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Virgin loses $767K a day.....for how much longer?

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Virgin loses $767K a day.....for how much longer?

Old 22nd May 2017, 00:51
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the 1900 days doesn't take into account bond maturity. Because our shareprice is so low, balance sheet so rooted and P & L in the toilet, he can't borrow any more money, at least not at sustainable interest rates, so he had to go to the bond market (junk bond market), and I assume those bonds will have a maturation date. As that date arrives he'll need to find another greater fool to get some money from to pay back the bonds.

I was watching wizard of lies last night, which is about the Bernie Madoff ponzi scheme. Can someone tell me how this is any different, other than the Virgin figures are in the public domain for all to see, yet everyone is still being dazzled by JB's personality.

People wonder how things like the Enron collaps can happen, yet here we are watching it unfold in slow motion. We all know what's happening, yet nobody is doing anything. It can only be that the dysfunctional makeup of the board has rendered it useless due to the competing interests of the major shareholders.
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Old 22nd May 2017, 01:13
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I dunno, he was hired to spend big to turn Vaus into a premium yield airline. And so he did and the major shareholders put their hands in their pockets to fund this. Why the surprise?
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Old 22nd May 2017, 01:29
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Originally Posted by maggot View Post
I dunno, he was hired to spend big to turn Vaus into a premium yield airline. And so he did and the major shareholders put their hands in their pockets to fund this. Why the surprise?
Because he was touted in the media and other outlets as a genius... he wasn't, he wasn't a genius at Qantas, he might have been good to some staff but in the whole, at Qantas, none of the strategy, etc. was his, he was more than likely just in the right place at the right time and it would seem was passed over for the CEO job because they judged him not to be up to it, if so, this is being borne out right now - even the WORST CEO of Qantas has never racked up 7 years of losses, destruction of the balance sheet, share price down the toilet and nothing, absolutely nothing, to show for it except some glossy, white tiled, chilly feeling and over-hyped so-called lounges that make me feel like I'm in a hospital waiting room. The much vaunted 'The Club' is a joke. Not even in the same street as the Chairman's Lounge and all by invitation so no fees charged and millions spent on it... it comes down to the fact that he is a salesperson only and one with the ability it would seem of a mail room boy. It's all front. My question is just how long does this continue... if this was Qantas, people would be screaming for his head. Just imagine what shape Qantas would be in now had he got the job.
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Old 22nd May 2017, 01:34
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So his spending plan and strategy wasn't sanctioned by the board?
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Old 22nd May 2017, 01:49
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Usually the strategy is developed by the CEO, the board simply approve it based on what they are told and yes, I blame them too for continually letting him go with zero runs on the board.
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Old 22nd May 2017, 01:53
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I have no skin in this game but QF are getting lots of applications from Virgin pilots and also recruiting them. I guess they don't like the look of things either.
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Old 22nd May 2017, 02:59
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Question is... Considering new aircraft and other major investments are off the table given balance sheet... What else can be done to fix situation?

Doubt there will be another chance at capital raising given Singapore and Etihad in particular have got losses of their own to deal with.

Domestic demand likely to remain subdued for some time. Can't be many throws of the dice left, hope I'm wrong.
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Old 22nd May 2017, 03:30
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Question is... Considering new aircraft and other major investments are off the table

Has the 737MAX order been deferred?
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Old 22nd May 2017, 04:00
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Originally Posted by chuboy View Post
Question is... Considering new aircraft and other major investments are off the table given balance sheet... What else can be done to fix situation?

Doubt there will be another chance at capital raising given Singapore and Etihad in particular have got losses of their own to deal with.

Domestic demand likely to remain subdued for some time. Can't be many throws of the dice left, hope I'm wrong.
How would new aircraft fix the problem? The A330's are less than a 5 years old and are the best aircraft for Asia (where they are about to go). QF and the majority of the Asian airlines are operating them on the Australia to Asia routes.

Same goes with the NG's, most are less than 5 years old, with the older ones eventually going to Tiger.

The B777's are older than 5 years, but they are still the best aicraft for the Pacific route.

Given, the cost of fuel at the moment why purchase/lease new aicraft that will incur higher purchase/lease expenses for no real savings, as the saving in fuel costs were be outweighed by the purchase/ lease costs.

The MAX's have been deferred to next year, due to the above.

Seems a number of people on here want to see VA fall over, why is that? Did they miss out on a job at VB/VA? The same occurred a few years back when QF was in a bad way.

Everyone seems to forget that both airlines employ a large number of Australian's, plus there are the support companies that the also employ more Australian's.

We should be happy that we do not have a monopoly or is that what everyone wants?
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Old 22nd May 2017, 04:06
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737Max deliveries deferred to 2019... VA can't afford the more fuel/maintenance efficient aircraft.
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Old 22nd May 2017, 04:28
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I doubt that many want to see VA fall over completely, including Qantas, who want a weak but still viable competitor in the duopoly market.

The elephant in the room that no one has really talked about is that VA has allowed their cost base to blow out at a pace beyond their revenue. In what looks like an attempt to avoid any labour disputes while trying to secure the corporate accounts they need, VA has 'sold the farm' on costs and allowed them to balloon far too close to Qantas's costs, when they are simply unable to charge anything like what Qantas can charge their corporate clients. I don't think VA will be back in the back until they address this fundamental issue and it may require some industrial discomfort to achieve.
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Old 22nd May 2017, 04:48
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Originally Posted by BPA View Post
How would new aircraft fix the problem? The A330's are less than a 5 years old and are the best aircraft for Asia (where they are about to go). QF and the majority of the Asian airlines are operating them on the Australia to Asia routes.

Same goes with the NG's, most are less than 5 years old, with the older ones eventually going to Tiger.

The B777's are older than 5 years, but they are still the best aicraft for the Pacific route.

Given, the cost of fuel at the moment why purchase/lease new aicraft that will incur higher purchase/lease expenses for no real savings, as the saving in fuel costs were be outweighed by the purchase/ lease costs.

The MAX's have been deferred to next year, due to the above.

Seems a number of people on here want to see VA fall over, why is that? Did they miss out on a job at VB/VA? The same occurred a few years back when QF was in a bad way.

Everyone seems to forget that both airlines employ a large number of Australian's, plus there are the support companies that the also employ more Australian's.

We should be happy that we do not have a monopoly or is that what everyone wants?
Nobody wants to see it fall over, which is why many are saying it's time the CEO went back to the mail room... and the media for one stopped trying the canonize him as being some sort of genius which he isn't... all the crap in the media at the time, including from Branson himself about how Qantas will rue the day they let him go. No they won't and they're not... they're probably celebrating the fact they didn't promote him. One of the reasons I think this has all gone south is because the 'strategy' from this particularly small minded person was not to beat Qantas but to 'get back at' them for denying him the job, it's certainly how it seems and his book seems to be dripping with hatred for his former employer, even saying some pretty off color and completely unsubstantiated things about a Qantas incident which almost seems actionable - surprised Qantas haven't moved on it but then again, perhaps leaving it just says more about him than them. Rumor was that he was referred to a few years back in the Qantas circles as 'mini me' as he seemed to not have a strategy, just copy everything Qantas had. Well, well done. He's now at the helm of an airline that was once profitable but now has unit costs higher than Qantas' on just about every metric. Again, no one wants to see it fall over, just to see someone who knows what they're doing take it over and save it, if indeed there's anything left to save.

Last edited by AerialPerspective; 22nd May 2017 at 04:51. Reason: sp
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Old 22nd May 2017, 05:04
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Don't get me wrong I want them to survive as much as anyone.

I say new aircraft because 5 777s and 6 A330 is not really enough to have a meaningful international network from the golden triangle. The types are fine but there aren't enough of them to maintain a daily feed into the hubs of its biggest three partners, which is what attracts the high yielding business pax.
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Old 22nd May 2017, 05:09
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Originally Posted by chuboy View Post
Don't get me wrong I want them to survive as much as anyone.

I say new aircraft because 5 777s and 6 A330 is not really enough to have a meaningful international network from the golden triangle. The types are fine but there aren't enough of them to maintain a daily feed into the hubs of its biggest three partners, which is what attracts the high yielding business pax.
Not only that, the 777 aren't worth much to sell anyway because some moron at VA (DJ) who obviously knew nothing about aircraft, international ops or re-sale went ahead and removed the wide door on the rear hold so the aircraft can't carry pallets fore and aft, only forward making them largely useless to any serious long haul operator... knowing what I know I'm sure they were warned not to do it but went ahead anyway because they can't be told.

Last edited by AerialPerspective; 22nd May 2017 at 05:54. Reason: add
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Old 22nd May 2017, 05:09
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Virginexcess - Sarcasm, bud.
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Old 22nd May 2017, 06:31
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Déjà Vu

Haemorrhaging cash, a CEO under pressure and those god damned 777 rear cargo doors......

The SMH
July 27 2009
Small cargo door restricts Virgin
Matt O'Sullivan

A SIMPLE rear cargo door could hinder Virgin Blue's ability to raise much-needed cash.

Australia's second-largest airline is believed to have attempted sale-and-leaseback deals for some of the new Boeing 777-300 passenger jets its long-haul carrier, V Australia, flies between Australia and the US.

But Virgin's decision when it ordered the aircraft from Boeing to opt for smaller rear cargo doors means the 777s cannot take freight in pallets.

Not only does this make them less appealing to aircraft leasing companies, it reduces the airline's ability to offset weak passenger loads on flights between Australia and Los Angeles by carrying large cargo.

It is estimated the sale and leaseback of a single 777 could raise more than $100 million for Virgin. Sales and leasebacks of aircraft are one of the few ways for airlines to single-handedly boost their cash reserves.

Boeing 777s and Airbus 320s are believed to be some of the few aircraft models that leasing companies have an appetite for at present amid a large surplus of planes caused by the global downturn in travel.

But industry insiders also say that V Australia's new 777s have been modified to such an extent - each aircraft has inbuilt features such as two bars and high-tech entertainment systems - that the airline cannot gain a fair value from a sale and leaseback. It is believed it would cost up to $10 million to restore each aircraft to a standard state to make it suitable to leasing companies.

"Those leasing companies just don't like non-standard aircraft," an industry official said.

It further limits Virgin's options for gaining working capital after a lukewarm response from institutional investors to a capital-raising.

Although V Australia did lease the first 777, it bought two more directly from Boeing this year. The aircraft have a list price of more than $US250 million ($300 million) each, but the airline paid considerably less.

V Australia is due to take delivery of a fourth 777 this month, which will allow it to begin flights between Melbourne and Los Angeles in September.

At least the first three 777s have smaller rear cargo doors than standard models. The doors cannot be enlarged later to allow the loading of pallets because they are a structural part of the aircraft.

V Australia and Hawaiian Airlines are among the few international carriers flying from Australia that have opted for smaller rear cargo doors on their longer-range wide-body aircraft.

Virgin has recently shown a desire to sell and lease back aircraft to bolster its balance sheet, having completed such a deal for three new Boeing 737-800s and an older plane in March with BOC Aviation of China.
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Old 22nd May 2017, 07:16
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Don't VA 777's have small doors both Fwd and Aft?
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Old 22nd May 2017, 07:18
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Yes. Just like those... and likely they will find the same as VA did when they tried to sell and lease back their aircraft with the small door and no lessor would touch them... a used aircraft that doesn't have the additional flexibility. It was a stupid decision, considering they lose money hand over fist on the Pacific, it is incredibly stupid not to have had this option which could streamline an additional revenue stream by carrying transfer freight on pallet base units, but no surprise for a carrier that buys a regional airline then sells half it's fleet and contracts out the flying to another operator - and no, I don't consider just because SQ, TG, JL and a Chinese carrier ordered them that that makes it smart. SQ has made plenty of dumb decisions in the past, like buying everything that flies to do the same job... Thai Airways who apparently TWICE damaged MD-11s doing engine runs which jumped the chocks and Japan Airlines who were allegedly broke and had to be bailed out by QF, AA and others.
It's akin to AN ordering the 767 without the wide cargo door at the front and then not being able to easily transfer pallets to its 747s from the 5 original aircraft or ordering (paying more) for the A320 without ULD capability to save money on GSE, then spending millions more on injury compensation. These are things that experienced airlines generally don't do.

Last edited by AerialPerspective; 22nd May 2017 at 07:21. Reason: add
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Old 22nd May 2017, 08:47
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VA have 3 B777s with the small doors and 2 with the big doors. AP is correct on the transfer issues but they were carrying over 15 tonnes of freight out of LA each night to Syd up until recently. Must have the large door ones doing that route only.
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Old 22nd May 2017, 10:03
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Originally Posted by AerialPerspective View Post
Yes. Just like those... and likely they will find the same as VA did when they tried to sell and lease back their aircraft with the small door and no lessor would touch them... a used aircraft that doesn't have the additional flexibility. It was a stupid decision, considering they lose money hand over fist on the Pacific, it is incredibly stupid not to have had this option which could streamline an additional revenue stream by carrying transfer freight on pallet base units, but no surprise for a carrier that buys a regional airline then sells half it's fleet and contracts out the flying to another operator - and no, I don't consider just because SQ, TG, JL and a Chinese carrier ordered them that that makes it smart. SQ has made plenty of dumb decisions in the past, like buying everything that flies to do the same job... Thai Airways who apparently TWICE damaged MD-11s doing engine runs which jumped the chocks and Japan Airlines who were allegedly broke and had to be bailed out by QF, AA and others.
It's akin to AN ordering the 767 without the wide cargo door at the front and then not being able to easily transfer pallets to its 747s from the 5 original aircraft or ordering (paying more) for the A320 without ULD capability to save money on GSE, then spending millions more on injury compensation. These are things that experienced airlines generally don't do.
Don't dispute it's not ideal, just that the stupid decision was isolated to VA and that "smart carriers" knew better.

Ive heard all the rumours related to that decision too, like the one where Boeing had to manufacture the Jig to make the door as nobody else ordered one with the small door, and the original Jig was lost.
The rumour was that Va were literally the only ones getting around.
Obviously complete and utter bullshit but it went around.

SQ not an experienced, smart long haul carrier??
Care to name a long haul airline that has only made good decisions?
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