Virgin Australia's plans for 2013
From Bloomberg...
Virgin Will Drop Tiger Deal If Capacity Increase Mandated
By David Fickling - Feb 27, 2013 12:01 AM GMT+1100.
Virgin Australia Holdings Ltd. (VAH), Australia’s second-largest carrier, will drop a bid for its next-largest rival if the country’s antitrust regulator forces it to increase fleet numbers to a specified level.
Virgin won’t give “commitments that are unrealistic” in order to buy control of budget airline Tiger Airways Holdings Ltd. (TGR)’s local unit, Chief Executive Officer John Borghetti said in an interview yesterday. The carrier reported first-half profit that missed analyst estimates amid competition with Qantas Airways Ltd. and the impact of a carbon tax.
A cancellation of the takeover would deal a blow to Borghetti’s plans to challenge Qantas’s 65 percent share of the Australian market. Virgin has added business class seats, upgraded lounges and extended flights to outback areas as it seeks to win business from the country’s largest operator, which has the biggest shares of leisure flights, corporate accounts and routes in remote areas.
“If there is anything that stands in its way that doesn’t make it attractive for us, I have no problem in not continuing” the Tiger deal, Borghetti said by phone. “If there are conditions imposed on the deal that I don’t believe is prudent for this company to commit to, we will walk.”
‘Muted Competition’
Australia’s antitrust regulator said Feb. 7 that Virgin’s attempt to buy 60 percent of Tiger Australia risked “muted competition following the reduction in the number of airline groups within Australia.” The Australian Competition and Consumer Commission would be more inclined to allow the deal if it was convinced that Virgin would boost Tiger’s fleet from 11 at present to 35 by 2018, according to the regulator.
Tiger’s largest shareholder, Singapore Airlines Ltd. (SIA), is helping to fund the takeover through buying A$105 million ($108 million) of newly-issued Virgin shares, giving it a 10 percent stake in the carrier. Borghetti’s also spending about A$95 million in cash and shares buying Skywest Airlines Ltd. (SKYW), which operates regional routes mainly in Western Australia state.
Virgin “faces challenges in turning around the mounting losses within Tiger,” Russell Shaw, an analyst at Macquarie Group Ltd. in Sydney, wrote in a note to clients Feb. 1.
Tiger does not plan to and won’t seek new investors for Tiger Australia if the regulator disapproves the venture with Virgin, the budget carrier said in a statement Feb. 7. “Virgin is the right party to partner Tiger, and will be able to strengthen Tiger Australia,” the airline said in the statement.
Virgin shares slumped the most in almost six months yesterday after the company said net income fell 56 percent to A$23 million in the six months through December, missing the A$50 million median estimate of six analysts surveyed by Bloomberg News. The stock closed down 5.8 percent at 41 Australian cents, compared with a 1 percent drop in the benchmark S&P/ASX 200 index.
Virgin Australia doubled the proportion of seats filled in business class as it signed up corporate customers, Borghetti said, without giving specific numbers. The carrier now gets more than 20 percent of sales from corporate customers, while Qantas (QAN) says it has an 84 percent share of revenue in the market.
By David Fickling - Feb 27, 2013 12:01 AM GMT+1100.
Virgin Australia Holdings Ltd. (VAH), Australia’s second-largest carrier, will drop a bid for its next-largest rival if the country’s antitrust regulator forces it to increase fleet numbers to a specified level.
Virgin won’t give “commitments that are unrealistic” in order to buy control of budget airline Tiger Airways Holdings Ltd. (TGR)’s local unit, Chief Executive Officer John Borghetti said in an interview yesterday. The carrier reported first-half profit that missed analyst estimates amid competition with Qantas Airways Ltd. and the impact of a carbon tax.
A cancellation of the takeover would deal a blow to Borghetti’s plans to challenge Qantas’s 65 percent share of the Australian market. Virgin has added business class seats, upgraded lounges and extended flights to outback areas as it seeks to win business from the country’s largest operator, which has the biggest shares of leisure flights, corporate accounts and routes in remote areas.
“If there is anything that stands in its way that doesn’t make it attractive for us, I have no problem in not continuing” the Tiger deal, Borghetti said by phone. “If there are conditions imposed on the deal that I don’t believe is prudent for this company to commit to, we will walk.”
‘Muted Competition’
Australia’s antitrust regulator said Feb. 7 that Virgin’s attempt to buy 60 percent of Tiger Australia risked “muted competition following the reduction in the number of airline groups within Australia.” The Australian Competition and Consumer Commission would be more inclined to allow the deal if it was convinced that Virgin would boost Tiger’s fleet from 11 at present to 35 by 2018, according to the regulator.
Tiger’s largest shareholder, Singapore Airlines Ltd. (SIA), is helping to fund the takeover through buying A$105 million ($108 million) of newly-issued Virgin shares, giving it a 10 percent stake in the carrier. Borghetti’s also spending about A$95 million in cash and shares buying Skywest Airlines Ltd. (SKYW), which operates regional routes mainly in Western Australia state.
Virgin “faces challenges in turning around the mounting losses within Tiger,” Russell Shaw, an analyst at Macquarie Group Ltd. in Sydney, wrote in a note to clients Feb. 1.
Tiger does not plan to and won’t seek new investors for Tiger Australia if the regulator disapproves the venture with Virgin, the budget carrier said in a statement Feb. 7. “Virgin is the right party to partner Tiger, and will be able to strengthen Tiger Australia,” the airline said in the statement.
Virgin shares slumped the most in almost six months yesterday after the company said net income fell 56 percent to A$23 million in the six months through December, missing the A$50 million median estimate of six analysts surveyed by Bloomberg News. The stock closed down 5.8 percent at 41 Australian cents, compared with a 1 percent drop in the benchmark S&P/ASX 200 index.
Virgin Australia doubled the proportion of seats filled in business class as it signed up corporate customers, Borghetti said, without giving specific numbers. The carrier now gets more than 20 percent of sales from corporate customers, while Qantas (QAN) says it has an 84 percent share of revenue in the market.
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Keg, a deal with Skywest pilots sounds reasonable/feasible, should the company wish it to go ahead sometime in the future.
However, unlike the relationship between JQ and QF (a wholly owned subsidiary), VA are only buying a share of Tiger. I can't see how it could work at the present time in its present form.
Once again, the company has to have the will to allow this to happen. Negotiations are under way for VAA-VAI-VANZ to merge seniority lists, so there is something happening on that front. I won't go into the detail on here, suffice to say it is being facilitated by the company.
However, unlike the relationship between JQ and QF (a wholly owned subsidiary), VA are only buying a share of Tiger. I can't see how it could work at the present time in its present form.
Once again, the company has to have the will to allow this to happen. Negotiations are under way for VAA-VAI-VANZ to merge seniority lists, so there is something happening on that front. I won't go into the detail on here, suffice to say it is being facilitated by the company.
Nunc est bibendum
Good to hear Hugh. I do worry about those who may have joined VOZ in the last 3-5 years. The demographic at VOZ is very different to Qantas and if the music stops I don't think projected retirements will mean advancement into the other seat anytime short of a decade and a half- perhaps more!
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Bundaberg and Moranbah are 2 new destinations to start this year using ATR72s.
Virgin Australia Announces New Service Between Brisbane and Moranbah | Virgin Australia
Virgin Australia Announces New Service Between Brisbane and Moranbah | Virgin Australia
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my oleo is extended says:
Actually Virgin does not include the carbon tax in the ticket price. Customers may VOLUNTEER to offset the emissions. The company however is exposed to the tax on all emissions whether they are paid voluntarily or not.
It is pretty clear that very few customers volunteer to pay.
Interesting financial figures?? How could the carbon tax be blamed for around $23 million of lost profit when they added a carbon surcharge which offset that cost onto the fare payer some time ago??
It is pretty clear that very few customers volunteer to pay.
