Merged: Virgin Blue Share Price - how low can it go and for how long?
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Perhaps I could use a better word than ****, but it wasn't directed at you, the next posters comments.
Cunning_Stunt, if you watch the asx, that announcement went through at the very last moment yesterday and had been sitting there overnight.
That is why we have seen a huge decrease in the share price as over 100million or $31mill trades done today as 'investors' panic & have a Knee Jerk reaction.
Cunning_Stunt, if you watch the asx, that announcement went through at the very last moment yesterday and had been sitting there overnight.
That is why we have seen a huge decrease in the share price as over 100million or $31mill trades done today as 'investors' panic & have a Knee Jerk reaction.
Man overboard - abandon ship!
Virgin Blue's reality check
TOP News
Virgin slashes guidance, shares plunge 12:33 PM
A little more than three weeks ago, Virgin Blue warned that pre-tax earnings were likely to be at the lower end of its guidance of between $80 million and $110 million for this financial year. Today it slashed that guidance to between $20 million and $40 million. The business, it appears, hit a wall this month.
Before today’s warning it had appeared that, after a torrid 2009, the domestic industry had stabilised and, indeed, was showing signs of a recovery – albeit a relatively weak one, in both volume and yields.
Only three days ago, Flight Centre upgraded its guidance, saying trading conditions had improved and the Australian business was performing strongly with no sign yet of the slowdown being reported by some retailers.
Virgin Blue’s issues appear to be related to its long haul operations, with the group saying its domestic operations were still expected to make a pre-tax profit of about $100 million. Its V Australia trans-Pacific brand is, therefore, presumably still haemorrhaging.
But it goes beyond that. The airline also said there has been a "rapid" deterioration and increased volatility in its operating environment, particularly in the leisure sector, both domestically and internationally.
LOL JB.
BG got the golden handshake and JB you've got the golden rivet!
TOP News
Virgin slashes guidance, shares plunge 12:33 PM
A little more than three weeks ago, Virgin Blue warned that pre-tax earnings were likely to be at the lower end of its guidance of between $80 million and $110 million for this financial year. Today it slashed that guidance to between $20 million and $40 million. The business, it appears, hit a wall this month.
Before today’s warning it had appeared that, after a torrid 2009, the domestic industry had stabilised and, indeed, was showing signs of a recovery – albeit a relatively weak one, in both volume and yields.
Only three days ago, Flight Centre upgraded its guidance, saying trading conditions had improved and the Australian business was performing strongly with no sign yet of the slowdown being reported by some retailers.
Virgin Blue’s issues appear to be related to its long haul operations, with the group saying its domestic operations were still expected to make a pre-tax profit of about $100 million. Its V Australia trans-Pacific brand is, therefore, presumably still haemorrhaging.
But it goes beyond that. The airline also said there has been a "rapid" deterioration and increased volatility in its operating environment, particularly in the leisure sector, both domestically and internationally.
LOL JB.
BG got the golden handshake and JB you've got the golden rivet!
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Sir Richard said: "If it becomes impossible for us to remain an independent airline and survive, we may come to a situation where we have to consolidate."
Sovereign debt crisis, that's what!
When the share market gets hammered like it is EVERYTHING goes down. Especially when VB have downgraded their profit guidance...
When the share market gets hammered like it is EVERYTHING goes down. Especially when VB have downgraded their profit guidance...
At 2pm AEST 28/5/10 we have seen 184,870,884 shares change hands as low as 30c. There are still 60,000,000 plus shares for sale where the sellers are asking for 40c or less.
As VBA still has a very high Price/Earnings ratio and a high debt/equity ratio of 308% with the prospect of no dividends on the horizon they are still on shaky ground.
Massimo Borghetti's newly purchased VBA shares are well underwater and the net present day value of his renumeration package is not as attractive as it was when he started on 08/05/10.
As VBA still has a very high Price/Earnings ratio and a high debt/equity ratio of 308% with the prospect of no dividends on the horizon they are still on shaky ground.
Massimo Borghetti's newly purchased VBA shares are well underwater and the net present day value of his renumeration package is not as attractive as it was when he started on 08/05/10.
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The fate of VA lies in this DL tieup, and if fails, then you can probably guarantee significant reductions across the pacific and launching mabye new markets like Japan/Hong Kong.
So when is all this revamp project going to be announced. Sounds expensive.
So when is all this revamp project going to be announced. Sounds expensive.
Last edited by Sunstar320; 28th May 2010 at 08:47.
........................................FY07.........FY08... .......FY09..........6mthFY10
Interest Bearing Debt (m).......846.4.......1486.2........1779.4........1770.4
Shareholder Equity (m)...........743.5.......925.3.........577.1..........919.4
Debt/Equity ratio (%).............113.8.......160.6.........308.3..........192 .5
Qantas D/E (%).....................81.9.........72.5..........95.5..... .......97.9
Interest Bearing Debt (m).......846.4.......1486.2........1779.4........1770.4
Shareholder Equity (m)...........743.5.......925.3.........577.1..........919.4
Debt/Equity ratio (%).............113.8.......160.6.........308.3..........192 .5
Qantas D/E (%).....................81.9.........72.5..........95.5..... .......97.9
Last edited by The The; 29th May 2010 at 03:45.
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Reading this in the Financial Review this morning
"Something smells a little fishy, especially given that Borghetti took over just three days after guidance was affirmed. We wonder whether we're seeing a clearing of the desk...so he has a clean slate to work from."
What exactly is this implying??
"Something smells a little fishy, especially given that Borghetti took over just three days after guidance was affirmed. We wonder whether we're seeing a clearing of the desk...so he has a clean slate to work from."
What exactly is this implying??
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DJCCGuy
I'm not a finacial guy but a mate of mine who is a stockbroker once explained to me that most CEO's are paid bonuses in cash and shares/options based on movement of share price during their tenure.
So when their is a change in command companies generally pour out the bad news which in turn reduces the value of shares to a low point. The new CEO then looks like a hero as the share price rebounds from its lows and a hero for saving the company and adding shareholder value. This results in the said hero recieving a huge bonus.
Someone here may it explain it better or refute my comment but understand I'm only a dumb pilot. Unfourtantely I'm on a five day trip starting tommorrow morning so I am resting today. Otherwise I would of caught up with my beer swilling broker mate at the rugby this arvo and could of grabbed a better explantion before he(we) got to full
.
I'm not a finacial guy but a mate of mine who is a stockbroker once explained to me that most CEO's are paid bonuses in cash and shares/options based on movement of share price during their tenure.
So when their is a change in command companies generally pour out the bad news which in turn reduces the value of shares to a low point. The new CEO then looks like a hero as the share price rebounds from its lows and a hero for saving the company and adding shareholder value. This results in the said hero recieving a huge bonus.
Someone here may it explain it better or refute my comment but understand I'm only a dumb pilot. Unfourtantely I'm on a five day trip starting tommorrow morning so I am resting today. Otherwise I would of caught up with my beer swilling broker mate at the rugby this arvo and could of grabbed a better explantion before he(we) got to full
.
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Spin
Round and round the foolishness goes......
All of the latest financial 'disclosings' come as no surprise. The place has been run by a bunch of assclowns for a long time, and now the chicken has come home to roost. To have two downgrades in less than a month, the second forecast being approximately 75% less than the one just three weeks ago sends a clear message - The place is being run by either liars, or complete incompetents,or perhaps both, you be the judge.
To say that DJ needs an immediate and radical overhaul is an understatement ! They need to start the cleaning process with the overhaul of the ridiculous business structure pertaining to 'trying to operate both a Low cost brand, premium brand and mid low cost/premium brand. An absolute farce. And it is a legacy and testament to former incompetent management decisions ( don't worry there is still enough incompetent deadwood left to run the place yet even further into the ground).
It would appear JB has learnt his first lesson this past week.
I don't think he will be 'tricked' a second time. In the very least he needs to 'bring in the cleaners' and shovel out the crap that remains entrenched in VB's 'Alice In Wonderland' fantasy world where inept, incompetent and pathetic management get paid ludicrous salaries to produce nothing but financial decline.
Then again, maybe JB's quarter of a century stint with an operator that has ridden high upon the successes of life and provided a substantial gravy train to the upper echelon's of business management has not adequately prepared him for the reality of heading a 'flair based LCC' ??
All of the latest financial 'disclosings' come as no surprise. The place has been run by a bunch of assclowns for a long time, and now the chicken has come home to roost. To have two downgrades in less than a month, the second forecast being approximately 75% less than the one just three weeks ago sends a clear message - The place is being run by either liars, or complete incompetents,or perhaps both, you be the judge.
To say that DJ needs an immediate and radical overhaul is an understatement ! They need to start the cleaning process with the overhaul of the ridiculous business structure pertaining to 'trying to operate both a Low cost brand, premium brand and mid low cost/premium brand. An absolute farce. And it is a legacy and testament to former incompetent management decisions ( don't worry there is still enough incompetent deadwood left to run the place yet even further into the ground).
It would appear JB has learnt his first lesson this past week.
I don't think he will be 'tricked' a second time. In the very least he needs to 'bring in the cleaners' and shovel out the crap that remains entrenched in VB's 'Alice In Wonderland' fantasy world where inept, incompetent and pathetic management get paid ludicrous salaries to produce nothing but financial decline.
Then again, maybe JB's quarter of a century stint with an operator that has ridden high upon the successes of life and provided a substantial gravy train to the upper echelon's of business management has not adequately prepared him for the reality of heading a 'flair based LCC' ??
Investors told to fly by
RICHARD WEBB
May 30, 2010
Australian Share Market
THE two major airline stocks on the Australian sharemarket have proved huge underperformers, and the latest profit downgrade from Virgin Blue has added to the misery.
If you are a share trader, then there is plenty of opportunity given the share prices of Qantas and Virgin Blue bounce around like yo-yos - albeit, more often than not in a southerly direction.
But for small investors interested in the medium to long term and who generally like to set and forget, airline stocks are to be avoided, investment advisers say.
Advertisement: Story continues below
There are too many huge external influences out of an airline's control that can hurt their business, while intense competition is knocking the stuffing out of profitability.
IG Markets institutional dealer Peter Stanhope says the shocking news from Virgin Blue on Friday highlighted the risks involved in airline stocks.
''They are vulnerable to consumer demand, and there's massive amounts of capital involved in an airline, yet they run around trying to get an extra $5 out of each seat from people to watch television - that illustrates the problem,'' he says.
Virgin Blue announced that pre-tax profit for its full-year to the end of June was likely to be between $20 million and $40 million. Three weeks ago the airline said the figure would be between $80 million and $110 million. The new forecast reflects a big loss for the first six months of 2010. Can we really have seen a $60 million negative turnaround at Virgin Blue in three weeks? Apparently yes.
The six interest rate rises in seven months have clobbered consumer confidence. In response, they cut back on discretionary spending, and Virgin Blue, which has 80 per cent of its business in the ''leisure'' market (non-business travel) ended up with an awful lot of empty seats all of a sudden.
The Virgin Blue statement indicates it was V Australia, the new trans-Pacific part of the business, that lost the big bucks. V Australia's fleet expansion options on two more Boeing 777 airlines (its sixth and seventh planes) are now being reviewed, according to the airline's general manager public affairs, Danielle Keighery.
''We are committed to making our international business profitable, ''she says.
''We have also been heavily exposed to the leisure sector and we've highlighted our interest in moving into the corporate market.''
Ms Keighery says Virgin Blue will reveal more about its planned overhaul of its business with its results in August.
For many shareholders, though, Friday's announcement was the last straw. Virgin Blue shares tanked on the news, falling 12¢, or 27.9 per cent, to 31¢ on huge turnover representing more than 10 per cent of the company's issued capital.
The stock touched 30¢ at its worst; eye watering for a company originally floated at $2.25 a share in 2003. Qantas shares initially fell on the news too but regrouped to finish 3¢, or 1.2 per cent, higher at $2.45 after the company reaffirmed its full-year profit forecast of $200 million to $300 million pre-tax.
But even Qantas has hardly set the stockmarket boards alight - the airline was originally privatised at $1.90 a share back in 1995, so has delivered a total 29 per cent return for original investors in 16 years. That's an average - and snail-like - 1.8 per cent of capital growth a year.
Austock senior adviser Michael Heffernan says mum and dad investors should give the airlines a wide berth.
''Why on earth would you want to buy shares in an industry whose business is at the mercy of terrorist attacks, at the mercy of volcanos, is at the mercy of the oil price and so sensitive to consumer confidence?''
''People seem to invest in them when things are going well, but like Virgin Blue's big downgrade shows, the negatives are too much - airlines are OK in the good times, but why take the punt?''
RICHARD WEBB
May 30, 2010
Australian Share Market
THE two major airline stocks on the Australian sharemarket have proved huge underperformers, and the latest profit downgrade from Virgin Blue has added to the misery.
If you are a share trader, then there is plenty of opportunity given the share prices of Qantas and Virgin Blue bounce around like yo-yos - albeit, more often than not in a southerly direction.
But for small investors interested in the medium to long term and who generally like to set and forget, airline stocks are to be avoided, investment advisers say.
Advertisement: Story continues below
There are too many huge external influences out of an airline's control that can hurt their business, while intense competition is knocking the stuffing out of profitability.
IG Markets institutional dealer Peter Stanhope says the shocking news from Virgin Blue on Friday highlighted the risks involved in airline stocks.
''They are vulnerable to consumer demand, and there's massive amounts of capital involved in an airline, yet they run around trying to get an extra $5 out of each seat from people to watch television - that illustrates the problem,'' he says.
Virgin Blue announced that pre-tax profit for its full-year to the end of June was likely to be between $20 million and $40 million. Three weeks ago the airline said the figure would be between $80 million and $110 million. The new forecast reflects a big loss for the first six months of 2010. Can we really have seen a $60 million negative turnaround at Virgin Blue in three weeks? Apparently yes.
The six interest rate rises in seven months have clobbered consumer confidence. In response, they cut back on discretionary spending, and Virgin Blue, which has 80 per cent of its business in the ''leisure'' market (non-business travel) ended up with an awful lot of empty seats all of a sudden.
The Virgin Blue statement indicates it was V Australia, the new trans-Pacific part of the business, that lost the big bucks. V Australia's fleet expansion options on two more Boeing 777 airlines (its sixth and seventh planes) are now being reviewed, according to the airline's general manager public affairs, Danielle Keighery.
''We are committed to making our international business profitable, ''she says.
''We have also been heavily exposed to the leisure sector and we've highlighted our interest in moving into the corporate market.''
Ms Keighery says Virgin Blue will reveal more about its planned overhaul of its business with its results in August.
For many shareholders, though, Friday's announcement was the last straw. Virgin Blue shares tanked on the news, falling 12¢, or 27.9 per cent, to 31¢ on huge turnover representing more than 10 per cent of the company's issued capital.
The stock touched 30¢ at its worst; eye watering for a company originally floated at $2.25 a share in 2003. Qantas shares initially fell on the news too but regrouped to finish 3¢, or 1.2 per cent, higher at $2.45 after the company reaffirmed its full-year profit forecast of $200 million to $300 million pre-tax.
But even Qantas has hardly set the stockmarket boards alight - the airline was originally privatised at $1.90 a share back in 1995, so has delivered a total 29 per cent return for original investors in 16 years. That's an average - and snail-like - 1.8 per cent of capital growth a year.
Austock senior adviser Michael Heffernan says mum and dad investors should give the airlines a wide berth.
''Why on earth would you want to buy shares in an industry whose business is at the mercy of terrorist attacks, at the mercy of volcanos, is at the mercy of the oil price and so sensitive to consumer confidence?''
''People seem to invest in them when things are going well, but like Virgin Blue's big downgrade shows, the negatives are too much - airlines are OK in the good times, but why take the punt?''