Toll grits teeth as VB shares head south
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Tasdevil
The share price has very little to do with the day to day going's on. In DJ's case there are only really 3 significant share holders being Toll, Branson and Godfrey who feel the pinch. I think between them they have around 90%.So that does not leave too much left for mum & dad investors to get burnt unlike institutions such as Telstra , NAB etc. It will however affect them when it comes to their expansion plans .
The share price has very little to do with the day to day going's on. In DJ's case there are only really 3 significant share holders being Toll, Branson and Godfrey who feel the pinch. I think between them they have around 90%.So that does not leave too much left for mum & dad investors to get burnt unlike institutions such as Telstra , NAB etc. It will however affect them when it comes to their expansion plans .
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A more rational view
I just noticed this item by Ross Greenwood.
money.ninemsn.com.au/article.aspx?id=575329
It makes sense to me. I think it also could be applied to Qantas or Regional Express or the Kiwis. You start off by asking how realistically is fuel going to be where it is for so many years while nothing else changes? If the projections were to come true, everyone would go broke. If anyone puts up the fares between Sydney and Melbourne by $30 (or about one tenth more than I paid a few months ago) it would be about half what I paid to park for the day and less than half the cost of driving there based on fuel alone, although the numbers change a bit if I use Canberra but there are fewer flights.
Why did such a bull**** story get everyone so excited.
money.ninemsn.com.au/article.aspx?id=575329
It makes sense to me. I think it also could be applied to Qantas or Regional Express or the Kiwis. You start off by asking how realistically is fuel going to be where it is for so many years while nothing else changes? If the projections were to come true, everyone would go broke. If anyone puts up the fares between Sydney and Melbourne by $30 (or about one tenth more than I paid a few months ago) it would be about half what I paid to park for the day and less than half the cost of driving there based on fuel alone, although the numbers change a bit if I use Canberra but there are fewer flights.
Why did such a bull**** story get everyone so excited.
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Tasdevil
The share price has very little to do with the day to day going's on. In DJ's case there are only really 3 significant share holders being Toll, Branson and Godfrey who feel the pinch.
The share price has very little to do with the day to day going's on. In DJ's case there are only really 3 significant share holders being Toll, Branson and Godfrey who feel the pinch.
Yeah, all I am saying in general that no body likes to see the share price of any company that low. It still hurts whether its mum & dad investors or large shareholders where the share price is low etc. Boards starting getting itchy calculators working out how to bail and take something away with them.
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BG has taken DJ too far away from the LCC model for the company to survive.
Sadly DJ has now become the AN of today and Tiger is the new DJ
Seems like 2001 revisited.......
Sadly DJ has now become the AN of today and Tiger is the new DJ
Seems like 2001 revisited.......
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Why did such a bull**** story get everyone so excited?
Granted, Ross Greenwood's article seems to provide the most rational and balanced perspective for the day, but unfortunately it always comes down to perception rather than reality - whether it be shareholder perception, travelling public perception, or whoever. If the perception that it's all going pear-shaped gains enough momentum, well it's only a matter of time before that perception indeed becomes the reality so many people fear. I really hope it doesn't come to that, as I don't relish the notion of having to dust off that CV again.
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Some posts on this topic, especially those of Heavy Cargo’s gloating over the possible demise of the jobs of fellow pilots at Virgin Blue are particularly distasteful. If fuel prices stay at present levels impacts are going to be negative on all airlines as yesterday’s announcement of cutbacks on services by Qantas and Jetstar attest. If fuel prices rise to $200 a barrel there will be no ‘koalas’ in the aviation industry, Heavy Cargo included. He should be very careful for what he wishes lest it come true.
Last edited by Thylacine; 6th Jun 2008 at 05:29. Reason: grammar
0959 [Dow Jones] Virgin Blue (VBA.AU) expected to announce measures to combat high fuel prices early next week after a four-week strategic review, with CEO Brett Godfrey telling The Australian newspaper that a range of options, including capacity reductions, and redeployment of aircraft onto more profitable routes, will be considered, alongside fare reviews, after JPMorgan analysts said airline faced potential collapse if jet fuel prices remain high and recommended immediate 10% hike to fares. Godfrey reportedly peeved that "overly-simplistic" report didn't consider supply-sided measures, or potential value that could be unlocked in loyalty program or value of its fleet, which suggests VBA may be looking to sell or spin-off some ancillary parts of business, as Qantas (QAN.AU) is also planning to do with its frequent flyer program by the end of this year. (WEL)
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I find it interesting that, in the papers this week, VB have been warned by professional analysts that they are in trouble, yet Godfrey was almost crowing one or two weeks ago about how well they are positioned.
Remember him pontificating in The Australian about who will survive and who won't, about being savy at picking up "white Tails" . He said that in their "model" they had done calculations on fuel at $80 a barrel . He said they had even looked at fuel at $100 a drum.
Well, it's north of $125 lately. Fat lot of good modelling at $80!
Rather a bit like Bush and the price of fuel in the US, isn't it?
How a few years at the helm of a gift horse will make you at top flight airline executive. So top flight that you don't even need to take notice of the professionals.
I remember when Godfrey was accountant to Rob Sherrard when he was selling secondhand light aircraft. Don't remember either of them running any airline.
Bet no one else can either.
What happened to Rob? Anyone know what and why?
What did VB float at and what is it today? mmmmmm.
What was the true value of the company at the float?
Remember him pontificating in The Australian about who will survive and who won't, about being savy at picking up "white Tails" . He said that in their "model" they had done calculations on fuel at $80 a barrel . He said they had even looked at fuel at $100 a drum.
Well, it's north of $125 lately. Fat lot of good modelling at $80!
Rather a bit like Bush and the price of fuel in the US, isn't it?
How a few years at the helm of a gift horse will make you at top flight airline executive. So top flight that you don't even need to take notice of the professionals.
I remember when Godfrey was accountant to Rob Sherrard when he was selling secondhand light aircraft. Don't remember either of them running any airline.
Bet no one else can either.
What happened to Rob? Anyone know what and why?
What did VB float at and what is it today? mmmmmm.
What was the true value of the company at the float?
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All the projections in the world from groups outside the core of a buisness dont hold much weight in the scheme of things if they dont know or hold all the relevant buisness information, they maybe right or they may be way off the mark, its a wait n see scenario.
The aquisition of a new type( Embraers) and set up of V Australia arent going to do the bottom line any favours ..
The aquisition of a new type( Embraers) and set up of V Australia arent going to do the bottom line any favours ..
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Announcement
I believe that BG has told all team members that there is a major announcement coming next week which has come from yesterdays board meeting to address the current problems...the announcement is expected within a week to the ASX...what could possibly be going on? any ideas?
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Before anyone else, besides Heavy Cargo and International Trader, get too excited over the prospect of another airline collapse, they should first read Ross Greenwood’s piece published online in 'Money' http://money.ninemsn.com.au/article.aspx?id=575329
on J P Morgan's analysis of Virgin Blue's financial prospects in view of current and forecast fuel prices and the impacts on its bottom line if not addressed with appropriate fare increases.
on J P Morgan's analysis of Virgin Blue's financial prospects in view of current and forecast fuel prices and the impacts on its bottom line if not addressed with appropriate fare increases.
Last edited by Thylacine; 6th Jun 2008 at 09:01.
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There's a REALLY complex game going on here.
It is NOT in Qantas' interest to have VB go under - it would rather have 'the devil it knows' in VB - and not face the prospect of being a monopoly airlne [for all intents and purposes] - with subsequent detailed scrutiny by a host of government regulatory and competition watchdogs.
It IS in Qantas' interest to have the smaller competitor talk up the gloom and doom - take the heat from Joe Public - raise their prices - and allow Qantas to do likewise "in the interests of off-setting cost pressures.
The "behind the scenes" sweetheart deals have been going on for some time now - with markets carved up between QF, J* and VB [look at the Tassie services] - so don't believe that some sort of 'silent handshake' deals haven't been going on re fuel prices.
If Qantas want to play tough and want to chance their arm with a monopoly - with all that entails - they could put VB out of business in 2 weeks.
It is NOT in Qantas' interest to have VB go under - it would rather have 'the devil it knows' in VB - and not face the prospect of being a monopoly airlne [for all intents and purposes] - with subsequent detailed scrutiny by a host of government regulatory and competition watchdogs.
It IS in Qantas' interest to have the smaller competitor talk up the gloom and doom - take the heat from Joe Public - raise their prices - and allow Qantas to do likewise "in the interests of off-setting cost pressures.
The "behind the scenes" sweetheart deals have been going on for some time now - with markets carved up between QF, J* and VB [look at the Tassie services] - so don't believe that some sort of 'silent handshake' deals haven't been going on re fuel prices.
If Qantas want to play tough and want to chance their arm with a monopoly - with all that entails - they could put VB out of business in 2 weeks.
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Wellconcerned
I think most of the going's on are in your head. Conspiracies sound great but I think you give them too much credit .As the saying goes "despite managements best efforts they continue to operate".
And possibly DJ could dampen jet stars parade just as quick. As QF may not be as willing to prop them in order to conserve their own cash flow with the current oil spike.
I think most of the going's on are in your head. Conspiracies sound great but I think you give them too much credit .As the saying goes "despite managements best efforts they continue to operate".
And possibly DJ could dampen jet stars parade just as quick. As QF may not be as willing to prop them in order to conserve their own cash flow with the current oil spike.
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sorry Sir Richard has been a bit of a liability rather than a white knight - hence the minders in major deflection mode during the last Oz visit...... it's the bottom of the ninth and VB needs to desperately decide where it needs to be.
Toll has decided somewhere else and if I were a VB senior exec I'd be seriously learning a few words of german and considering boning up on the german business protocols.
Toll has decided somewhere else and if I were a VB senior exec I'd be seriously learning a few words of german and considering boning up on the german business protocols.
Qantas could have put AN out of business but didn't (AN put itself out of business).
BUT QF is now the defacto Ansett. It has higher overheads and a far too complex a fleet. A disenfrancised staff and rotten reputation amongst travellers.
VB, also a listed company, has lower overheads and (fuel hedging notwithstanding), therefore a greater ability to fend off competition, although a greater exposure to higher yield J Class traffic would be desirable...happy to be shown the error of this logic.
Just like AN 7 years ago, I think it is QF that should be scared now.