Australia, New Zealand & the Pacific Airline and RPT Rumours & News in Australia, enZed and the Pacific

What’s going on at Tiger

Old 7th Nov 2019, 04:22
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Allegedly those F100s are coming off the VARA RPT side of things (think BME, KTA, etc). Apparently that flying to be picked up by PER 737 (maybe A320 too?). Although what that does to costs when you have a 100 seat jet replaced by a 170 seat jet - who knows? But I suppose that’s similar to some of the routes that were purely ejet back in the days.
Its a necessary move, F100s close to 30 years old will no longer be acceptable to VARA's resource clients travelling to BME/KTA etc.
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Old 7th Nov 2019, 09:45
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Originally Posted by industry insider View Post
Its a necessary move, F100s close to 30 years old will no longer be acceptable to VARA's resource clients travelling to BME/KTA etc.
VARA selling / parting out the 2 F100's. That will cover them to operate the others without cost for a little while.
The illustrious management has stated that there is demand for the A320. So on top of the 5 A320's VARA has, more A320's will be going VARA's way. Yes prob from TT's A320 fleet..... So the Question is, why would they have smaller A320 numbers in VARA and call that efficient yet Tigers fleet somehow is inefficient? Smells like B.S CEO bonus chasing to me
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Old 1st Dec 2019, 10:55
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Old 1st Dec 2019, 17:16
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Why do people post links that take you to a paywall?
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Old 1st Dec 2019, 22:03
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Originally Posted by Climb150 View Post
Why do people post links that take you to a paywall?
It didn’t take me to a pay wall.
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Old 1st Dec 2019, 22:47
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Originally Posted by davidclarke View Post


It didn’t take me to a pay wall.
I can assure you, I can’t read the article without paying for it either
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Old 1st Dec 2019, 23:20
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No pay wall for me.

Standby.
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Old 1st Dec 2019, 23:23
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L1 Capital has predicted the Virgin Australia-owned budget carrier Tiger Airways will continue to cut capacity and could eventually be forced to shut the airline completely, as Virgin's new chief Paul Scurrah hunts for ways to lift profits.

But Virgin says it has no plans to shut the airline, and says capacity reductions announced across the group last month, which included cuts at Tiger large enough to have two planes taken out of its fleet, will strengthen Virgin's financial position.

Mark Landau, managing director of L1 Capital, which is an investor in Virgin's rival Qantas, made the bold prediction on the future of Tiger at the Future Generation investor forum in Melbourne last week.
Capacity cuts are already under way at Tiger under Paul Scurrah.
He argued a restructuring at Tiger would be the catalyst for a surge in profitability at both Qantas and Virgin Australia, which acquired the 40 per cent of Tiger it didn’t already own in 2015.

“Tiger is losing money on many routes and it will be forced to significantly cut capacity or shut down altogether," Mr Landau told the forum. "That will be the step change that will see both airlines significantly increase their profitability.”Mr Scurrah has promised a renewed focus on earnings and cash flow at Virgin, and taken action to cut costs at Tiger in recent months, announcing a series of structural changes and pushing ahead with a plan to use only Boeing 737s in its fleet to manage costs.

On November 6, Virgin announced a plan to slash capacity across the group by 2 per cent by the end of the 2020 financial year.

As part of these cuts, Tiger will no longer fly the Brisbane-Darwin route or Proserpine-Sydney from February next year. Flights from Adelaide to Brisbane will cease at the end of March next year.

Virgin’s balance sheet has now become very highly geared, which will force them to be far more focused on route profitability.

— Mark Landau, managing director, L1 Capital

But Virgin says the subsidiary remains an important part of its future.

"Operating our low-cost carrier strengthens our offering and enables us to cater to a growing low-cost market segment in Australia," a spokesman said.

"A number of changes are under way to improve Tigerair's financial performance. In November, we announced network changes to reduce capacity, fleet and ensure Tigerair is flying on the routes it is best suited."

But Mr Landau says the announced cuts will not go far enough and Mr Scurrah will need to take more drastic action.

He said on Sunday that Tiger generated a negative 8 per cent margin on earnings before interest and tax in the 2019 financial year and "we believe that would only have deteriorated this year given the weakening domestic leisure market".

Mr Landau said L1's analysis suggested Tiger is "currently operating numerous routes at negative 15 per cent margins or worse, which is simply unsustainable".

Virgin's Scurrah brings urgency to turnaround

"Virgin’s balance sheet has now become very highly geared, which will force them to be far more focused on route profitability and cash-flow generation, which we would expect will see both Qantas’ and Virgin’s earnings recover from this cyclical low point," he said.

Capacity cuts at Virgin would be a big win for Qantas. Despite L1 enjoying about a 150 per cent gain on Qantas over the past few years - and the stock soaring seven-fold in the past six years - Mr Landau said L1 was not ready to take profits just yet.

He said it was remarkable that Qantas still traded at an 11 times price-to-earnings multiple despite the significant reduction in volatility chief executive Alan Joyce had engineered. This is around half the average multiple of industrial companies on the ASX.

Qantas targets growth in domestic operating margins

He said the multiple suggested earnings would stagnate or go backwards, with the end of irrational competition boosting profitability.

"Put simply, we think this is ridiculous," Mr Landau said.

"Qantas has dramatically improved the efficiency of its business over the past six years, which has made it a far more formidable competitor than ever before."

Virgin shares have fallen 19 per cent year to date, while Qantas shares are up 26 per cent.
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Old 2nd Dec 2019, 00:31
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Should've sold it to Fox when the offer came in.
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Old 2nd Dec 2019, 00:38
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It just rehashes the same old same old. Tiger loses money. Certainly no trade secret.

The larger issue is the slowdown in the leisure end as quoted by Jetstar on the last half. Qantas is also feeling this. Virgin domestic is not seeing this trend. Tiger whilst it’s numbers are terrible so hard to judge, would only indicate it would just make it harder to get back to the green.

The Virgin 737 operation has a much larger leisure network compared to the QF 737 operation. What’s interesting is these passengers are not dropping off. Essentially it’s the bottom of the barrel market that is going backwards. The premium leisure market (ie non bogan) is growing, PS has acknowledged this countless times and is a large focus going forward.

A lot of upside for Virgin to can the Tiger.
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Old 2nd Dec 2019, 01:16
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The premium leisure market (ie non bogan) is growing
Don't kid yourself - it's a bogan country.
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Old 2nd Dec 2019, 06:28
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News Corp has picked up the story now. ‘Monumentally Stupid decisions’ made at this mob.


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Old 2nd Dec 2019, 07:23
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Of course a person who is an investor at QF wouldn’t have any interest stirring up trouble at the opposition.
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Old 2nd Dec 2019, 09:45
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And Virgin has done some monumentally stupid things with Tiger like investing in changing the fleet to try and make it the same as Virgin when even Virgin doesn’t have a common fleet.”
Yep pretty much.....they spent millions removing them from Tiger to simplify the fleet....but then moved them back into the Group to VARA?

Genius!

VA was never going to be able to save TT considering they couldn’t even run their own airline. It’s possibly the most incompetent airline group to have ever formed.....fingers crossed PS takes a broom to the place and gets some people with some actual experience and intelligence who have previously worked at a real airline to turn it around.
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Old 2nd Dec 2019, 10:30
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"On November 6, Virgin announced a plan to slash capacity across the group by 2 per cent by the end of the 2020 financial year."

a 2% cut over 12 months is not what I'd call a SLASH - more a slight trim of the toe nails..................
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Old 3rd Dec 2019, 03:24
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I think you will find virgin never announced they where “slashing” routes, simply they where putting it all under the microscope and making changes where needed.
The qantas fed bloggers (sorry can’t bring myself to call them journo’s) did with that info what they can always be relied upon to do.
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Old 3rd Dec 2019, 03:34
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What's going on at Tiger
Apparently Tiger are going to smash Jetstar the same way Virgin will smash Qantas, is what I heard.
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Old 3rd Dec 2019, 05:27
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John, you probly shouldn't take everything your guide dog says as gospel.
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Old 3rd Dec 2019, 06:47
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John, you probly shouldn't take everything your guide dog says as gospel
Do you actually believe dogs can talk ?

A Virgin pilot told me this actually.
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Old 3rd Dec 2019, 07:36
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Originally Posted by John Citizen View Post
Apparently Tiger are going to smash Jetstar the same way Virgin will smash Qantas, is what I heard.
Yes Tiger will smash JQ with with their mixed bag of 10 aircraft and VA will smash QF by starting a price war.
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