Merged: Virgin Blue Share Price - how low can it go and for how long?
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Would suspect given the recent drops in price of oil/ (and or $AUS) I would expect the hedging/derivatives may have to be marked to market - which may be some of the reason for the drop in guidance.
TODAY'S "AUSTRALIAN"
NEW Virgin Blue chief John Borghetti is clearly doing the rounds to reassure analysts after last week's cut to earnings guidance, with Royal Bank of Scotland the latest to meet with the airline's top brass.
RBS analysts Mark Williams and Michael Newbold said in a note this morning that they met with senior Virgin Blue management yesterday and were left “underwhelmed, given the short-term challenges facing the business”.
The meeting with RBS came after Macquarie’s Russell Shaw and Sam Thornton dined with Borghetti over lunch on Monday and came up with a similar conclusion, that investors should expect near-term trading conditions for the airline to remain “very challenging”.
Williams noted Borghetti wanted to take the airline in a different direction to his predecessor Brett Godfrey, to streamline operations, focus on the Australian domestic market and increase corporate penetration.
“We see the rationale in this strategy, given Virgin Blue can’t win a battle of the lowest cost base. However, it is likely to add additional cost pressures in the short term as the change in strategy is pursued,” said Williams.
“We believe there is opportunity to capture more corporate customers. However, the question will be whether this will be enough to offset the pressures of the leisure market.”
Virgin last Friday stunned the market with a 75 per cent chop to its annual earnings guidance - its second in a month - and blamed a steep drop in leisure travel as well as a sudden decline in consumer confidence.
Merrill Lynch analyst Kevin O'Connor said this morning that Qantas was also suffering, but was far less exposed as JetStar, which is leisure-market focussed, represented just 9 per cent of the group’s passenger-kilometres, while Qantas had 90 per cent of the corporate market.
O’Connor kept his “buy” on Qantas with a target of $3.
Williams said that, given 80 per cent of Virgin’s business was exposed to the leisure market, “we think profitability will remain challenged over the next 12 months”.
“We believe short-term momentum is against the stock and may push the share price lower,” he said.
NEW Virgin Blue chief John Borghetti is clearly doing the rounds to reassure analysts after last week's cut to earnings guidance, with Royal Bank of Scotland the latest to meet with the airline's top brass.
RBS analysts Mark Williams and Michael Newbold said in a note this morning that they met with senior Virgin Blue management yesterday and were left “underwhelmed, given the short-term challenges facing the business”.
The meeting with RBS came after Macquarie’s Russell Shaw and Sam Thornton dined with Borghetti over lunch on Monday and came up with a similar conclusion, that investors should expect near-term trading conditions for the airline to remain “very challenging”.
Williams noted Borghetti wanted to take the airline in a different direction to his predecessor Brett Godfrey, to streamline operations, focus on the Australian domestic market and increase corporate penetration.
“We see the rationale in this strategy, given Virgin Blue can’t win a battle of the lowest cost base. However, it is likely to add additional cost pressures in the short term as the change in strategy is pursued,” said Williams.
“We believe there is opportunity to capture more corporate customers. However, the question will be whether this will be enough to offset the pressures of the leisure market.”
Virgin last Friday stunned the market with a 75 per cent chop to its annual earnings guidance - its second in a month - and blamed a steep drop in leisure travel as well as a sudden decline in consumer confidence.
Merrill Lynch analyst Kevin O'Connor said this morning that Qantas was also suffering, but was far less exposed as JetStar, which is leisure-market focussed, represented just 9 per cent of the group’s passenger-kilometres, while Qantas had 90 per cent of the corporate market.
O’Connor kept his “buy” on Qantas with a target of $3.
Williams said that, given 80 per cent of Virgin’s business was exposed to the leisure market, “we think profitability will remain challenged over the next 12 months”.
“We believe short-term momentum is against the stock and may push the share price lower,” he said.
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According to The Australian in Virgin Blue flags network overhaul | The Australian
· “Virgin’s turnaround is dependent on the Delta Joint Services Agreement approval...
But! According to Flight Global in Jetstar inks interline agreement with Air France-KLM
· Jetstar just inked an interline agreement with Air France-KLM ...
Hang on! Isn’t Delta already in bed with Air France KLM?
Who’s two timing who I wonder. Suspect an older woman just wouldn't put up with it.
· “Virgin’s turnaround is dependent on the Delta Joint Services Agreement approval...
But! According to Flight Global in Jetstar inks interline agreement with Air France-KLM
· Jetstar just inked an interline agreement with Air France-KLM ...
Hang on! Isn’t Delta already in bed with Air France KLM?
Who’s two timing who I wonder. Suspect an older woman just wouldn't put up with it.
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Where does one draw the line Globalsan.
Sewth Efricin is in bed with QF on codeshare and share frantic flapper exchange with a bucketload of airlines including Oneworld, Skyteam and Star alliance.
SA-083 SOUTH AFRICAN AIRWAYS
ACCEPTS FF ACCOUNT NUMBERS IN THE PROGRAMS LISTED
AC BD* CA CO EK FM JJ JK* KF* LH LX* LY MS
NH NZ* OS OZ QF* SA* SK* SN SQ* TC TG* TK* TP
UA* UL US U0* VS 9W
There they are for our edification.
SAS are also anyones best girl. Following are their points share partners.
SK-117 SCANDINAVIAN AIRLINES
ACCEPTS FF ACCOUNT NUMBERS IN THE PROGRAMS LISTED
AC* BD* BT CA CO DM ET FM JJ JK* KF LH* LO*
LX* MS NH NZ* OS OU OV OZ* PZ QF* QI SA* SK*
SN SQ* TG* TK* TP UA* US* VS WF
The alliances are one thing.
The affiliations are another entirely.
Best all
EWL
Sewth Efricin is in bed with QF on codeshare and share frantic flapper exchange with a bucketload of airlines including Oneworld, Skyteam and Star alliance.
SA-083 SOUTH AFRICAN AIRWAYS
ACCEPTS FF ACCOUNT NUMBERS IN THE PROGRAMS LISTED
AC BD* CA CO EK FM JJ JK* KF* LH LX* LY MS
NH NZ* OS OZ QF* SA* SK* SN SQ* TC TG* TK* TP
UA* UL US U0* VS 9W
There they are for our edification.
SAS are also anyones best girl. Following are their points share partners.
SK-117 SCANDINAVIAN AIRLINES
ACCEPTS FF ACCOUNT NUMBERS IN THE PROGRAMS LISTED
AC* BD* BT CA CO DM ET FM JJ JK* KF LH* LO*
LX* MS NH NZ* OS OU OV OZ* PZ QF* QI SA* SK*
SN SQ* TG* TK* TP UA* US* VS WF
The alliances are one thing.
The affiliations are another entirely.
Best all
EWL
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VB are running from the grim reaper, TIGER. They can give up marginal routes that don't make money and Tiger will grab them and make them pay, when things eventually pick up they can't get back in as the door will be slammed shut. The top end is a diminishing market, not the place to aim for.
I think in less than two years VB will need further cash and lots of it or they are gone.! Day trade the stock only.
SN
I think in less than two years VB will need further cash and lots of it or they are gone.! Day trade the stock only.
SN
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A check of the ASX website shows BG is still on the board of DJ as an executive director. Does JB then really have a free hand at running the business and making necessary fundamental changes with the architect of their current business plan looking over his shoulder and possibly scrutinizing every decision?
Surely after BG's performance at DJ in which he led them to their current disastrous circumstances, he should have been shown the door by the other board members when he left the top job.
By keeping BG in place as an executive director the investment community could conclude the DJ board is a 'cosy little club' that doesn't want to be overly influenced by 'uncontrolled new blood'. Although BG isn't 'fat' perhaps he remains 'the controller'.
Surely after BG's performance at DJ in which he led them to their current disastrous circumstances, he should have been shown the door by the other board members when he left the top job.
By keeping BG in place as an executive director the investment community could conclude the DJ board is a 'cosy little club' that doesn't want to be overly influenced by 'uncontrolled new blood'. Although BG isn't 'fat' perhaps he remains 'the controller'.
Keep telling yourself that Nazi.....
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more like the tiger having a cry every time VB tries to sign up an alliance with anyone delta now anz.
tiger should pay attention to jetstar they're they ones that really want to crossbow it!
tiger should pay attention to jetstar they're they ones that really want to crossbow it!
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The TRUE Oracle
Aagh yes. 'The Oracle' wins the award for the most accurate and defined statement in this thread. 10/10.
A true statement. Surely nobody thought BG would cut the ties completely to his baby did they ?? BG will be around for a while, consulting, advising, receiving tidy somes of money for his 'so called expert advice'. Perhaps the goal is to see the share price dip below $0.10 per share ??
Sounds good in theory, and would be a positive move for the organisation, but that sort of action is not as easy as it seems when you have somebody who has their tentacles deeply entrenched into the organisation.
Truest statement yet !
A check of the ASX website shows BG is still on the board of DJ as an executive director. Does JB then really have a free hand at running the business and making necessary fundamental changes with the architect of their current business plan looking over his shoulder and possibly scrutinizing every decision?
Surely after BG's performance at DJ in which he led them to their current disastrous circumstances, he should have been shown the door by the other board members when he left the top job.
By keeping BG in place as an executive director the investment community could conclude the DJ board is a 'cosy little club' that doesn't want to be overly influenced by 'uncontrolled new blood'. Although BG isn't 'fat' perhaps he remains 'the controller'.
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Provided there is no short term disaster of some monumental proportion I think you will steadily see the share price rise under JB. I envision it will be gradual over an extended period of time,but it will keep heading north rather than south.Unfortunately previous management direction over an extended period of time has created a mess that needs time to heal. You won't ever see the price back up to is list price of yesteryear, but I reckon if you buy in under $0.50 you might make a couple of dollars down the track..
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Cactusjack,
I'm a VBA shareholder. You won't see the prices of yesteryear as you called it because mate, they gave all the Toll shares away to punters like me at a nominal value of 50cents (and I bought more at 20cents) so the price between the float and the Toll exit means nothing except to people who don't know anything about the stocks history.
If you dig around you'll find the analyst briefings have Borghetti acknowledging Godfrey's achievements and pointing out that the fact that the company did so well out of the flying business compared to Qantas was the strength of the domestic business which earned far more than QF per plane by raking in $127 million in the whole financial year. Most of the turnaround from a loss of $160 million to a PBT of $34 million happened before Borghetti got the gig or even sat in the chair. I think he is doing the right thing fixing the international routes and going for a bigger domestic jet too and the notes my financial advisor sent include confirmation of an international role for the Airbuses as well as Perth within two years. I reckon Borghetti is a good choice to follow up a terrific success by the Godfrey team who weren't like Jetstar getting gifted a billion in Qantas jets and subsidies but did it themselves from the ground up, mistakes and all.
I'm a VBA shareholder. You won't see the prices of yesteryear as you called it because mate, they gave all the Toll shares away to punters like me at a nominal value of 50cents (and I bought more at 20cents) so the price between the float and the Toll exit means nothing except to people who don't know anything about the stocks history.
If you dig around you'll find the analyst briefings have Borghetti acknowledging Godfrey's achievements and pointing out that the fact that the company did so well out of the flying business compared to Qantas was the strength of the domestic business which earned far more than QF per plane by raking in $127 million in the whole financial year. Most of the turnaround from a loss of $160 million to a PBT of $34 million happened before Borghetti got the gig or even sat in the chair. I think he is doing the right thing fixing the international routes and going for a bigger domestic jet too and the notes my financial advisor sent include confirmation of an international role for the Airbuses as well as Perth within two years. I reckon Borghetti is a good choice to follow up a terrific success by the Godfrey team who weren't like Jetstar getting gifted a billion in Qantas jets and subsidies but did it themselves from the ground up, mistakes and all.
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I'm a VBA shareholder. You won't see the prices of yesteryear as you called it because mate, they gave all the Toll shares away to punters like me at a nominal value of 50cents (and I bought more at 20cents) so the price between the float and the Toll exit means nothing except to people who don't know anything about the stocks history.
If you dig around you'll find the analyst briefings have Borghetti acknowledging Godfrey's achievements and pointing out that the fact that the company did so well out of the flying business compared to Qantas was the strength of the domestic business which earned far more than QF per plane by raking in $127 million in the whole financial year. Most of the turnaround from a loss of $160 million to a PBT of $34 million happened before Borghetti got the gig or even sat in the chair.
A CEO riding a launch of over $2.60 per share down to $0.30 per share is a disgrace by any measure (irrelevant of all the 'unpredicatables') that occur in aviation.
I think he is doing the right thing fixing the international routes and going for a bigger domestic jet too and the notes my financial advisor sent include confirmation of an international role for the Airbuses as well as Perth within two years. I reckon Borghetti is a good choice
to follow up a terrific success by the Godfrey team who weren't like Jetstar getting gifted a billion in Qantas jets and subsidies but did it themselves from the ground up, mistakes and all.
At the end of the day however, the scene of aviation has certainly changed, and as you said if you bought in to DJ now at the current listing or had bought in at around $0.20 you will make a couple of bucks. Little comfort though for those who were sold a lemon at $2.60. Buyer beware I guess.