Merged: Virgin Blue Share Price - how low can it go and for how long?
Ditto Section28- BE.
And lets not mention the value of BG's 29,000,000 shares at this point. (and still going south). That alone should be enough to get him motivated into being seen to be doing something in the area of cost saving and or increasing revenue.
I know it's the festive season and the slowness in share trading shows this however, the DJ share price could do with some good news. Its been going sideways for too long now. Maybe people are unloading at these prices because they're sick of waiting.
Looking at the Operating stats from DJ and QF (incl JQ) Virgin stack up quite well.
Perhaps it's a good opportunity to buy cheap and hope for some good news to kick the price along, then get some capital gain out of the stock.
Crystal ball anyone.........
And lets not mention the value of BG's 29,000,000 shares at this point. (and still going south). That alone should be enough to get him motivated into being seen to be doing something in the area of cost saving and or increasing revenue.
I know it's the festive season and the slowness in share trading shows this however, the DJ share price could do with some good news. Its been going sideways for too long now. Maybe people are unloading at these prices because they're sick of waiting.
Looking at the Operating stats from DJ and QF (incl JQ) Virgin stack up quite well.
Perhaps it's a good opportunity to buy cheap and hope for some good news to kick the price along, then get some capital gain out of the stock.
Crystal ball anyone.........
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Perhaps it's a good opportunity to buy cheap and hope for some good news to kick the price along, then get some capital gain out of the stock.
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Well said Section 28. Your comments re the tip of the iceberg are absolutely spot on. Mine closures and job losses are certainly going to increase as only the most efficient ones are going to survive... and we are seeing this happening right now. This is also true for the airline industry, as too Fat QF and too lean JQ and DJ will also see cut backs as this very vulnerable country of ours starts to feel the repercussions of Americas stupidity. Buy shares now ??? you would have to be a very brave man ... sit a while .. on both hands if necessary .. and watch with interest !! As section 28 has not quite finished yet.
Serious investor??
There's been much interest today with 369 trades for a total of 13.8m shares.
On a 26c share it doesn't take much to get a 10% gain in a day. Not a bad capital gain.
Risky I'll give you.
Touchy shares like this move quite quickly on news of any kind.
Just a thought.........
On a 26c share it doesn't take much to get a 10% gain in a day. Not a bad capital gain.
Risky I'll give you.
Touchy shares like this move quite quickly on news of any kind.
Just a thought.........
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VB Half year loss
So VB made approximately $113 mil in the first half of FY07/08 and then made approximately $97 mil for the whole of FY 07/08. That translates to a loss of $15 mil in the last half of the FY.
In a year when the debt burden doubled the revenue only increased by a meager 10% ish.
The soon to be released half yearly results for FY08/09 will be very interesting to read.
Of the $600 mil in the bank $215 mil is reserved capital for the funding covenants. V Australia is coming at a terrible time for the company right in the middle of the slowest passenger time of the year, both domestically and internationally.
At least the oil price has come down however I don't believe that will be enough to prevent a full year operating loss in 08/09 once VA is operating.
I hope they are able to delay aircraft 3 and 4.
I would not be expecting any improvement in the share price for some time yet. Not until the global economy is well and truly on the upswing.
In a year when the debt burden doubled the revenue only increased by a meager 10% ish.
The soon to be released half yearly results for FY08/09 will be very interesting to read.
Of the $600 mil in the bank $215 mil is reserved capital for the funding covenants. V Australia is coming at a terrible time for the company right in the middle of the slowest passenger time of the year, both domestically and internationally.
At least the oil price has come down however I don't believe that will be enough to prevent a full year operating loss in 08/09 once VA is operating.
I hope they are able to delay aircraft 3 and 4.
I would not be expecting any improvement in the share price for some time yet. Not until the global economy is well and truly on the upswing.
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So VB made approximately $113 mil in the first half of FY07/08 and then made approximately $97 mil for the whole of FY 07/08
I think we will be surprised when VB announces results soon. The $50 mil of cost cutting that has been done will help the bottom line and trimming the workforce by 5% in 2009 which is BG's worst case scenario should probably happen anyway. The company has a few middle managers that wouldn't be missed. There is $200 mil of fuel hedges that have been offset by $200 mil of currency hedges so they got a little lucky there.
At the end of the day they are still selling plenty of tickets and have increased business from the government (up 31%) and private sectors (up 14%). The finance minister reminded Federal Departments of the need to give 25% of there flying to VB. At the time this was only around 10% so there is more revenue coming. These are areas that will continue to provide revenue for the company when the rest of the general population will probably slow down as they become increasingly worried about their jobs and put holidays on the back burner.
Interesting times ahead for all. VB managers have only dealt with the good times so far. Lets see if they have what it takes to manage the company through the uncertain times.
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Continuing operations
Hi Wirgin Blew,
No, I did not forget those items. The profit and loss figures I gave were those derived from continuing operations not including one off
expenses such as those you listed.
VB did indeed make an operating loss in the last half of the financial year.
Please don't get me wrong, I do not wish ill upon VB. I have lots of friends who fly there and would hate to see it struggle or worse. I am however concerned that they may have stretched themselves a little to thin and not left very much, if anything, in the kitty.
Yes, the soon to be released results will be very informative indeed. I will be extremely happy if I am wrong, as I often am (both wrong and happy).
I don't think too much has changed in the last six months compared to the previous six months. Maybe the rate of internal cash wastage has been slowed (anymore $700 chairs in the new HQ) however the yield could not have increased much. Hopefully the $50 mil in savings is coming through. A single dollar saved goes straight to the bottom line so if they have been successful in that then perhaps a profit will be in order.
There has not been any market guidance since the last result so perhaps a profit.............................time will tell.
Cheers
Tsalta
No, I did not forget those items. The profit and loss figures I gave were those derived from continuing operations not including one off
expenses such as those you listed.VB did indeed make an operating loss in the last half of the financial year.
Please don't get me wrong, I do not wish ill upon VB. I have lots of friends who fly there and would hate to see it struggle or worse. I am however concerned that they may have stretched themselves a little to thin and not left very much, if anything, in the kitty.
Yes, the soon to be released results will be very informative indeed. I will be extremely happy if I am wrong, as I often am (both wrong and happy).
I don't think too much has changed in the last six months compared to the previous six months. Maybe the rate of internal cash wastage has been slowed (anymore $700 chairs in the new HQ) however the yield could not have increased much. Hopefully the $50 mil in savings is coming through. A single dollar saved goes straight to the bottom line so if they have been successful in that then perhaps a profit will be in order.
There has not been any market guidance since the last result so perhaps a profit.............................time will tell.
Cheers
Tsalta
Last edited by tsalta; 23rd Dec 2008 at 06:21. Reason: spelling correction
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There is $200 mil of fuel hedges that have been offset by $200 mil of currency hedges so they got a little lucky there.
can someone explain how a currency hedge can offset a fuel hedge??.
i mean if you are using the + $$ from your currency hedge to offset/justify your - mtm on your fuel hedge, what are you going to use to cover your currency exposure that your original currency hedge was put in place to protect??
can someone explain how a currency hedge can offset a fuel hedge??.
i mean if you are using the + $$ from your currency hedge to offset/justify your - mtm on your fuel hedge, what are you going to use to cover your currency exposure that your original currency hedge was put in place to protect??
Last edited by im sparticus; 23rd Dec 2008 at 11:13.
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Hey Sparticus,
A hedge, be it fuel, currency or corn etc, is just locking in a future price. If the price moves against you, then you lose. If the price moves for you, then you win.
VB bet that fuel would stay high so they hedged. They pre purchased fuel at $100 per barrel (I'm not privy to the exact figure so this number is just for the example) however, now fuel is $60 a barrel. So they lose $40 per barrel. Their total hedging exposure is 200 mil.
Where the currency hedge came from I am not sure. Perhaps there was financing arranged in US dollars and then the Aussie dollar plummetted giving them a windfall. Maybe it materialised from the purchase of the e-jets. I'm not sure.
Regardless, Wirgin Blew indicated VB got lucky that their 200 mill loss on fuel hedging was covered by their 200 mill dollar gain on currency hedging.
tsalta
(part time options trader)
A hedge, be it fuel, currency or corn etc, is just locking in a future price. If the price moves against you, then you lose. If the price moves for you, then you win.
VB bet that fuel would stay high so they hedged. They pre purchased fuel at $100 per barrel (I'm not privy to the exact figure so this number is just for the example) however, now fuel is $60 a barrel. So they lose $40 per barrel. Their total hedging exposure is 200 mil.
Where the currency hedge came from I am not sure. Perhaps there was financing arranged in US dollars and then the Aussie dollar plummetted giving them a windfall. Maybe it materialised from the purchase of the e-jets. I'm not sure.
Regardless, Wirgin Blew indicated VB got lucky that their 200 mill loss on fuel hedging was covered by their 200 mill dollar gain on currency hedging.
tsalta
(part time options trader)
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so whats going to cover their planned future spending in USD that now has to be done @ 60something cents is what im saying?
the currency hedge was there for a reason and it wasnt to speculate on the USD/AUD for profit.
the currency hedge was there for a reason and it wasnt to speculate on the USD/AUD for profit.
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VBA has a Debt to Equity Ratio of 160+%
I'm no been counter rescue 1, but I think VB's cash reserves are the only thing stopping the "insolvent" scenerio at the moment?
Just how much of those reserves are pumped into an as yet to fly International carrier will be interesting to say the least
!
Just how much of those reserves are pumped into an as yet to fly International carrier will be interesting to say the least
!
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Got my info from Chairmans Announcement - ASX website re the hedging.
As for the debt to equity ratios not sure where you got the 160% from but if you take a look at VB's annual report the ratio is 66% @ 30SEP08. As rescue 1 said they would be shut down if that was the true ratio.
I don't believe they could borrow any more money as it is. It is also highly unlikely that they could raise any money from the stockmarket either.
The only way forward for the company is to continue to keep VB, PB and Poly B profitable. Do everything possible to make sure VAus works. Make sure Delta/NWA want to continue with some sort of interline/loyalty program deal, perhaps even by joining Skyteam even though VA has pulled out of it.
ICAO has said that world numbers in 2008 were only up 1.8% on 2007 and they expect only a 0.9% increase in 2009. However they are more optimistic in 2010 forecasting a 5.1% rise.
As for the debt to equity ratios not sure where you got the 160% from but if you take a look at VB's annual report the ratio is 66% @ 30SEP08. As rescue 1 said they would be shut down if that was the true ratio.
I don't believe they could borrow any more money as it is. It is also highly unlikely that they could raise any money from the stockmarket either.
The only way forward for the company is to continue to keep VB, PB and Poly B profitable. Do everything possible to make sure VAus works. Make sure Delta/NWA want to continue with some sort of interline/loyalty program deal, perhaps even by joining Skyteam even though VA has pulled out of it.
ICAO has said that world numbers in 2008 were only up 1.8% on 2007 and they expect only a 0.9% increase in 2009. However they are more optimistic in 2010 forecasting a 5.1% rise.
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You have just won the idiots post of the year.....
What is really funny is when some clown makes a statement like the one above and the person who they were slagging off at is actually correct, or at least, more correct than the slagging clown.
Skystar, I think you have just won the idiots post of the year with that call.
Virgin Blue, does not have a debt to equity ratio of 66%. It does have a debt to equity ratio of somewhere in the vicinity of the 160% previously indicated.
Financial ratios lesson 1. The debt to equity ratio is the long term debt / shareholder equity. It is often confused with assets to liabilities but is a completely different measure.
The 66% quoted by VB in their annual report is a pseudo debt to equity ration where they have calculated Adjusted Net Debt/Adjusted Net Debt Plus Equity. By including the adjusted net Debt plus equity it is essentially and assets/liabilities ratio, NOT debt/equity.
I haven't calculated the actual figure but it is for sure in the range o2 quoted previously.
The debt/equity ratio has nothing to do with solvency which has been confused a couple of times here.
regards
tsalta
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comsec 160.6 %
Debt/Equity
Ratio of interest-bearing debt to shareholders equity, as of the last annual report. Shareholders equity is based on the book value of equity, not the current market value of a companys stock.
Debt/Equity
Ratio of interest-bearing debt to shareholders equity, as of the last annual report. Shareholders equity is based on the book value of equity, not the current market value of a companys stock.
Correct me if I am wrong but a hedge does not bind the company to purchase fuel at $100 a barrel. They pay a fee (purchase an option) to have the option to purchase fuel at eg $100/ barrel. If fuel goes up to $180 / barrel then they exercise the option and laugh all the way to the bank saving $80/barrel. If fuel goes down to $35/barrel as it has then they do not exercise the option, lose the small fee they paid for that option, and buy at market rate of $35/barrel.
Same with the currency hedge, so hedging is a very smart thing to do, much like an insurance policy. So my summation would be VB have 2 very good Ace's in the hole with a currency hedge of 200mil at 95c and fuel hedges not being exercised and just buying fuel at market rates. I would also suggest some smart person in VB has been hedging fuel all the way down so that when it does go back up they ride that hedge at say $30/barrel.
So VB really has no penalty whatsoever for its hedges just plenty of pluses in exchange for a premium to buy the hedge in the first place!
I would also suggest VB's figures will come out better than expected (bar the V Aus costs) as fuel has fallen from July - 154AUD/barrel to now 54AUD/barrel. BG did say every $1 in the barrel costs 1 mil , so effectively 100mil has been gained. Hopefully this has not been squandered elsewhere. Not sure of Sing Jet prices but they will be fairly relative.
Same with the currency hedge, so hedging is a very smart thing to do, much like an insurance policy. So my summation would be VB have 2 very good Ace's in the hole with a currency hedge of 200mil at 95c and fuel hedges not being exercised and just buying fuel at market rates. I would also suggest some smart person in VB has been hedging fuel all the way down so that when it does go back up they ride that hedge at say $30/barrel.
So VB really has no penalty whatsoever for its hedges just plenty of pluses in exchange for a premium to buy the hedge in the first place!
I would also suggest VB's figures will come out better than expected (bar the V Aus costs) as fuel has fallen from July - 154AUD/barrel to now 54AUD/barrel. BG did say every $1 in the barrel costs 1 mil , so effectively 100mil has been gained. Hopefully this has not been squandered elsewhere. Not sure of Sing Jet prices but they will be fairly relative.