Merged: Virgin Blue Share Price - how low can it go and for how long?
Join Date: Aug 2005
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VB are in deep ****. I read where they have mortgaged an aircraft to raise cash. The interesting thing is the timing of the expansion of the 49% SQ owned Tiger Airways. SQ, as history tells, us were very keen to buy Ansett ( when there was something there to buy)! The short of the long was that Q.F successfully lobbied the Federal government to prevent this. Then it was all over red rover for the AN group.
There is no doubt in my mind that SQ is going to spend a bit of dough to start a bit of a price war putting VB under more pressure, either bankrupting them or putting themselves in a position that they have to be sold to inject capital and survive. By the look of it that won't take much.
VB have just committed to a very expensive trans Pacific experiment that is unlikely to yield any significant profit for a good while as NZ, QF will go hard to protect market share. I think it was DELTA? who indicated they would also join in the party.
The rights to fly trans Pacific from Australia's eastern seaboard is the jewel in the crown for SQ. They have wanted it for years and have the capital ,patience and smarts to see the way to get it is via Tiger. Virgin is vulnerable.
Virgin was handed 50% of the market on a platter when AN when tits up.
Since then it would have been hard not to make money. Now a real crisis is being faced and I really doubt that it has the management accumen to steer it successfully out of it.
As a survivor of the Ansett collapse I hope for the staff's sake that all they will have to endure is a change of ownership.
There is no doubt in my mind that SQ is going to spend a bit of dough to start a bit of a price war putting VB under more pressure, either bankrupting them or putting themselves in a position that they have to be sold to inject capital and survive. By the look of it that won't take much.
VB have just committed to a very expensive trans Pacific experiment that is unlikely to yield any significant profit for a good while as NZ, QF will go hard to protect market share. I think it was DELTA? who indicated they would also join in the party.
The rights to fly trans Pacific from Australia's eastern seaboard is the jewel in the crown for SQ. They have wanted it for years and have the capital ,patience and smarts to see the way to get it is via Tiger. Virgin is vulnerable.
Virgin was handed 50% of the market on a platter when AN when tits up.
Since then it would have been hard not to make money. Now a real crisis is being faced and I really doubt that it has the management accumen to steer it successfully out of it.
As a survivor of the Ansett collapse I hope for the staff's sake that all they will have to endure is a change of ownership.
Priapism...........I have to agree with you, what a fcuk up.
This indicates the real capabilities of the senior mngmnt team at VB.
I remember thinking how on earth could Ansett go broke with a virtual duopoly. This VB blunder plainly shows that bad decisions sometimes compound themselves.
I feel dreadfully sorry for the employees working at VB who will pay the ultimate price for senior mngmnt inadequacies, yet the same mngmnt walk away with very well lined pockets.
This indicates the real capabilities of the senior mngmnt team at VB.
I remember thinking how on earth could Ansett go broke with a virtual duopoly. This VB blunder plainly shows that bad decisions sometimes compound themselves.
I feel dreadfully sorry for the employees working at VB who will pay the ultimate price for senior mngmnt inadequacies, yet the same mngmnt walk away with very well lined pockets.
Join Date: Oct 2004
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The ASX is at its lowest point in 5 years. Bigger companies than VBA are doing it tough.
The next 12 months will be ugly for the world economy not just a small airline with 31% of the Australian domestic market.
The next 12 months will be ugly for the world economy not just a small airline with 31% of the Australian domestic market.
Agreed Wirgin but for instance 5/3/09 Vb share price dropped a further 4.7% whereas Qantas's rose by 4.9%.
Whilst not trumpeting the benefits of Q's business model, no one seems to see value in VB right now!
Whilst not trumpeting the benefits of Q's business model, no one seems to see value in VB right now!
There is little value when they are raising cash through asset sales which is only used to fund the current operation, not expanding it. Traditionally this has been used to fund expansion or fund dividends to shareholders when times are good!
This money is just being utilised to keep V OZ and VB flying in a dire situation globally, they didn't budget sufficiently for the Pacific.
This money is just being utilised to keep V OZ and VB flying in a dire situation globally, they didn't budget sufficiently for the Pacific.
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The ASX is closing the lowest it has been in years... Billions are being wipped off companies, including everyone's super...
Just because they sold & leaseback three B737-800's doesnt give a hoot that it means that they need the cash because they are in 'dire straight' Everyone does it... Qantas with A330's, Virgin Blue with 737's and most European companies have done it.. Its common practise... as long as they put the funds to good use...
While it is sad to see that they posted a loss thanks to the set up with V Australia but... isnt like everyone posting losses, writing off huge debt?
Just because they sold & leaseback three B737-800's doesnt give a hoot that it means that they need the cash because they are in 'dire straight' Everyone does it... Qantas with A330's, Virgin Blue with 737's and most European companies have done it.. Its common practise... as long as they put the funds to good use...
While it is sad to see that they posted a loss thanks to the set up with V Australia but... isnt like everyone posting losses, writing off huge debt?
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While it is sad to see that they posted a loss thanks to the set up with V Australia but... isnt like everyone posting losses, writing off huge debt? Today 15:06
This should be, and no doubt is, a real concern for VBA.
I'm not blowing smoke up QF, just putting out there what is widely known.
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I think Qantas had better pray that VB survive because if Singapore increase their presence here, whether it be through Tiger or not, then Qantas is going to have a real battle on it's hands.
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Qantas is one of the few airlines that are posting profits, whereas most other airlines are posting losses... look into Asia / America / Europe, low cost airlines are posting losses.
Yes it 'does' matter what other companies are doing, most of them the market value is sliding downwards, thanks to the 'economic' crisis.
Qantas to compare with VBA, is huge, operations are spread around to regional / domestic & international... They are the only ones with a good brand of business seats etc, have got already fully depreciable assets etc...
As I said, its a concern that VB posted a loss... the writing is not on the wall for VBA for a while...
If next financial performance they post even a bigger loss than yes, the ****e is going to get bigger and bigger.
Yes it 'does' matter what other companies are doing, most of them the market value is sliding downwards, thanks to the 'economic' crisis.
Qantas to compare with VBA, is huge, operations are spread around to regional / domestic & international... They are the only ones with a good brand of business seats etc, have got already fully depreciable assets etc...
As I said, its a concern that VB posted a loss... the writing is not on the wall for VBA for a while...
If next financial performance they post even a bigger loss than yes, the ****e is going to get bigger and bigger.
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Yes it 'does' matter what other companies are doing
VB's only real competition is making a profit and that's what really matters...
VB don't even have 20c left per share and if this keeps going the banks and other creditors be asking questions very soon if not already....
biton is right...SIA will be looking at this very closely.The question is if VB is close to going under will the Gov step in with a bail out or let SIA take it over....
I know which one QF would prefer....
The Gov would be reluctant to give a bail out because as with the US once you bail out one company there are literally dozens more knocking on the door asking for the same kind of help...
Personally,I hope VB can trade out of this but it does look grim
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Does anyone know how you would go about de-listing a company? It is something that hasn't been discussed. Current market cap at around $216 million. Of that about 30% aren't traded as they are owned by Virgin Group (SRB) and BG.
Perhaps the BOC are interested? They were happy to buy and lease back 737's last week. Perhaps they will be willing to buy the company off the market and lease it back to BG?
Perhaps the BOC are interested? They were happy to buy and lease back 737's last week. Perhaps they will be willing to buy the company off the market and lease it back to BG?
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Kaboy
I think you have hit the nail on the head.Eventually that option will have all been used, then without out major business plan change the piggy bank become's EMPTY. Not that I would like to see Virgin bust but they better do something fast to turn around the rapid rate of cash burn.
The Dog
I think you have hit the nail on the head.Eventually that option will have all been used, then without out major business plan change the piggy bank become's EMPTY. Not that I would like to see Virgin bust but they better do something fast to turn around the rapid rate of cash burn.
The Dog
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Far out. My plan to buy control of VBA at 0.05 cents is starting to look good again. Oh, and QAN at 20 cents.
In all seriousness, just about everything on the ASX is heading toward penny dreadful status, which is where the really lucky or clever always make their money in a stock market meltdown.
In all seriousness, just about everything on the ASX is heading toward penny dreadful status, which is where the really lucky or clever always make their money in a stock market meltdown.
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QF better hope that DJ goes under.
QFs biggest f**k up was not geting 777s. If (and thats a big if!) DJ get through this, when the world economies pick up, DJ will stick it to QF.
In a world of uncertainty, and high oil prices the 777 is the machine to have.
QFs biggest f**k up was not geting 777s. If (and thats a big if!) DJ get through this, when the world economies pick up, DJ will stick it to QF.
In a world of uncertainty, and high oil prices the 777 is the machine to have.
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Cash is by far the biggest issue for Virgin Blue. Sale and lease back may provide temporary protection, but when the business is trading at a loss, all that does is prolong the agony and further weaken the balance sheet in terms of equity. While the current capitalisation of ~ $ 200 m is not helpful, it roughly matches the trend of the market.
The balance between capacity reduction, break even, cash management, is extremely difficult to manage effectively and will be the ultimate test of the VB management team.
Considering the current trading climate and the latest financials, I seriously doubt whether VB on its own has the capacity to trade through this awful period.
Hope I'm proved wrong.
The balance between capacity reduction, break even, cash management, is extremely difficult to manage effectively and will be the ultimate test of the VB management team.
Considering the current trading climate and the latest financials, I seriously doubt whether VB on its own has the capacity to trade through this awful period.
Hope I'm proved wrong.
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forget the share price - just count the bums
wirgen blue - a very tongue in cheek post
but with Godfrey rewriting the meaning of the term 'corporate goverance'
I think protection from creditors will be the order of the day as opposed to de-registration. - Still your idea would provide a very convenient way of getting away from some of the costly off-balance sheet liabilities that would eat up the treasury reserves if the cash flow was really squeezed.
VB are not alone as the economy will continue to dive - All operators will reduce capacity, revert to streamlined hub schedules and probably seek even more short cuts in the regulatory regimes to save money. This is the key area that every pilot and crew member must watch closely as they will be the precipes that will haunt us in the future. (eg Jungle Jets with 3 crew instead of 1 crew per door, fatigue provisions etc.,...dare I mention the life rafts!!!!)
Contrary to the critics, the BOC leaseback was a shrewed move - aside from raising a bit cash to pay a few V debts, it has (further) lessened the appeal of VB to potential predators and backed shareholders into a narrow alley where they really cannot turn around - I would expect the same to be done with the village and the other limited assets.
Interestingly, the deviation between QF & DJ capital city website fares is probably the smallest it has ever been which says a lot about price segment elasticity - would love to see the pax profile trends for both carriers. (Maybe some of the cabin Crew might like to post their observations on this?)
In short - expect the share price game of limbo to go lower but I think the numbers to watch are not on the ASX boards but are the numbers of bums of seats. (operators might even need to rethink the traditional ASK formulas) - these will increasingly be the new performance benchmarkers.
AT
but with Godfrey rewriting the meaning of the term 'corporate goverance'
I think protection from creditors will be the order of the day as opposed to de-registration. - Still your idea would provide a very convenient way of getting away from some of the costly off-balance sheet liabilities that would eat up the treasury reserves if the cash flow was really squeezed.
VB are not alone as the economy will continue to dive - All operators will reduce capacity, revert to streamlined hub schedules and probably seek even more short cuts in the regulatory regimes to save money. This is the key area that every pilot and crew member must watch closely as they will be the precipes that will haunt us in the future. (eg Jungle Jets with 3 crew instead of 1 crew per door, fatigue provisions etc.,...dare I mention the life rafts!!!!)
Contrary to the critics, the BOC leaseback was a shrewed move - aside from raising a bit cash to pay a few V debts, it has (further) lessened the appeal of VB to potential predators and backed shareholders into a narrow alley where they really cannot turn around - I would expect the same to be done with the village and the other limited assets.
Interestingly, the deviation between QF & DJ capital city website fares is probably the smallest it has ever been which says a lot about price segment elasticity - would love to see the pax profile trends for both carriers. (Maybe some of the cabin Crew might like to post their observations on this?)
In short - expect the share price game of limbo to go lower but I think the numbers to watch are not on the ASX boards but are the numbers of bums of seats. (operators might even need to rethink the traditional ASK formulas) - these will increasingly be the new performance benchmarkers.
AT
As at the close of trading today these are the comparative figures for VB and QF.
VB QF
Today's loss 9.7% 1.6%
Market Cap $216M $2,924M
Debt/Equity Ratio 72.7% 160.6%
Dividend Yield 9.8% 15.5%
Franking Nil 100%
VB QF
Today's loss 9.7% 1.6%
Market Cap $216M $2,924M
Debt/Equity Ratio 72.7% 160.6%
Dividend Yield 9.8% 15.5%
Franking Nil 100%