uniquely termed 'new world carrier', so as to distinguish it so he can launch a truly 'low cost carrier'. Already Virgin has set the precedent in reducing cabin crew ratios', so of course Jetstar and Qantas will follow suit to remain competitive. The so called 'they can copy our business but not copy our culture' rhetoric virgin drums home in its training and induction programs will disappear quickly if it continues to pursue more from their staff for less rewards and conditions.
Evertonian
So I think that, in about 15 years from now, air travel will be free for the punters. This will be because the costs associated with flying will be subsidised by the employees paying for endorsements and the honour of working!
The Reverend
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Where are all the soothsayers that predicted a six month lifespan for that pommy upstart, when they launched their seven daily flights between Sydney and Brisbane on August 3, 2000?
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Virgin Spawn - I think we have an innovative new name for the offshoot already.
I like it.
PLEASE tell me that conditions and remuneration are not going to be degraded again.
The industry is starting to make the Bodgie/Fat Man bastardisation of the industry look more and more like a fart in the bath.
I do not like the direction it is travelling as there are too many bean counters in direct control of spanners and spare parts and where they are located. We do not need a Pan American mindset. That will cause a great deal of paperwork in the worst possible way sooner rather than later.
Best all
EWL
I like it.
PLEASE tell me that conditions and remuneration are not going to be degraded again.
The industry is starting to make the Bodgie/Fat Man bastardisation of the industry look more and more like a fart in the bath.
I do not like the direction it is travelling as there are too many bean counters in direct control of spanners and spare parts and where they are located. We do not need a Pan American mindset. That will cause a great deal of paperwork in the worst possible way sooner rather than later.
Best all
EWL
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Absolutely correct.
Where will it end? .......To make milk you need to be able to buy a farm, then plant grass, then pray that water falls from the sky so the grass can grow, then you need some cows and a dairy and a truck to take it all to the supermarket via the middle men who all get more from it than you. Then they will sell it for you by the litre at less than the cost of a litre of water.
We are still better off than the dairy farmers but that is how low it could go.
The question remains to be answered, why not just bottle the water that falls from the sky and forget about the cows?
Where will it end? .......To make milk you need to be able to buy a farm, then plant grass, then pray that water falls from the sky so the grass can grow, then you need some cows and a dairy and a truck to take it all to the supermarket via the middle men who all get more from it than you. Then they will sell it for you by the litre at less than the cost of a litre of water.
We are still better off than the dairy farmers but that is how low it could go.
The question remains to be answered, why not just bottle the water that falls from the sky and forget about the cows?
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When are you guys going to realise...
We get paid what the market thinks we are worth, not what you think you are worth.......
Funny how today the guy fixing the plane takes home more money than the guy flying the plane.
The golden pineaple days are long gone.
We get paid what the market thinks we are worth, not what you think you are worth.......
Funny how today the guy fixing the plane takes home more money than the guy flying the plane.
The golden pineaple days are long gone.
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We get paid what the market thinks we are worth, not what you think you are worth.......
That said, on a global scale, the pilot market is operating just fine. There are fantastic opportunities for those willing to be part of the global market. Even if local wges stagnate, the wage differential will begin to widen & the process of pilots leaving local operators will accelerate.
Last edited by freddyKrueger; 20th Feb 2007 at 22:56.
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Where are all the soothsayers that predicted a six month lifespan for that pommy upstart, when they launched their seven daily flights between Sydney and Brisbane on August 3, 2000?
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I've got a different opinion on this one. I think the existing Virgin Blue will go more high end to introduce a more seamless product from those European and new codeshare customers that don't promote no-frills. The existing Virgin Blue will end up looking more like Virgin Atlantic.
Once the partnership stuff is all taken care of, then they can go and chase Jetstar around again.
Once the partnership stuff is all taken care of, then they can go and chase Jetstar around again.