At least someone can see through the BS
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At least someone can see through the BS
From The SMH
'Dysfunctional, embarrassing': Major investor slams Virgin Australia
Virgin Australia has come under attack from high-profile investor Geoff Wilson, who has said the airline's chairman should be "embarrassed" by its share price and demanded the board reconsider privatisation.
The country's second-largest carrier is 90 per cent owned by major airlines. Its board weighed up taking the company private earlier this year but eventually decided against it.
Virgin CEO John Borghetti improved the airline's underlying profitability, but its share price doesn't reflect that.
At Virgin's annual general meeting on Wednesday, Mr Wilson, from fund management company Wilson Asset Management, expressed frustration that his firm's shares in the airline had not increased in value to reflect its improved underlying profitability. He blamed Virgin's "dysfunctional" shareholding structure for the disappointing share performance.
“You refuse to enact what I believe is good corporate governance, and do the right thing by all shareholders and the company and all its employees," he said. "Why don’t you privatise Virgin?"Virgin's share price has remained stubbornly low at between 16¢ and 21¢ since the company raised $1.1 billion in new capital from its major investors in 2016. By contrast, rival Qantas' share price has climbed about 85 per cent during the same time.
“If I was standing there as chair, I’d be embarrassed by that," said Mr Wilson, who owns about 12 million Virgin shares.
Virgin chairman Elizabeth Bryan said the board had spent "significant time" considering a privatisation, but decided it was not in the best interests of the business as it tried to achieve "sustainable profitability".
"The board’s view was that at this time their business judgement was not to proceed with the privatisation," she said.
Ms Bryan said that while Virgin's shareholding structure was "unusual", it was not dysfunctional.
Strategic airline investors Singapore Airlines, Etihad Airways and Chinese groups HNA and Nanshan each own about 20 per cent of Virgin, with Richard Branson’s Virgin Group owning another 10 per cent.
Virgin has not paid a dividend since 2008, and has been unprofitable for the past six years, falling to a record net loss of $653 million in 2018, due to $120 million in writedowns to the value of its international business, and the de-recognition of deferred tax assets worth $451.9 million.
On an underlying basis, excluding impairment costs and the cost of its business turnaround plan, Virgin reported a before-tax profit of $113 million last year - up from an $3.7 million loss - and last month said its first-half underlying profit was on track to improve by 22 per cent.
Revenue in the first quarter was up 9.7 per cent year-on-year, Virgin said in a trading update on October 22, while forecasting revenue growth of 10 per cent in the second quarter.
'Dysfunctional, embarrassing': Major investor slams Virgin Australia
Virgin Australia has come under attack from high-profile investor Geoff Wilson, who has said the airline's chairman should be "embarrassed" by its share price and demanded the board reconsider privatisation.
The country's second-largest carrier is 90 per cent owned by major airlines. Its board weighed up taking the company private earlier this year but eventually decided against it.
Virgin CEO John Borghetti improved the airline's underlying profitability, but its share price doesn't reflect that.
At Virgin's annual general meeting on Wednesday, Mr Wilson, from fund management company Wilson Asset Management, expressed frustration that his firm's shares in the airline had not increased in value to reflect its improved underlying profitability. He blamed Virgin's "dysfunctional" shareholding structure for the disappointing share performance.
“You refuse to enact what I believe is good corporate governance, and do the right thing by all shareholders and the company and all its employees," he said. "Why don’t you privatise Virgin?"Virgin's share price has remained stubbornly low at between 16¢ and 21¢ since the company raised $1.1 billion in new capital from its major investors in 2016. By contrast, rival Qantas' share price has climbed about 85 per cent during the same time.
“If I was standing there as chair, I’d be embarrassed by that," said Mr Wilson, who owns about 12 million Virgin shares.
Virgin chairman Elizabeth Bryan said the board had spent "significant time" considering a privatisation, but decided it was not in the best interests of the business as it tried to achieve "sustainable profitability".
"The board’s view was that at this time their business judgement was not to proceed with the privatisation," she said.
Ms Bryan said that while Virgin's shareholding structure was "unusual", it was not dysfunctional.
Strategic airline investors Singapore Airlines, Etihad Airways and Chinese groups HNA and Nanshan each own about 20 per cent of Virgin, with Richard Branson’s Virgin Group owning another 10 per cent.
Virgin has not paid a dividend since 2008, and has been unprofitable for the past six years, falling to a record net loss of $653 million in 2018, due to $120 million in writedowns to the value of its international business, and the de-recognition of deferred tax assets worth $451.9 million.
On an underlying basis, excluding impairment costs and the cost of its business turnaround plan, Virgin reported a before-tax profit of $113 million last year - up from an $3.7 million loss - and last month said its first-half underlying profit was on track to improve by 22 per cent.
Revenue in the first quarter was up 9.7 per cent year-on-year, Virgin said in a trading update on October 22, while forecasting revenue growth of 10 per cent in the second quarter.
Virgin has not paid a dividend since 2008, and has been unprofitable for the past six years, falling to a record net loss of $653 million in 2018, due to $120 million in writedowns to the value of its international business, and the de-recognition of deferred tax assets worth $451.9 million.
By contrast, rival Qantas' share price has climbed about 85 per cent during the same time.
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Also from The SMH
One of the world’s most prolific and successful aviation entrepreneurs has held a secret stake in Virgin Australia for at least eight years, but is now looking to sell in a move that could trigger a larger shake-up in the airline's ownership.
Several sources confirmed that Brazilian-American businessman David Neeleman owns about 1 per cent of Virgin’s shares, in a stake worth close to $18 million, making him the airline’s sixth largest shareholder on its tightly held register.
Prominent airline entrepreneur David Neeleman, who has been trying to sell his stake in Virgin.
The stake has come to light just as Mr Neeleman is trying to offload his shares which are held anonymously including through the Texan investment firm Dimensional Fund Advisers.
Mr Neeleman has been a long-time adviser to the financially distressed Chinese conglomerate HNA, which has also reportedly been looking to sell its 20 per cent stake in Virgin as part of a worldwide asset sale.Sources close to the company suggested Mr Neeleman was disappointed with the company's performance and the sale would also test the appetite of potential buyers for HNA’s much larger stake.
Mr Neeleman is considered one of aviation’s most accomplished entrepreneurs and his sale follows Virgin’s ongoing financial weakness and its decision to not take the ASX-listed company private. Virgin is more than 90 per cent owned by other international airlines, and its future as a listed company has been under question.
Mr Neeleman co-founded Canada’s second largest airline, WestJet in 1996, launched the United States' sixth largest carrier JetBlue Airways in 1999, and started the Brazilian airline Azul in 2008. He also co-owns Portugal’s national carrier TAP.
Virgin’s strategic airline investors control more than 90 per cent of the airline, meaning Mr Neeleman owns a significant portion of the 8.5 per cent of its shares in its “free float”, which are the shares able to traded on the stock market.
Singapore Airlines, Etihad Airways, and the Chinese conglomerates HNA and Nanshan each own about 20 per cent of Virgin, while Richard Branson’s Virgin Group owns another 10 per cent.
Dimensional first bought a sizeable parcel of Virgin shares in late 2010, when shares were traded at around 38¢. On Friday they were trading at 22¢.
Multiple well-placed sources have told Fairfax Media that Mr Neeleman has been looking to sell his stake in Virgin for several years.
One said Mr Neeleman was fed-up with Virgin’s continued weak financial performance, and feared another capital raising from its institutional investors could be required to fund an order of new Boeing 737 Max aircraft, which would dilute his investment.
Virgin ran at a $653 million loss last year, while its shares are largely unchanged over the past 12 months at around 22¢. Its main rival Qantas delivered a $980 million profit last year and its shares have fallen slightly, from $6.02 to $5.71 over the same period.
Virgin's decision to put privatisation on ice earlier this year solidified his view to sell, the source said.
In June, Mr Neeleman sought to raise $100 million to launch a new low-cost airline in the US, to start flying in 2021.
Mr Neeleman’s investment in Virgin is worth close to the $US13 million ($17.9 million) that he is reported to have personally invested in Azul.
Fairfax Media sent a list of questions to Mr Neeleman via Azul, the Brazilian airline he chairs, but no response was received.
A Virgin Australia spokeswoman said it was not appropriate for the airline to comment on its share register.
The revelation of Mr Neeleman’s investment in Virgin comes amid ongoing scrutiny and uncertainty around the company’s ownership structure.
Along with HNA, Etihad has also reportedly considered selling out of Virgin as it deals with its own financial woes and winds back its global investment strategy.
Virgin’s board said a year ago that it would consider mopping up its smaller shareholders and privatising the company but in February announced that was off the cards.
The company is also looking for a new chief executive to replace John Borghetti by the end of next year.
Prominent investor and minor Virgin shareholder, Geoff Wilson from Wilson Asset Management, said this week that Virgin’s “dysfunctional” ownership structure was responsible for its languish share price.
Expand the time frame from 6 to 10 years (Joyce’s tenure at the top) and Qantas’ share price hasn’t budged.. cherry picking facts helps no ones argument. (I notice the Qantas website conveniently shows their share price only dating back to their lowest point to now.)
Also highly convenient the article highlights Virgins loss, and Qantas’ record gains, but doesn’t bother mentioning Qantas’ $2.8 Billion loss just 4 years ago (well in the time frame the article covers)
Also highly convenient the article highlights Virgins loss, and Qantas’ record gains, but doesn’t bother mentioning Qantas’ $2.8 Billion loss just 4 years ago (well in the time frame the article covers)
I think it will inevitably be privatised, good for the company. Will be harder for pilot unions however as the company won’t have wont’t have to report everything to the ASX. Who knows how it will turn out.
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Expand the time frame from 6 to 10 years (Joyce’s tenure at the top) and Qantas’ share price hasn’t budged.. cherry picking facts helps no ones argument. (I notice the Qantas website conveniently shows their share price only dating back to their lowest point to now.)
Also highly convenient the article highlights Virgins loss, and Qantas’ record gains, but doesn’t bother mentioning Qantas’ $2.8 Billion loss just 4 years ago (well in the time frame the article covers)
Also highly convenient the article highlights Virgins loss, and Qantas’ record gains, but doesn’t bother mentioning Qantas’ $2.8 Billion loss just 4 years ago (well in the time frame the article covers)
Qantas were fortunate the fuel price helped them to the tune of $597 million in the 'transformation' year as well as management timed depreciation charge!
As most funds (superannuation, mutual) have a requirement to hold transport sector stocks, then it is self evident that there is more support for QF than VAH.
Expand the time frame from 6 to 10 years (Joyce’s tenure at the top) and Qantas’ share price hasn’t budged.. cherry picking facts helps no ones argument. (I notice the Qantas website conveniently shows their share price only dating back to their lowest point to now.)
Also highly convenient the article highlights Virgins loss, and Qantas’ record gains, but doesn’t bother mentioning Qantas’ $2.8 Billion loss just 4 years ago (well in the time frame the article covers)
