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Virgin share price drops 17 percent

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Virgin share price drops 17 percent

Old 17th May 2013, 03:48
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Virgin share price drops 17 percent

Stephen Bartholomeusz in Business Spectator - Aviation writes
Alliance winces at a Virgin earnings overshoot | Business Spectator
Has Borgetti overplayed his hand in taking Qantas head on in the business market? Could this be like Ansett reincarnated, as the first comment suggests?
As usual Sir Richard comes out smelling sweet and SIA takes another haircut.
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Old 17th May 2013, 05:29
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I think the Virgin re-branding and move into the business market has been a 'bold' move that will take years become established before we see the true fall of the cards with regard to market share etc...

I suspect that Singapore Airlines is laughing all the way to the bank at managing to offload a controlling share in what is a bit of a dog in Tiger. It will be interesting to see if Virgin has any better success in establishing Tiger as a realistic low cost operation in Australia. This also may take years to see how it is going to pan out and will no doubt effect the profitability of the entire Virgin group in Australia for the foreseeable future.

Borgetti made a very bold move in virtually showing Qantas the two finger salute, it will be interesting to look back in 10 years time to see if that was a good strategy.

Last edited by Ollie Onion; 17th May 2013 at 05:30.
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Old 17th May 2013, 05:34
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They had to change or go broke. Now wouldn't it be handy if they had a cargo component to the business.
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Old 17th May 2013, 06:00
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I agree Ernie'.


What I have trouble getting my head around (and have for some time).....
  • Loan to SkyWest: $100 mil
  • Acquisition of SkyWest: Another $100 mil
  • Total cost of the ATR operation (35 aircraft): $500 mil+
  • Total cost to expand TT and to bring them to profitability (additional 19 aircraft): $1Bil?
Happy to be corrected on my beer coaster figures, but I think it's safe to say we're looking at serious dollars!

I feel the move to a full service airline was both inevitable and required. My greatest fear is that combined with all the other stuff, it may be a case of a "Bridge too far".
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Old 17th May 2013, 07:46
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It will get worse yet. So much invested in Regionals to cash in the mining side of things yet mining has peaked friends, it won't disappear but it is declining. I think Il Deuce saw gold in them thar hills but the gold seams are running dry!
The only one laughing all the way to the bank is Alliance! MacMillan's timing was impeccable, his bank balance proves it.
Anyone in aviation wishing or dreaming of the old days where big profits and high salaries rules the airwaves is dreaming. Only an idiot would buy shares in airlines.
Oh well, Skytrans is gearing up to sell or float its lemon, so maybe Il Deuce will blow some more cash on that half baked outfit?
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Old 17th May 2013, 12:24
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Its called 'leasing' Krusty! Similar to what your mob does with its engines. If I added up the cost of buying 100 odd SAAB donks then the figure would be astronomical too.....

Better get another coaster!
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Old 17th May 2013, 23:23
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Sorry Chadzat!

Might start my own airline. Cheap as chips if you have the right accountant.
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Old 18th May 2013, 00:58
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'Motley Fool' describes Airlines as places where capital goes to die, so long time investors may want to steer clear and leave it to the wanna-be stunt pilots.
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Old 19th May 2013, 00:33
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Gets better ladies and gents:

- Deferred aircraft deliveries
- Exec level pay cuts
- Voluntary Redundancies
- Leave without pay

Interesting times ahead for VA
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Old 19th May 2013, 13:05
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Abe Froeman, sausage king, you mention executive pay cuts? Surely not? Or perhaps something along the lines of a 10% salary cut offset by a 20% bonus increase and other little perks that remain under lock and key in the bowels of HR will be enshrined! No executive will take a 'legitimate' haircut, I can assure you that.
Then again, VA has always been fat, very very fat with a plethora of managers, specialists, all those wanky positions that contribute nothing but excess costs to the company.

Has Little John's spending spree of the past 18 months achieved nought? Or is Brett's legacy a bigger turd than first thought? Perhaps Richard The Third will come back out to Australia and dazzle us with more zany antics, or VA might revert back to flair and frivolity to enhance its industry perception and increase profits? Has putting a barrier and a purple screen up between the priveledged guests at the pointy end of the plane ( you know, 2 business travellers enjoying the fwd ****ter while 150 other guests get to enjoy the aft ****ter) not reigned in the expected profits?
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Old 19th May 2013, 22:54
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If Virgin is fat with managers etc I wonder what QF is? Obese?
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Old 19th May 2013, 23:09
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Yes, interesting times ahead.

Little johnny has had a pretty easy few years talking up the Virgin product while Joyce seemed hell bent on destroying 90 years of history and brand loyalty at Qantas.

You can safely bet your left one that with big Timmy Clark pulling the strings at Qantas, you will see no more undermining of that brand from within, and little Johhny Borghetti will have woken up to find he is actually in the fight of his life, rather than what seemed to be an Alan Joyce assisted joy ride to the top.

Wouldn't mind betting JB exercises his right to spend more time with his family in the nexrt year or so and hands a steaming dog turd over to the next poor b*stard who's given the opportunity to boost his retirement savings courtesy of the highly regarded (by those who have access to it) Virgin executive bonus scheme.

How much did JB get paid last year? 5m or so with bonuses? Not bad for a business whose after tax profit was around 20m.

Last edited by virginexcess; 19th May 2013 at 23:11.
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Old 19th May 2013, 23:56
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If Virgin is fat with managers etc I wonder what QF is? Obese?
A timely question indeed.

As the QF SH EA is currently under "negotiation" AIPA commissioned an economics consultant to compare key metrics between Virgin and Qantas in order to present a professional, reasoned and justifiable position.

Pilots / Airframes QF737 8.75 vs Virgin 11.65 -33.1%

Staff / Airframe. QF 155 vs Virgin 70 -121.4%

One of QFs 3 Chief Pilots whilst explaining QF again rejecting justified, measured and rational changes stated
we need to keep our competitive advantage
The austerity measures shall not evidently apply to the inhabitants of the
Qantas Campus
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Old 19th May 2013, 23:57
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So we have come full circle.

3-4 years ago the sky was falling in at Virgin. Rumours were going around about their imminent closure.

JB comes along, breathes new life into the place.

Now we are back where we started.

The boys at Tiger were breathing easy. I think Tiger will be the drag on the group and will be dropped or absorbed, and the frames used via Skywest.


There is an old saying about spreading yourself to thinly.

History repeats......
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Old 20th May 2013, 00:06
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Green Goblin

Not quite the full circle i would say.

Significant difference now is several shareholders with deep pockets and vested interest.

With QF's alilgnment with EK, Virgin's survival is now paramount to EY and SQ and NZ.

Whether this is a good thing or a bad thing is yet to be seen. Clearly there is potential for substantial conflict of interest amongst shareholders.

Interesting times ahead.
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Old 20th May 2013, 00:33
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It will be interesting to see what happens when qantas receive the 787 and if the final 8 a380's ever arrive and what routes they will be used on because that will really kill off virgin.
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Old 20th May 2013, 00:44
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Shareholders and deep pocket?

Singapore is in decline. We know it. They know it. As Asia develops there is more competition for 'hubbing' in cheaper places. Great product, great airline, but shortly irrelevant which is why they keep on putting money into overseas ventures.

Air New Zealand is a basket case. If it wasn't for the tax payers purse, they would have closed down long ago. While the product is great, the airline proud, and the staff loyal, it's always going to be a niche market spoon fed from the public purse - a bit like Tasmania. Same strategy as Singapore, invest in other markets and hopefully remain relevant.

Etihad.

Well the dynamics are the same as Emirates, there is only room in any market for two main players.

Expect to see a merger of two of the middle east carriers in the next few years. Where that leaves VA? Who knows. I'm guessing Qatar and Etihad will join forces to take on Emirates.

So yes, Virgin does have some interesting shareholders, but it is akin to tossing a bag of chips into a playground of thirty kids. Not everyone is going to get a taste, and there are going to be some tantrums!

Last edited by The Green Goblin; 20th May 2013 at 00:45.
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Old 20th May 2013, 01:07
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Crap crap and more crap


Where do you think all the money ( Oil ) is in the UAE???

It's not in Dubai that's for sure.....

Yep it's all in Abu Dhabi the home of ETIHAD......

Who bailed out Dubai a few years ago???

Yep Abu Dhabi, the capital of the UAE and the home of ETIHAD.....

Dubai ain't the capital and doesn't have all the money.

Last edited by nitpicker330; 20th May 2013 at 01:11.
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Old 20th May 2013, 01:10
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But Emirates has the brand, the critical mass, and the order books booked out for years to come.

While Emirates are not the perfect employer, they are a saint compared to the stories you hear from the other gulf carriers.
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Old 20th May 2013, 01:28
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GG, Air NZ would be one of the most profitable airlines in the world per revenue these past few years. Not many years AirNZ does not make a profit. Can't see how that is a basket case?

Wait for QF's figures, not good is the expectation, ie worse hit than VA.

Interesting times ahead.
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