Merged: Virgin Blue Share Price - how low can it go and for how long?
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Desmotronic, good advice to sell the shares when they were at 90 cents indeed.
The share price has collapsed back to close at 48 cents today.
Expect further declines in the share price as the Toll shareholders prepare to dump this volatile stock.
Such wild and rapid swings in share price is enough to drive away any long term or serious investor and make any institutional investors stay away in droves.
A junk stock perhaps?
When it was floated a few short years back for over $2.20 or so I remember the fanfare of Sir Richard and Brett Godfrey touting its wonders and its fulfilling future.
I agreed seeing that picking up where Ansett left off from was a bit of a no-brainer.
It had a ready made market, a single aircraft fleet, lower wages and new aircraft.
Since then the shares peaked at $2.81 in Feb 07 and have been decimated ever since with todays price of 48 cents after having traded as high as $1.25 earlier in the week!
Changing business tactics midstream from their original business plan hasnt exactly panned out as desired.
I'd be wondering if Mr Godfrey's business plan has been up to scratch.
The share price has collapsed back to close at 48 cents today.
Expect further declines in the share price as the Toll shareholders prepare to dump this volatile stock.
Such wild and rapid swings in share price is enough to drive away any long term or serious investor and make any institutional investors stay away in droves.
A junk stock perhaps?
When it was floated a few short years back for over $2.20 or so I remember the fanfare of Sir Richard and Brett Godfrey touting its wonders and its fulfilling future.
I agreed seeing that picking up where Ansett left off from was a bit of a no-brainer.
It had a ready made market, a single aircraft fleet, lower wages and new aircraft.
Since then the shares peaked at $2.81 in Feb 07 and have been decimated ever since with todays price of 48 cents after having traded as high as $1.25 earlier in the week!
Changing business tactics midstream from their original business plan hasnt exactly panned out as desired.
I'd be wondering if Mr Godfrey's business plan has been up to scratch.
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Can't help but wonder if virgins decision not to go into Star Alliance when Ansett folded will now be seen as a big mistake. It is hard to attract business without a global Alliance partner.You can advertise about some extra space but what high yield passengers really want is that ability to travel without having to check in more than once.
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Sentiment concerning the stock seems to show that only Godfrey knows what a 'New World' Airline is!!
Virgin's stock value is an absolute 'train wreck' which will only worsen if they persist with their three tiered business plan!!
Virgin's stock value is an absolute 'train wreck' which will only worsen if they persist with their three tiered business plan!!
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Dont forget with star alliance or not, when you are coming into Oz, you need to recheck once you pass customs. There is a VB checking spot at the international in syd/bne/mel. As for those going the other way, they have many interlined flights with many airlines thru syd/bne/mel etc.
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What is the problem with their ideas Krusty34. Its a easy way of not putting out monies for more business. I do understand the view that you need to put out money to make it. I believe the DJ brand is well establish to make an alliance descision today. They (management) do not believe that its a thing to do at this moment, from previous comments made by Virgin (SA holding) Group and Virgin Blue Group that they wish not to go down a track with such as an alliance. Things change!
Each area of the company can probably cut back in areas, of course this can cause issues with moral etc. A very fine line to tread and decide with. There will always going to be a pro and con to each descision made.
Remember DJ started with alternate ideas in what an airline was going to be from day one, evolution takes place and mistakes are made and changed and growth is made!
Its a business and the main reason for a business to be in business is make the money!!
Each area of the company can probably cut back in areas, of course this can cause issues with moral etc. A very fine line to tread and decide with. There will always going to be a pro and con to each descision made.
Remember DJ started with alternate ideas in what an airline was going to be from day one, evolution takes place and mistakes are made and changed and growth is made!
Its a business and the main reason for a business to be in business is make the money!!
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Last 3 days VBA has fallen from $1.15 to $0.60.
Oil going back up, AUD$/US$ going down plus a profit warning.
Hmm, get back in under 55c
Oil going back up, AUD$/US$ going down plus a profit warning.
Hmm, get back in under 55c
Sorry if I hit a raw nerve kitty, but you should be careful about swallowing the hype. Believe me, the last thing I want is to see more Aussies thrown out of work, but if DJ aren't careful they may end up going the way of the airline who's demise is the only reason they, and you for that matter, are here today! Some of the parallels are quite ironic.
I'm not going to mince words. Every post you put up is nothing short of a thinly veiled attempt at propaganda. I smelt a rat when you started extolling the virtues of "flying" the EJ into regional centers, and your illinformed description of operational matters. This is a pilots forum, and while the opinions of others are certainly welcome, your previous attempt at subterfuge has lost you any credibility with this reader. I do however love this little gem...
"Remember DJ started with alternate ideas in what an airline was going to be from day one, evolution takes place and mistakes are made and changed and growth is made!"
Make no mistake, the only reason DJ is alive today is because of the death of Ansett.
People really should learn the leasons of history, unless of course they wish to repeat it.
I'm not going to mince words. Every post you put up is nothing short of a thinly veiled attempt at propaganda. I smelt a rat when you started extolling the virtues of "flying" the EJ into regional centers, and your illinformed description of operational matters. This is a pilots forum, and while the opinions of others are certainly welcome, your previous attempt at subterfuge has lost you any credibility with this reader. I do however love this little gem...
"Remember DJ started with alternate ideas in what an airline was going to be from day one, evolution takes place and mistakes are made and changed and growth is made!"
Make no mistake, the only reason DJ is alive today is because of the death of Ansett.
People really should learn the leasons of history, unless of course they wish to repeat it.
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Krusty, point well valid and well noted.
Its been documented that VB had gone far left field from a true lost carrier to a [what do you call them]
Three well points we can see
- Frequent Flyers
- Premium Economy
- Business class at the airport
- Introduce the ERJ flying into regional ports
DJ stick with what you were good at, the TRUE low cost airline
Its been documented that VB had gone far left field from a true lost carrier to a [what do you call them]
Three well points we can see
- Frequent Flyers
- Premium Economy
- Business class at the airport
- Introduce the ERJ flying into regional ports
DJ stick with what you were good at, the TRUE low cost airline
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I agree, however you can see why they attempted this, they need to go back where they were, but I dont belive they can compete with Tiger or even Jet* for that mater, I would much rather see Virgin survive over Jetstar....
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KRUSTY what parallels are you refering to? QF has the questionable engineering issues at the moment not VB. VB have still got large cash reserves $700 million. They are expanding the market not pulling out of the market eg QF to shut Mildura maintenance whilst VB put EJets in there. QF have handed not so profitable routes to Jetstar as they realised if they didn't compete with VB on the same level they would be in trouble eg OOL. VB under VOZ are picking the eyes out of the most profitable international routes LAX and JNB.
Finally the company made a $98 million dollar profit and included in this $40 million of start up costs for VOZ. So as VB $138 million in a year when the price of fuel is double what it probably should be.
The reasons for VB changing is to please the people buying the seats not the wannnabe pilots/economists/stock brokers on this forum. All the changes have been asked for by the people buying the seats. There is no point sticking to the one thing if it isn't going to last in the long term. If this recession gets under way do you think the people from the outer suburbs will still be able to afford even J* and Tiger.
I say the changes are for the good and with a +80% load factor the majority agree.
Finally the company made a $98 million dollar profit and included in this $40 million of start up costs for VOZ. So as VB $138 million in a year when the price of fuel is double what it probably should be.
The reasons for VB changing is to please the people buying the seats not the wannnabe pilots/economists/stock brokers on this forum. All the changes have been asked for by the people buying the seats. There is no point sticking to the one thing if it isn't going to last in the long term. If this recession gets under way do you think the people from the outer suburbs will still be able to afford even J* and Tiger.
I say the changes are for the good and with a +80% load factor the majority agree.
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Finally the company made a $98 million dollar profit and included in this $40 million of start up costs for VOZ. So as VB $138 million in a year when the price of fuel is double what it probably should be.
I think DJ are losing the plot, I hope not they are a good airline.
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Not quite as simple as this 320, but if QF is 5 times larger, then to have an equal profit vis size, then QF would have to make 5 times the VB profit, wouldn't they. They did, which is fine, but I'm pointing out why QF did/have to make a bigger profit to be considered reasonable. Also, consider that all of QF's issues recently, including cancellations, empty positioning, delays, hotels etc racked up in the last 2 months aren't on this balance sheet. Next year will give a bit of an indication there.
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Also back to the QF profit. Does this include planes that were supposed to be here already but have been delayed. The A380 for example at $300 million USD per plane would make a big dent in the QF P&L.
QF new purchase aircraft are on a progressive payment scheme, it was alluded to when the financial statements were released. I think a fair amount of the aircraft cost may have already been accounted for.
As for VB I think some may have had a good look at the balance sheets which has led to the price fall. Liabilities almost doubled during the year to $2.5b, operating cash dropped to $600m. Combine this with slowing economy, decreasing loads, increased competition, volatile fuel prices and no parent company to inject cash and it doen't look like a great investment at the moment.
As for VB I think some may have had a good look at the balance sheets which has led to the price fall. Liabilities almost doubled during the year to $2.5b, operating cash dropped to $600m. Combine this with slowing economy, decreasing loads, increased competition, volatile fuel prices and no parent company to inject cash and it doen't look like a great investment at the moment.
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KRUSTY34 are you a former Ansett employee? This is not a dig at you or Ansett, I would like (with your permission) what experiences form your perspective?
As for my propaganda, I have been with DJ since start up. I've have change positions 3 times and do thank the company for my long term employment. Some descision that have been made, I personally feel were made reactive than by great conscious thought. Some have been successes and some failures. But hey 'The Blue Room' evolved into 'The Lounge' as is as popular with regular and adhoc fliers.
Bias, it may come across that way.... you speak about DJ and I have direct knowledge, and happy to discuss it with everyone. I can not say that I can talk about other airlines in the same manner.
I do wish the company to continue being profitable.... keeps me and the 4000+ staff in a job.
As for my propaganda, I have been with DJ since start up. I've have change positions 3 times and do thank the company for my long term employment. Some descision that have been made, I personally feel were made reactive than by great conscious thought. Some have been successes and some failures. But hey 'The Blue Room' evolved into 'The Lounge' as is as popular with regular and adhoc fliers.
Bias, it may come across that way.... you speak about DJ and I have direct knowledge, and happy to discuss it with everyone. I can not say that I can talk about other airlines in the same manner.
I do wish the company to continue being profitable.... keeps me and the 4000+ staff in a job.
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kitty
balanced viewpoint and no doubt from the heart however, the fact remains that VB has a very low nett asset value and a host of non reportable, off balance sheet liabilities that would wipe out the cash reserve in an instant. That's the simple risk equation and it is that risk that fenced off the potential buyers when a sale was first mooted by Toll's, Paul Little.
Irrespective of fuel and the cost of money, the business is in a very difficult place - it can't afford route continuity, but in reality it can't afford in the long term to drop/consolidate routes either. V Jets (nice planes) were very exe choices for notional regional feeder routes plus the price elasticity of seasonal leisure routes reduces the ability of the business to amortise the lease captial over longer terms.
Aviation is a tough gig and without a strong USP and year round sustainable market it's pragmatic at best.
It is very easy and sometimes incorrect for others to make Ansett analogies however baseline is that VB under the current CEO and Board have indeed lost focus and have forgot what their core business was all about. Ansett went down due to similar management traits albeit with a fair measure of rape and pillage from banks, financiers all of whom were helped by the NZ govt. [Note: Ansett refugees no correspondence - pls fwd all hate mail to Korda Mentha and also ask about their fees]
VB is a great airline and given the scale of the Australian market, has a real place as a competitive LCC - But it has high risks that need to be mitigated.
In addition to the dubious investment decisions (IFE/Premium Econ etc etc) it is a worry in that there is also a reliance on a number of CASA dispensations for daily ops and that there are other significant operational burdens that do pose unacceptable fatigue and safety risks for VB's hardworking crews.
In addition, the capex for V Australia is a hard hit as will be the hits from the conservative forecasts of the operating losses for the establishment years. Reality is the SYD/LAX route might have demand but under the Open Skies model is likely to provide diminished yeilds.
If Godfrey and the Board were to go tomorrow and be replaced by sound strategic management, then the market would immediately give the shares a huge leg up. "Brett" might be good at emailing and reving up the VB faithful, but the markets are not blinded by the Branson bravado that surrounds the DJ hype.
Let's hope that Godfrey, the Board and some within VB's over subscribed management ranks either get out or better still - get with the program and get the business back on track.
To paraphrase the punter opinion however:
VB is to shareholder/market confidence what Qantas is to current safety perceptions......everyone hopes it doesn't happen.... but still keeps an 'ear out' to hear the crash.
balanced viewpoint and no doubt from the heart however, the fact remains that VB has a very low nett asset value and a host of non reportable, off balance sheet liabilities that would wipe out the cash reserve in an instant. That's the simple risk equation and it is that risk that fenced off the potential buyers when a sale was first mooted by Toll's, Paul Little.
Irrespective of fuel and the cost of money, the business is in a very difficult place - it can't afford route continuity, but in reality it can't afford in the long term to drop/consolidate routes either. V Jets (nice planes) were very exe choices for notional regional feeder routes plus the price elasticity of seasonal leisure routes reduces the ability of the business to amortise the lease captial over longer terms.
Aviation is a tough gig and without a strong USP and year round sustainable market it's pragmatic at best.
It is very easy and sometimes incorrect for others to make Ansett analogies however baseline is that VB under the current CEO and Board have indeed lost focus and have forgot what their core business was all about. Ansett went down due to similar management traits albeit with a fair measure of rape and pillage from banks, financiers all of whom were helped by the NZ govt. [Note: Ansett refugees no correspondence - pls fwd all hate mail to Korda Mentha and also ask about their fees]
VB is a great airline and given the scale of the Australian market, has a real place as a competitive LCC - But it has high risks that need to be mitigated.
In addition to the dubious investment decisions (IFE/Premium Econ etc etc) it is a worry in that there is also a reliance on a number of CASA dispensations for daily ops and that there are other significant operational burdens that do pose unacceptable fatigue and safety risks for VB's hardworking crews.
In addition, the capex for V Australia is a hard hit as will be the hits from the conservative forecasts of the operating losses for the establishment years. Reality is the SYD/LAX route might have demand but under the Open Skies model is likely to provide diminished yeilds.
If Godfrey and the Board were to go tomorrow and be replaced by sound strategic management, then the market would immediately give the shares a huge leg up. "Brett" might be good at emailing and reving up the VB faithful, but the markets are not blinded by the Branson bravado that surrounds the DJ hype.
Let's hope that Godfrey, the Board and some within VB's over subscribed management ranks either get out or better still - get with the program and get the business back on track.
To paraphrase the punter opinion however:
VB is to shareholder/market confidence what Qantas is to current safety perceptions......everyone hopes it doesn't happen.... but still keeps an 'ear out' to hear the crash.