Be seeing you John...
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Since John joined Virgin, the company has suffered losses of more than $1B. It has survived by continued capital injection by a few key shareholders. Had these investments not occur - we would not see Virgin today. With the share price at $2.07 in 2007, to current day levels of around $0.20, it has hovered on average to under $0.50. That's a 900% devaluation in the stock over the last 10 years - not good at all.
However, it is pleasing to see that it can now report free cash flow (so critical for business), and it is paying down debt. And the underlying performance for the last fiscal was its best yet. Sustainable earnings growth will now be essential, as we see market softening. It still has a 'way' to go.
With restrictions on Chinese capital outflow, and Etihad' own financial woes - they're going to need to be self-sustaining in the coming years.
Virgin had to do something, and I don't feel John's "game changer" program was the wrong thing to do. What they did not do well was estimate the time it would take to return positive results. That took a few years longer than anticipated. Virgin is very lucky it was saved by the capital raising it did. Very lucky.
However, it is pleasing to see that it can now report free cash flow (so critical for business), and it is paying down debt. And the underlying performance for the last fiscal was its best yet. Sustainable earnings growth will now be essential, as we see market softening. It still has a 'way' to go.
With restrictions on Chinese capital outflow, and Etihad' own financial woes - they're going to need to be self-sustaining in the coming years.
Virgin had to do something, and I don't feel John's "game changer" program was the wrong thing to do. What they did not do well was estimate the time it would take to return positive results. That took a few years longer than anticipated. Virgin is very lucky it was saved by the capital raising it did. Very lucky.
One of the big problems with his strategy is the way it was implemented.
“We need a330’s and we need them now”. There is a term used in virgin called JWIN. John wants it now...
he hated the old paint scheme, so he demanded that the aircraft be painted quickly, well before they were due,
he hated the uniforms so they they had to go quickly (can’t say I blame him on that one)
He hated the embraer so that fleet had to go
he wanted to take QF on in the regional market so they had to get a kazillion ATR’s at over inflated prices, and then buy Skywest at an over inflated price, then buy a couple of F100’s off Alliance at an over inflated price.
he hated the res system so it had to go
see a theme appearing? A more managed implementation of the plan would have achieved the gains he wanted without wasting hundreds of millions of dollars
“We need a330’s and we need them now”. There is a term used in virgin called JWIN. John wants it now...
he hated the old paint scheme, so he demanded that the aircraft be painted quickly, well before they were due,
he hated the uniforms so they they had to go quickly (can’t say I blame him on that one)
He hated the embraer so that fleet had to go
he wanted to take QF on in the regional market so they had to get a kazillion ATR’s at over inflated prices, and then buy Skywest at an over inflated price, then buy a couple of F100’s off Alliance at an over inflated price.
he hated the res system so it had to go
see a theme appearing? A more managed implementation of the plan would have achieved the gains he wanted without wasting hundreds of millions of dollars
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One of the big problems with his strategy is the way it was implemented.
“We need a330’s and we need them now”. There is a term used in virgin called JWIN. John wants it now...
he hated the old paint scheme, so he demanded that the aircraft be painted quickly, well before they were due,
he hated the uniforms so they they had to go quickly (can’t say I blame him on that one)
He hated the embraer so that fleet had to go
he wanted to take QF on in the regional market so they had to get a kazillion ATR’s at over inflated prices, and then buy Skywest at an over inflated price, then buy a couple of F100’s off Alliance at an over inflated price.
he hated the res system so it had to go
see a theme appearing? A more managed implementation of the plan would have achieved the gains he wanted without wasting hundreds of millions of dollars
“We need a330’s and we need them now”. There is a term used in virgin called JWIN. John wants it now...
he hated the old paint scheme, so he demanded that the aircraft be painted quickly, well before they were due,
he hated the uniforms so they they had to go quickly (can’t say I blame him on that one)
He hated the embraer so that fleet had to go
he wanted to take QF on in the regional market so they had to get a kazillion ATR’s at over inflated prices, and then buy Skywest at an over inflated price, then buy a couple of F100’s off Alliance at an over inflated price.
he hated the res system so it had to go
see a theme appearing? A more managed implementation of the plan would have achieved the gains he wanted without wasting hundreds of millions of dollars
I believe that if Virgin has the right person at the helm, the ship can be steadied.
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John had to do what he did to Virgin for its survival. Low cost airlines only survive by continued growth in order to take advantages of economies of scale and market share. If you stop growing, your margins are eaten up by cost rises e.g. cogs, fuel, labour etc.
You can't just increase price in this environment. The customer type will transfer to bus, train, or not travel at all. And then you get further hammered by your competitor who has the scale and the capital, to undercut you, and continue to grow. It was a double sword for Virgin. It would be gone today. He did the only thing he could to ensure survival.
You can't just increase price in this environment. The customer type will transfer to bus, train, or not travel at all. And then you get further hammered by your competitor who has the scale and the capital, to undercut you, and continue to grow. It was a double sword for Virgin. It would be gone today. He did the only thing he could to ensure survival.
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Low cost airlines only survive by continued growth in order to take advantages of economies of scale and market share.
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John had to do what he did to Virgin for its survival. Low cost airlines only survive by continued growth in order to take advantages of economies of scale and market share. If you stop growing, your margins are eaten up by cost rises e.g. cogs, fuel, labour etc.
You can't just increase price in this environment. The customer type will transfer to bus, train, or not travel at all. And then you get further hammered by your competitor who has the scale and the capital, to undercut you, and continue to grow. It was a double sword for Virgin. It would be gone today. He did the only thing he could to ensure survival.
You can't just increase price in this environment. The customer type will transfer to bus, train, or not travel at all. And then you get further hammered by your competitor who has the scale and the capital, to undercut you, and continue to grow. It was a double sword for Virgin. It would be gone today. He did the only thing he could to ensure survival.
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John had to do what he did to Virgin for its survival. Low cost airlines only survive by continued growth in order to take advantages of economies of scale and market share. If you stop growing, your margins are eaten up by cost rises e.g. cogs, fuel, labour etc.
You can't just increase price in this environment. The customer type will transfer to bus, train, or not travel at all. And then you get further hammered by your competitor who has the scale and the capital, to undercut you, and continue to grow. It was a double sword for Virgin. It would be gone today. He did the only thing he could to ensure survival.
You can't just increase price in this environment. The customer type will transfer to bus, train, or not travel at all. And then you get further hammered by your competitor who has the scale and the capital, to undercut you, and continue to grow. It was a double sword for Virgin. It would be gone today. He did the only thing he could to ensure survival.
Thread Starter
John had to do what he did to Virgin for its survival. Low cost airlines only survive by continued growth in order to take advantages of economies of scale and market share. If you stop growing, your margins are eaten up by cost rises e.g. cogs, fuel, labour etc.
You can't just increase price in this environment. The customer type will transfer to bus, train, or not travel at all. And then you get further hammered by your competitor who has the scale and the capital, to undercut you, and continue to grow. It was a double sword for Virgin. It would be gone today. He did the only thing he could to ensure survival.
You can't just increase price in this environment. The customer type will transfer to bus, train, or not travel at all. And then you get further hammered by your competitor who has the scale and the capital, to undercut you, and continue to grow. It was a double sword for Virgin. It would be gone today. He did the only thing he could to ensure survival.
777Nine pretty much covered the main points, but I'll gladly add to it.
The acquisition of Tiger
The whole Bali debacle
Running 330's from Perth to Abu - costing millions when it didn't even happen
The ATR's
The
contest of 2014 with no winnersHedging fuel incorrectly, with the ex-head of Caltex on your board
I honestly can't believe you'd sit there and say he (and the board) have made smart decisions, while he smugly sits in Business class and asks the LA - SYD inbound crew what he should name his new P1 (actually happened) after taking a bonus when the company is making its what, 6th straight loss?
Last edited by romeocharlie; 14th Jun 2018 at 10:49. Reason: Additional info.
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You're kidding right? Spending money in a time of transition when saving is imperative. The environment dictated an increase in fares - the RASK only increased for both companies when they were both to an unsustainable point. The EPS is indicative of the bad decisions that have been made over his tenure.
777Nine pretty much covered the main points, but I'll gladly add to it.
The acquisition of Tiger
The whole Bali debacle
Running 330's from Perth to Abu - costing millions when it didn't even happen
The ATR's
The contest of 2014 with no winners
Hedging fuel incorrectly, with the ex-head of Caltex on your board
777Nine pretty much covered the main points, but I'll gladly add to it.
The acquisition of Tiger
The whole Bali debacle
Running 330's from Perth to Abu - costing millions when it didn't even happen
The ATR's
The
contest of 2014 with no winnersHedging fuel incorrectly, with the ex-head of Caltex on your board
Tiger Acquisition. Singapore Enforced.
If you think Etihad and Singapore were just sitting back watching everything happen your in another world.
Hold the CEO accountable. No Problem. Don’t forget to hold those major shareholders also because they have more involvement behind close doors than most think. The above two were key decision makers in major cockups also.
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Respectfully, Virgin would have been eaten up by QF at both ends. Keeping a sole LCC business would have ended in failure. You can't argue this. There was nothing to save, and margins were not growing at Virgin (look back at their annual reports to see). Growing cASK, declining rASK, barley enough operating cash flow - what else could he do. And if he did not do what he did - someone else would have.
You point out some specific examples, that in "retrospective eyes" did not turn out as planned - but that is called having courage to try things. Qantas has done the same, and failed at many also.
I speak to the vision of replicating the successful Qantas model of high-end and low-end market servicing. Required in this country. We just do not have the population, or the advantages of hubs. And out cost base in this country is very high, and we get punished on forex. Lots of disadvantages operating in Australia.
You point out some specific examples, that in "retrospective eyes" did not turn out as planned - but that is called having courage to try things. Qantas has done the same, and failed at many also.
I speak to the vision of replicating the successful Qantas model of high-end and low-end market servicing. Required in this country. We just do not have the population, or the advantages of hubs. And out cost base in this country is very high, and we get punished on forex. Lots of disadvantages operating in Australia.
Courage, yes but no. Is it courageous when there is no skin off ones back?
He had a vision, and the execution was inept at best. Almost like being thrown into the deep end and asking for a life jacket.
Would have been much easier to organize his financial backing and support before looking to pass the hat around. Someone screwed the numbers.
He had a vision, and the execution was inept at best. Almost like being thrown into the deep end and asking for a life jacket.
Would have been much easier to organize his financial backing and support before looking to pass the hat around. Someone screwed the numbers.
Last edited by Bula; 15th Jun 2018 at 16:40.
Thread Starter
Perth to Abu Dhabi. Etihad Enforced.
Tiger Acquisition. Singapore Enforced.
If you think Etihad and Singapore were just sitting back watching everything happen your in another world.
Hold the CEO accountable. No Problem. Don’t forget to hold those major shareholders also because they have more involvement behind close doors than most think. The above two were key decision makers in major cockups also.
Paid
is an understatement romeocharile. An all care, no responsibility role is hardly worthy of pay + bonuses in the millions, or tens of millions. These are self awarded accolades which for little to no real gain has been achieved. If we as pilots were as inept at managing these airlines, we would be out of a job before we knew it.
commensurately
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Someone screwed the numbers.
This debacle of his own making is the result of surrounding himself with sycophantic “Yes” men with no balls.
Anybody who had the audacity to point out his errors or mistakes were quickly removed from the company!
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Virgin had to do something, and I don't feel John's "game changer" program was the wrong thing to do. What they did not do well was estimate the time it would take to return positive results. That took a few years longer than anticipated. Virgin is very lucky it was saved by the capital raising it did. Very lucky.
Low cost airlines only survive by continued growth in order to take advantages of economies of scale and market share. If you stop growing, your margins are eaten up by cost rises e.g. cogs, fuel, labour etc.
Many will recall in 2013 when little Napoleon ran to the government looking for $3billion 'as the market was distorted' VAH had exploited the breech and as Qantas was too busy growing JQ it took along time for the opponent to notice, for once VAH had backing Qantas could not afford the distraction of JQ, a low yield high volume business...
No battle plan survives contact with the enemy.
Perhaps it was executed imperfectly, but the strategy was correct. The idea was to lose money at a decreasing rate until the J class position was solidified, thereby ensuring the business could absorb the migration of the cost base. The move scared Qantas.
The Australian market actually is better served by two robust participants.
One of the big problems with his strategy is the way it was implemented.
“We need a330’s and we need them now”. There is a term used in virgin called JWIN. John wants it now...
he hated the old paint scheme, so he demanded that the aircraft be painted quickly, well before they were due,
he hated the uniforms so they they had to go quickly (can’t say I blame him on that one)
He hated the embraer so that fleet had to go
he wanted to take QF on in the regional market so they had to get a kazillion ATR’s at over inflated prices, and then buy Skywest at an over inflated price, then buy a couple of F100’s off Alliance at an over inflated price.
he hated the res system so it had to go
see a theme appearing? A more managed implementation of the plan would have achieved the gains he wanted without wasting hundreds of millions of dollars
“We need a330’s and we need them now”. There is a term used in virgin called JWIN. John wants it now...
he hated the old paint scheme, so he demanded that the aircraft be painted quickly, well before they were due,
he hated the uniforms so they they had to go quickly (can’t say I blame him on that one)
He hated the embraer so that fleet had to go
he wanted to take QF on in the regional market so they had to get a kazillion ATR’s at over inflated prices, and then buy Skywest at an over inflated price, then buy a couple of F100’s off Alliance at an over inflated price.
he hated the res system so it had to go
see a theme appearing? A more managed implementation of the plan would have achieved the gains he wanted without wasting hundreds of millions of dollars
SABRE is a piece of crap so hating the reservations system is one thing but replacing it with the most pathetic of the alternatives doesn’t make it worthwhile... what else, oh yes, letting pilots go at TT before you have new aircraft on the AOC and employing pilots for those aircraft who then sit around being paid while you have two or was it three attempts to get the AOC variation... don’t mention DPS...
There’s just so much the theme is clearly ‘incompetence’... also born out by good people who always seem to disappear while imbeciles get promoted... not just JWIN but people being scared of saying no to this person who really appears to have risen well above their level of competence.