Virgin Australia to be privatised ?
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Virgin Australia to be privatised ?
With the resignation of Christopher Luxon of Air New Zealand from the board of Virgin Australia I suspect Air New Zealand may be paving the way for Virgin Australia to be privatised and the Air New Zealand holding disposed of.
It has been known for some time that Air New Zealand has not been happy with the financial return of their investment in Virgin Australia.
It has been known for some time that Air New Zealand has not been happy with the financial return of their investment in Virgin Australia.
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The business is a rudderless ship at the moment, JB's been like a GenY with a credit card, and trying to pick up the pieces of an already nonviable business. Workforce costs have continued to increase and an poor taste TV campaign revolving around the crew instead of the customer... Hmmm. Why would you use them?
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Most analysts estimate Air NZ has made a $100mil profit on its investment. A 28% return over 4 years. Not bad in the airline world.
Make no mistake, with no game change Jetstar would've confined Virgin blue to a minor company and probably driven them out of business to be replaced by Lion air Australia.
Virgin has made significant inroads against a dominant competitor, no small achievement. Their handicap is access to cheaper capital which will hopefully be remedied in due course. Meanwhile the dominant competitor has demanded hand outs from the federal government, wasted millions on a failed Asian strategy, treated its staff with utter contempt and now thanks to some fortuitous infighting amongst oil producers is enjoying the windfall of a lucky hedging policy.
All of those relishing in Virgins short term woes should perhaps consider the alternatives if in the highly unlikely event it should fold. Air Asia and lion air would only be too happy to import their business models into the highly lucrative Australian domestic market....
Make no mistake, with no game change Jetstar would've confined Virgin blue to a minor company and probably driven them out of business to be replaced by Lion air Australia.
Virgin has made significant inroads against a dominant competitor, no small achievement. Their handicap is access to cheaper capital which will hopefully be remedied in due course. Meanwhile the dominant competitor has demanded hand outs from the federal government, wasted millions on a failed Asian strategy, treated its staff with utter contempt and now thanks to some fortuitous infighting amongst oil producers is enjoying the windfall of a lucky hedging policy.
All of those relishing in Virgins short term woes should perhaps consider the alternatives if in the highly unlikely event it should fold. Air Asia and lion air would only be too happy to import their business models into the highly lucrative Australian domestic market....
Air Asia and lion air would only be too happy to import their business models into the highly lucrative Australian domestic market....
Agree Virgin has made inroads, but needs to concentrate on the core business, domestic flying!
Running a fleet of 5 777s, for a minor International operation must be costing them big time!
Running a fleet of 5 777s, for a minor International operation must be costing them big time!
Meanwhile...... Elsewhere in the world, where traditionally buoyant domestics markets have tanked, those airlines are Judiciously growing revenue very successfully via international markets, both long and medium haul.
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JB's strategy at VA has been a huge failure and ANZ know it and are trying to cash in their chips while there are still some fat whales with loose wallets hanging around.
JB has boxed VA into a corner and is set for a future of poor financial returns. ANZ is becoming collateral damage with a rejuvenated QF and AA starting to land punches on ANZ.
JB is the best CEO QF has ever had
QF should still be paying JB for all the good work he continues to do for QF.
JB has boxed VA into a corner and is set for a future of poor financial returns. ANZ is becoming collateral damage with a rejuvenated QF and AA starting to land punches on ANZ.
JB is the best CEO QF has ever had
QF should still be paying JB for all the good work he continues to do for QF.
Not Surprising
Really this is no surprise. JB was not the wunderkind he was made out to be at QF... the book that was written about the work at VA included (regardless of anyone's opinion) a very off color reference to the QF1 incident at BKK, that shocked me, coming to the book with an open mind, of amateurism and unprofessionalism. You don't make accusations like that from that position, it just sounds bad if nothing else, like sour grapes.
The way it appears from what can be gleaned is that a very large amount of money has been spent on lounges which are the most clinical, white-hospital-waiting area unappealing environments to wait in... even if it's 40 degrees I feel freezing in those lounges.
Then we had the re-branding, personally after the designer's work at QF which threw out of balance a very striking logo I'm surprised he got any work again but in he goes and comes up with a few bits of paper cut out of Virgin America, Virgin Express and Virgin Atlantic liveries moved around on a piece of paper and presented as a new image... it's the most insipid design... at least DJ you could spot from 10 miles out, like QF but not now... tail looks pink from a distance.
Then we move on to the choice of SABRE, old technology when apparently the more modern Amadeus FM/CM was embedded already at V Australia... SABRE has been a continual issue from what I've heard, less functionality than their partner's systems (except EY)... SABRE is allegedly a very good sales platform but hopeless at airports and at the delivery end - it is not easily capable of the sort of kiosk driven products that QF offers via Amadeus and even it's prior system - who's used bag drop at VA, queue up, check in, then tag bag then go to a counter and queue up again to drop your bag after showing ID - everyone in the same queue as me was asking 'what's the point when at QF I can just swipe my card get a BP, then swipe it again and deposit my own bag??? - this is part of the problem, having someone whose entire experience is sales and marketing making operational decisions such as this - I do know from the old culture in QF that airports had to fight marketing/sales for years for investment because in most sales people's mind the airport stuff 'just happened'.
On top of this, no profit for 5 years.
A few comments here have stated that the transformation has been impressive... NO, it hasn't. Non-adjustable business class on narrow-bodies results in massive disruption in aircraft changes to people who you want to keep happiest with fixed perspex screens that look cheap and it hasn't made a profit.
If it was a world class product that had increased profits then it would be impressive but all it has done is drive the airline into a debt crisis with no end in sight. You can make the best product in the world if you don't need to make a profit.
This is not saying Qantas are the be all and end all, that was once a very good airline but has been white anted but at the end of the day... public companies are required to provide a return and QF does that and VA doesn't regardless of rhetoric.
For all intents and purposes it's been a disaster and could have been done better and cheaper.
My pick would be for Delta to buy Air NZ share, maybe even increase to near majority.
BTW, Analysts are not saying NZ has made $100m dollars, they have lost approximately $100m paying $480 and share now worth $381.
Any other benefits they've received could have been obtained via marketing agreements, etc.
While I'm not defending QF either, there are some inaccuracies on this thread... both airlines benefited to an extent from lower fuel prices but QF benefited slightly more because it hedged cleverly and VA didn't, VA did hedge but not so as to take best advantage. The CEO was at QF when they were leaders in hedging so there is no excuse for VA not getting this right it would seem.
QF have taken about 3-6% capacity out of the market since the end of the 'capacity war' and VA have added .1% (WTF???).
The sooner there is a clean out at VA instead of good people being let go (sometimes because of frustration of being isolated for fighting against stupidity I'm told) the better the future will be for the good people that are in the company, many of whom are in the process of leaving through sheer frustration. Once again, anecdotal, just what I'm told as I'm not connected with VA.
As for QF, they just need a people person at the top now all the restructuring has been done.
To summarize, there's been obscene expenditure, the wrong people employed in some key positions, bad decisions on equipment and IT, lounges that are in no way competitive - I mean they had Air NZ to look at, their lounges are fine - increased debt, no profit for 5 years. All in all, not very impressive.
The way it appears from what can be gleaned is that a very large amount of money has been spent on lounges which are the most clinical, white-hospital-waiting area unappealing environments to wait in... even if it's 40 degrees I feel freezing in those lounges.
Then we had the re-branding, personally after the designer's work at QF which threw out of balance a very striking logo I'm surprised he got any work again but in he goes and comes up with a few bits of paper cut out of Virgin America, Virgin Express and Virgin Atlantic liveries moved around on a piece of paper and presented as a new image... it's the most insipid design... at least DJ you could spot from 10 miles out, like QF but not now... tail looks pink from a distance.
Then we move on to the choice of SABRE, old technology when apparently the more modern Amadeus FM/CM was embedded already at V Australia... SABRE has been a continual issue from what I've heard, less functionality than their partner's systems (except EY)... SABRE is allegedly a very good sales platform but hopeless at airports and at the delivery end - it is not easily capable of the sort of kiosk driven products that QF offers via Amadeus and even it's prior system - who's used bag drop at VA, queue up, check in, then tag bag then go to a counter and queue up again to drop your bag after showing ID - everyone in the same queue as me was asking 'what's the point when at QF I can just swipe my card get a BP, then swipe it again and deposit my own bag??? - this is part of the problem, having someone whose entire experience is sales and marketing making operational decisions such as this - I do know from the old culture in QF that airports had to fight marketing/sales for years for investment because in most sales people's mind the airport stuff 'just happened'.
On top of this, no profit for 5 years.
A few comments here have stated that the transformation has been impressive... NO, it hasn't. Non-adjustable business class on narrow-bodies results in massive disruption in aircraft changes to people who you want to keep happiest with fixed perspex screens that look cheap and it hasn't made a profit.
If it was a world class product that had increased profits then it would be impressive but all it has done is drive the airline into a debt crisis with no end in sight. You can make the best product in the world if you don't need to make a profit.
This is not saying Qantas are the be all and end all, that was once a very good airline but has been white anted but at the end of the day... public companies are required to provide a return and QF does that and VA doesn't regardless of rhetoric.
For all intents and purposes it's been a disaster and could have been done better and cheaper.
My pick would be for Delta to buy Air NZ share, maybe even increase to near majority.
BTW, Analysts are not saying NZ has made $100m dollars, they have lost approximately $100m paying $480 and share now worth $381.
Any other benefits they've received could have been obtained via marketing agreements, etc.
While I'm not defending QF either, there are some inaccuracies on this thread... both airlines benefited to an extent from lower fuel prices but QF benefited slightly more because it hedged cleverly and VA didn't, VA did hedge but not so as to take best advantage. The CEO was at QF when they were leaders in hedging so there is no excuse for VA not getting this right it would seem.
QF have taken about 3-6% capacity out of the market since the end of the 'capacity war' and VA have added .1% (WTF???).
The sooner there is a clean out at VA instead of good people being let go (sometimes because of frustration of being isolated for fighting against stupidity I'm told) the better the future will be for the good people that are in the company, many of whom are in the process of leaving through sheer frustration. Once again, anecdotal, just what I'm told as I'm not connected with VA.
As for QF, they just need a people person at the top now all the restructuring has been done.
To summarize, there's been obscene expenditure, the wrong people employed in some key positions, bad decisions on equipment and IT, lounges that are in no way competitive - I mean they had Air NZ to look at, their lounges are fine - increased debt, no profit for 5 years. All in all, not very impressive.
The business is a rudderless ship at the moment, JB's been like a GenY with a credit card, and trying to pick up the pieces of an already nonviable business. Workforce costs have continued to increase and an poor taste TV campaign revolving around the crew instead of the customer... Hmmm. Why would you use them?
My bets on Singapore taking complete control with the next 24 months, appointing a new executive and running it to their protocol. SIA has been focusing recently on consolidating their businesses under the one group, plus SIAs apparent involvement around the while Virgin/Tiger thing indicates they already have more input than the other two. Scoot also interlines with Virgin, happend pretty much overnight.
Singapore Airlines
Virgin Australia
Scoot
Silkair
Tiger Airways
Singapore Airlines
Virgin Australia
Scoot
Silkair
Tiger Airways
Many forget that JB has saved VA. IT was a LCC that was floundering. It has taken lot of time, effort and cash to transform it into a full service airline.
Mistakes include some issues with fuel hedging and perhaps some poor fleet choices. Some of these issues he inherited.
SQ owned 49% of VS. Do you really think they have the required $1B to invest in VA? Both SQ and EY are busy with their own issues
Who is hiding in the bushes. DELTA. They already bought SQ's 49% of VS. VX is on the market (as of last week)
Watch out for the Delta controlled Virgin Airline Group. Cashed up and ready to pounce
Mistakes include some issues with fuel hedging and perhaps some poor fleet choices. Some of these issues he inherited.
SQ owned 49% of VS. Do you really think they have the required $1B to invest in VA? Both SQ and EY are busy with their own issues
Who is hiding in the bushes. DELTA. They already bought SQ's 49% of VS. VX is on the market (as of last week)
Watch out for the Delta controlled Virgin Airline Group. Cashed up and ready to pounce
Many forget that JB has saved VA. IT was a LCC that was floundering. It has taken lot of time, effort and cash to transform it into a full service airline.
None of the problems JB faces are inherited, all are of his own making
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None of the problems JB faces are inherited, all are of his own making