Merged: Virgin Blue Share Price - how low can it go and for how long?
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Tsalta, et al,
From a practical point of view some pilots have already started looking overseas to contracts, etc. Not a mass exodus yet but some guys are keeping their options open. The company has decided that 65 pilot positions redundant on the 737 should see them through at least the next 12 months, assuming of course that the economic situation doesn't deteriorate massively from where it is (they are trying for no involuntary redundancies by the way, most will be displaced to the e-jet, V-aus, part time, LWOP, etc). I'm sorry if I sound Naive, but I'm genuinly interested to hear from someone with a bit of business nous;
1) If the business situation is so bad at VB why didn't they go for a bigger redundancy number than 65? If they want to they have over 800 pilots to choose from and countless support staff.
2) As previously touted on this website, would VB not be ripe for a takeover? It has large domestic market share, bottoming share price, reasonably low cost basing and now has approval to conduct operations on the lucrative Pacific run. I know money isn't exactly in abundance at the moment, especially amongst Airlines but surely this has to be considered.
I too have a vested interest in VB's success but I'm not going to wait forever.........
From a practical point of view some pilots have already started looking overseas to contracts, etc. Not a mass exodus yet but some guys are keeping their options open. The company has decided that 65 pilot positions redundant on the 737 should see them through at least the next 12 months, assuming of course that the economic situation doesn't deteriorate massively from where it is (they are trying for no involuntary redundancies by the way, most will be displaced to the e-jet, V-aus, part time, LWOP, etc). I'm sorry if I sound Naive, but I'm genuinly interested to hear from someone with a bit of business nous;
1) If the business situation is so bad at VB why didn't they go for a bigger redundancy number than 65? If they want to they have over 800 pilots to choose from and countless support staff.
2) As previously touted on this website, would VB not be ripe for a takeover? It has large domestic market share, bottoming share price, reasonably low cost basing and now has approval to conduct operations on the lucrative Pacific run. I know money isn't exactly in abundance at the moment, especially amongst Airlines but surely this has to be considered.
I too have a vested interest in VB's success but I'm not going to wait forever.........
Last edited by biton; 3rd Mar 2009 at 21:33.
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There are plenty of other Aussie assets ripe for the takeover. Unfortunately VB doesn't appear to to be one of them. As previous posters have suggested buying into a company were someone holds a 25% share would make things interesting when deciding the future of the airline, especially if he didn't agree. Let alone the way airlines are going worldwide. tsalta is focusing on VB as his target for some reason. Perhaps you could look over the QF books and give some of your insight on that thread so people didn't view you as just another VB basher.
VB will only have outgoings over the next 10 years as they have to start replacing aircraft. They are commited to 6 more Embraers + 5 more 777's + 15-20 more 737's. All of which would be fine if the economy recovers quickly but that is a big if. The last time the USA stock market went down this far percentage wise was between 1929-1932. Even though Australia seems to be going ok on its own at some stage the rest of the world will drag us down into the shizen.
VB will only have outgoings over the next 10 years as they have to start replacing aircraft. They are commited to 6 more Embraers + 5 more 777's + 15-20 more 737's. All of which would be fine if the economy recovers quickly but that is a big if. The last time the USA stock market went down this far percentage wise was between 1929-1932. Even though Australia seems to be going ok on its own at some stage the rest of the world will drag us down into the shizen.
Bottums Up
I don't know if I've read all of tsalta's posts on the subject and I'm not about to re-read all 26 pages but from what I have read I don't get the impression that tsalta's wishing VB ill, just asking questions.
A colleague of mine was roundly criticised by many some years ago, and vilified as being stupid. Turns out he was correct, even though what he was saying wasn't well received, and most of the critics were off the mark. Caution not to shoot the messenger just because you don't like the message, seems prudent.
A colleague of mine was roundly criticised by many some years ago, and vilified as being stupid. Turns out he was correct, even though what he was saying wasn't well received, and most of the critics were off the mark. Caution not to shoot the messenger just because you don't like the message, seems prudent.
biton - re q1; Vb is walking a tightrope at the moment of controlling cost vs losing market share. If they pull back too much they stand to gift passengers and profit to tiger (aus domestic) & jetstar (nz ops). They also have a lot of debt and leasing costs which need to be covered which requires them to maintain a certain level of operations and cash flow. Also on the routes at which they have chosen to compete with QF (LA and Sth Africa) i don't think they'll get another chance as good as what they've got at the moment, GFC aside. QF is well into the final phase of restructuring and in a years time once all the reliability issues are forgotten about will be very tough to compete against, especially at business travel level. The last few BTRE stats show QFs OTP and cancellation rate both heading in the right direction as opposed to VB which was on the slide.
re q2; Wirgin is pretty much on the ball, the virgin group have proven to be a very stubborn business partner. Untill they relinquish the 25% holding most investors will stay away, this is probly the main reason TOLL dumped its stake. Secondly no one would fathom buying an airline in the current economic environment. And finally potential buyers like SQ have already invested heavily in their own LCC (tiger) which is waiting eagerly for VB to start reducing schedules which they will quickly fill. Why buy into a fleet of leased older 737 when you already have orders for 30 brand new a320 over the next few years.
re q2; Wirgin is pretty much on the ball, the virgin group have proven to be a very stubborn business partner. Untill they relinquish the 25% holding most investors will stay away, this is probly the main reason TOLL dumped its stake. Secondly no one would fathom buying an airline in the current economic environment. And finally potential buyers like SQ have already invested heavily in their own LCC (tiger) which is waiting eagerly for VB to start reducing schedules which they will quickly fill. Why buy into a fleet of leased older 737 when you already have orders for 30 brand new a320 over the next few years.
Last edited by 43Inches; 4th Mar 2009 at 01:16.
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Is this the same Tiger that was losing money when times were good? If they are waiting for VB to collapse as their business plan then they are in for an interesting time. Tiger have the cheapest cost base but at this stage have made little to no impact within Oz. THe people that I know have bought tickets and flown with them rate them below Jetstar which is not a good thing.
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Tiger won't threaten VB's Business till they come into NSW which they seem to be avoiding at all costs.(seems a bit strange considering its the most populated state)
The dog
The dog
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Hi wirgin blew,
I would be upset to be considered a 'VB Airline' basher, however I am happy to be labeled a 'VB Management' basher.
What has really annoyed me with VB is how they have portrayed their position in the half yearly report. You can't blame them for being a victim of the current financial climate. So many companies got it wrong that there should be no ill will for that. However, there is no excuse for trying to delude themselves and investors into portraying a better picture than actually exists.
Eating your greens is a far better way to go than what they are doing.
I have compared QF's reports to VB's. There are stark differences between the two, mainly, one is profitable the other is not. QF are doing OK, but are definitely not the healthiest company on the exchange. As a QF employee, it would be impossible to not be biased but I am quite concerned about the health of the company. I would however, be more concerned if I were flying for VB.
In the next day or two I'll have a refresh and throw my 2 cents in on the QF thread.
cheers
tsalta
I would be upset to be considered a 'VB Airline' basher, however I am happy to be labeled a 'VB Management' basher.
What has really annoyed me with VB is how they have portrayed their position in the half yearly report. You can't blame them for being a victim of the current financial climate. So many companies got it wrong that there should be no ill will for that. However, there is no excuse for trying to delude themselves and investors into portraying a better picture than actually exists.
Eating your greens is a far better way to go than what they are doing.
I have compared QF's reports to VB's. There are stark differences between the two, mainly, one is profitable the other is not. QF are doing OK, but are definitely not the healthiest company on the exchange. As a QF employee, it would be impossible to not be biased but I am quite concerned about the health of the company. I would however, be more concerned if I were flying for VB.
In the next day or two I'll have a refresh and throw my 2 cents in on the QF thread.
cheers
tsalta
Last edited by tsalta; 4th Mar 2009 at 01:54. Reason: spelling
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Best guess on how they got 60m "underlying profit" (vs the 1.1m operating profit) is by adding back the forex losses? (55m or so)
Which is a bit like saying "well, if the dollar was worth more, we would have made more money!"
Which is a bit like saying "well, if the dollar was worth more, we would have made more money!"
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one late-2008 vintage aircraft and three new Boeing 737-800 aircraft.
Monday 2 March, 2009: Virgin Blue has closed a sale-and-leaseback deal with BOC Aviation for one late-2008 vintage aircraft and three new Boeing 737-800 aircraft. The aircraft will be leased for an average lease term of 10 years, with delivery of the three new aircraft scheduled for the fourth quarter of this year.
Virgin Blue Chief Executive, Brett Godfrey, said: “The financing of these aircraft amidst the challenging economic environment is an affirmation of Virgin Blue’s strong reputation in the market. We look forward to a long-lasting business relationship with BOC Aviation.”
Virgin Blue, Australia’s second largest airline with a 32% market share, will use the aircraft for domestic services and international flying in the Pacific region.
Steven Townend, Chief Commercial Officer and Deputy Managing Director of BOC Aviation, said the Company is pleased to increase its presence in Australasia with this transaction.
“Virgin Blue is an established name in the Australian market for business and leisure travel,” he said. “We continue to deliver on our expansion plans and are happy that the airline can partner us as we grow our fleet.”
BOC Aviation is the leading Asia-based aircraft leasing company with a portfolio of 104 modern aircraft operated by airlines worldwide. In addition, the company has 70 aircraft on firm order for delivery through to 2013. BOC Aviation has one of the youngest fleets in the industry with an average aircraft age of less than four years.
BOC Aviation is 100% owned by Bank of China, the third largest bank in the world*.
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One that was delivered in late 2008 to the company, I dunno, VUN, VUO or one in that ballpark, the other 3 airframes mentioned are yet to be delivered.
The sale and leaseback that VBA are conducting can be paralleled to you going to the pawn broker when you need cash. They are releasing assets at market value for cash flow, better now then never.
Last edited by KABOY; 5th Mar 2009 at 03:46.
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The sale and leaseback that VBA are conducting can be paralleled to you going to the pawn broker when you need cash. The are releasing assets at market value for cash flow, better now then never.
Don't know about AirNZ and SQ but wouldn't QF have had to disclose to ASX if they had done a similar deal. Can not find any reference to it in the QF asx announcements for the last six months. I can believe AirNZ may have as they have hit financial difficulties of late.
I think its actually closer to selling your house then paying the new owner rent to live in it.
I think its actually closer to selling your house then paying the new owner rent to live in it.
QF were about to do it had the private equity deal got up! By receiving cash for assets they are avoiding going back to the banks who would have knocked it on the head.
A further share offering was also ruled out, make of it what you want but to me it is one of the last options that was left for cash raising.
A further share offering was also ruled out, make of it what you want but to me it is one of the last options that was left for cash raising.
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Didn't Qantas raise $500Million in a share placement late last year? If they need more cash they can sell and lease back the A380s if they want . If any bank will touch them (the aircraft that is ) 
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coaldemon : "Didn't Qantas raise $500Million in a share placement late last year? If they need more cash they can sell and lease back the A380s if they want . If any bank will touch them (the aircraft that is )"
No, they announced it late last year, this is it.
No, they announced it late last year, this is it.
Tankengine. My understanding is the QF A380's are leased, not owned.
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The VB share price is down today. The shares have lost 85+% of their value in the past 12 months. Market capitalisation is not much over $200M so they are looking vulnerable in the present financial outlook.
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The VB share price is down today. The shares have lost 85+% of their value in the past 12 months. Market capitalisation is not much over $200M so they are looking vulnerable in the present financial outlook.